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Now Is the Time to Invest In the Digital Mine

RPMGlobal's Digested View of PWC's Mining Industry Outlook 2018

PWC released its annual industry analysis this year and whilst these are “tempting times” for the mining industry, there are still other important insights worth considering.

One of the key takeaways is that the mining industry has cause to be optimistic and could be bolder with investment, but that businesses are justly cautious about over-extending themselves should commodities drop in value: “While we expect capital expenditure to increase next year as companies implement their long-term growth strategies, miners must be careful to maintain discipline and transparency in the allocation of capital.”.

This raises the question of how miners can achieve the delicate balancing act of upping investment without exposing themselves to undue risk.

The PWC report shows that some of the top mining companies are already reaping dividends by extracting greater value from their existing assets. BHP Billiton expects to save over $1.2bn by 2022 thanks to investment in its Maintenance Centre of Excellence initiative, and Rio Tinto identified $2.2bn in operating cost improvements in 2016 and 2017 by optimising its maintenance strategies.

A related factor to the question of investment is the uncertain future of US trade and dollar policy. Should the US introduce new tariffs, commodity prices would likely undergo a (brief) drop and rebound as the market adjusts. It is also possible in this scenario that the value of the dollar would drop, and some analysts suggest that a drop in the value of the dollar correlates to an increase in commodity prices. Would this increase offset any nervy selloffs? Uncertainty is the only certainty, which is reason alone to be cautious.

Given this outlook, the investment strategy of seeking ways to maximise the efficiency of businesses’ current assets is even more apropos. The industry may be heading for an upswing, but now is not the time to invest in brownfield sites. The mining industry is in a slow transition to the digital mine, and the PWC insights reinforce the necessity of speeding up this process. The digital mine is all about using digital platforms to maximise the efficiency of all aspects of mining and this is an ideal way to consolidate the value of existing assets without a large capital expenditure or absorbing new assets whose value may decline.

Given maintenance is often one of the largest expenses for mining companies, mining maintenance software is a key part of the digital mine to invest in first.

How can businesses without BHP and Rio Tinto’s resources invest in maintenance efficiencies? Software solutions such as AMT are enabling miners to do this through dynamic, real-time forecasting and budgeting of asset’s lifecycles. This leads to a significant reduction in maintenance costs over the long-term as managers can take a proactive approach to maintenance and identify potential issues before they escalate towards costly equipment downtime.

In addition to optimising maintenance costs for a relatively low outlay, enterprise software future-proofs existing assets by pooling company-wide data into one location. By adopting open industry standards, such as ISA-95, mining companies can eliminate the rigid data silos that are preventing them from achieving holistic, centralised forecasting and planning. Imagine having connected systems and information that is updated in real time including everything from the maintenance schedule for each truck on a site, to the revenue generated by every commodity by month.

Investment without over-exposure can never be guaranteed, but by investing in enterprise solutions backed by industry standards, miners can leverage their increasing equity without opening themselves up to the vagaries of the global commodities market.

The digital mine is here, and it’s time to dig in.