|Since the last major innovation in underground mine production over 30 years ago – the introduction of bulk stoping methods and the large-scale, electric-hydraulic equipment that made it possible – innovation in mining has been regarded as something that mines can get to later. Mining is known to be a risk-averse industry, and it becomes even more so during turbulent times. When prices are high and things are going smoothly, mining companies are too busy to look to the long term. However, when prices fall and things are going poorly, mines are pressured to focus even more on the short term. There is no time to explore or innovate.
For the last three decades, mines have relied upon the benefits that bulk stoping brought, like safer operations, larger volume production and reduced manpower. But the benefits of economies of scale are eroding as miners start to dig deeper underground and encounter increasing rock stresses and temperatures. Higher rock stresses lessen inherent stability so that larger drifts require proportionally more ground support to ensure acceptable levels of safety and stability. This increases the cycle time and reduces the rate of advance in capital development, thus expanding the time to first production. And the amount of capital development required has almost doubled over the last 30 years as the height of open stopes was reduced to optimize stress-induced dilution. In 1985 stope heights exceeding 60 metres were common. Nowadays, typical stope heights are around 35 metres and may well have to decline even further when drilling 2.5 kilometres below surface. Increasing rock temperature requires ever-greater volumes of ventilated air to remove heat – and so higher electricity bills – to ensure conditions that do not require dramatically unproductive work-rest regimes. It should be noted that no one believes complete automation is achievable or even desirable.
The real “risk” has changed as mines have become deeper and hotter, productivity continues to decline, and the return on capital employed erodes. Today, the steady decline towards unprofitability by applying the same old approaches is the main threat mines face. In comparison, the risk involved in trying something new that will take some time, money and ingenuity to refine and implement, is trivial compared to the risk of becoming unprofitable while sticking to the status quo. Increasing depth erodes productivity just like inflation erodes the value of cash, and the best continuous improvement can achieve is to keep pace with what we like to call “operational inflation,” or the rising costs associated with these operational realities – and only if it is continuous. Missing a few years of any improvement can never be recouped and is forever a lost opportunity.
At the level of mine management, the effect of increasing rock stress and temperature appears gradual, increasing marginally as the mine extends deeper. Those responsible for long-term strategic risk assessment are failing in their duties if they opt to ignore the fact that conventional production methods have reached their limits. This becomes painfully evident when new, deeper mines or deeper ore bodies close to existing mine infrastructure are considered for capital investment but ultimately left undeveloped because current methods cannot provide the needed return to cover the additional capital cost of access development – and this at a time when the cost of capital could not be lower. This is betting the future on higher grades; it is hardly a long-term strategy likely to attract cautious investors.
There are a few stalwart exceptions to this kind of strategic failure, most notably Rio Tinto in Australia for remote surface mining, and Vale in Canada for underground mining, both of which have funded a great deal of research and innovation over the years. But in most companies, year after year, executive management has effectively padded shareholder returns instead of investing in exploration and innovation. They are selling the seed corn of the future for short-term gain.
People understand what exploration is, but there is much confusion about what mining innovation is. Although it uses technical developments, innovation is only successful if you can make more money with the new technology than with the old. Mining innovation aims to accomplish a step-change operational practice that achieves significantly better economic performance – say, half the cost, as a target. And changing routine operations through continuous improvement is indispensible for innovation because it creates the open minds required to adopt new approaches.
For the Centre for Excellence in Mining Innovation (CEMI), right-tech – not high-tech – is the optimal solution. It allows miners to 1) be more productive; 2) decrease the capital demand for development; 3) be practical enough to integrate into operations and; 4) be supported by the training levels achievable by the local workforce. Our Ultra-deep Mining Network includes projects that use leading-edge materials for personal protection equipment and simple mechanical protection for drift crews, and that rejuvenate 100-year old ventilation technology.
Today, the need for innovation is as urgent as the need for exploration. The days when highly educated technical experts were abundant are gone and an aging workforce of qualified engineers, geologists and metallurgists means time is running out. Change is neither cheap nor easy; it takes time, money and ingenuity. But in a world where the cost of capital is as low as it can be, the best investment you can make today is in the ingenuity needed to implement step-change innovation tomorrow.
Douglas Morrison is the president and CEO of CEMI. He spent 14 years in Sudbury mines and 16 years consulting in Australia, South America, and Southern Africa. Since 2012 he has been based in Sudbury at CEMI, focused on innovations that increase mine productivity, decrease capital demand and reduce technical risk.