Robots, Drones, and Sensors Help You Mine More By Digging Less

using pick axes and shovels to mind cobalt. But he also mentioned about halfway through the episode about a mind he saw that he called the most advanced mind he'd ever seen. Now, today we're going to dig into that topic a bit more. Yeah, I know pun intended. We're going to talk about digitalization and mining. We'll talk with BENF digital industry analyst Daniel lu about a report she

wrote with Quacy called Digitalization Strategies in Mining. BENIF clients can find this report on beanf dot com, the BENF mobile app, and the Bloomberg terminal. It has always Beneif does not provide investment or strategy advice, and you can hear the full disclaimer at the end of the show. Okay, let's get to it. Hi, Daniel, him Mark, thanks for coming in, Thanks for having me. Can we start off today with the real basics. So why would anybody who

is not a miner care about digital advances in mining? Well, I think the core of your question is why should anybody who's not a minor right care about mining the industry? Okay, So if you care about things, then you should care about mining because mining is how you get the material

to make things. So if we expect economic growth, which hopefully we all do, that usually translates into more things, more new products, more technology, more material goods, and mining is going to have to really boom and take off to fuel that demand. So, in essence, if you care about things, if you care about economic growth, you have

to care about mining. So the advances will talk about today everybody should maybe be rooting for those, I think so, I mean, if you're excited about electric vehicles, if you're excited about the new iPhone next year, if you're excited about really any new technology or any material good, then yeah, you should be excited about these improvements in mining. That said, what are the pressures that are facing miners to make

improvements that we will talk about in a second. Yeah, so I think that maybe, um, it's a corollary to kind of what's happened in oil and gas. So oil prices have tanked and been very volatile the past few years, and the same thing has been happening in the commodities markets, so for iron, aluminum, cobalt, gold, everything like that. UM, commodities have been in wild fluctuation. And obviously commodity prices are directly linked to the revenue, the top line revenue

of all mining companies. So when commodity prices fall as they have, that means mining companies lose a lot of revenues. So in the past decade or so, if you look at commodity indices, they've been swinging a lot and that's resulted in up to loss of market cap for a lot of major mining companies like Rio Tinto, Haliburton, Glencore, a lot of these companies that are big players globally, and a few of the ones that we write about

in our note. In the note, you also mentioned to other challenges that are facing miners, a surgeon demand for battery medals, and a focus on sustainability. Can you comment on those how those are driving minors toick go digital. Yeah, so more electric vehicles, more grid scale batteries on the grid will require more battery metals like lithium and cobalt. A lot of those are mine from artisanal minds today. A lot of them involve humanitarian or environmental issues and

their supply change. So these two things really are linked. To get more battery metals and to become more sustainable, the mining company or the mining industry should look towards technologies that can improve its operations, improve their yields, and really improve transparency so that you can help make it safer for humans. So going back to sustainability a little bit, that's a growing trend all over the place, and it seems to be mining is following suit or are they

kind of affording their own path. I think they're trying to follow suit. Yeah, absolutely. I think a lot of large investors, especially institutional investors, are paying a lot more attention to efficiency, human rights issues, environmental stewardship in their operations. And mining is a pretty materially intense industry. It creates a lot of voice and it creates a really really big impact on the landscape. So, yeah, there is in

increased E s G pressure across the board. But mining, I think has a really big onus to use more technology to improve its environmental footprint. So why is digitalization the way to go for miners to accomplish these goals or is it? Or there are other ways they could advance? Well, I think number one, we should look at mining as just one of several industries that are becoming interested in digital technologies. So may manufacturing, power, utilities, oil and gas, transport, shipping,

you name it. All of these incumbent heavy industries are becoming very, very interested in using new technologies to just become leaner and better. And in a lot of regions, especially in places like China and Germany, with a lot of support for industrial technology, you as a company need to adopt more digital technology if you want to compete

into the future. So for a lot of industries and a lot of regions, going digital is no longer a question of if or should I It's a question of when or how, which I think is the natural next step. And the next question, how are they going digital? Yeah? So I have a lot of examples from our research, but let's maybe start from the basics. So one of

the most basic technologies in industrial digitalization is sensors. Sensors capture signals from the physical world and turn it into digital So there's a lot of applications for sensors in mining. Um One tidbit that I learned is that for every unit of material that you dig out of the ground, only one percent of that is usable at the end.

So that means everything that you dig up and transport and use chemicals to refine needs to be taken care of somehow so or one of the interesting applications for sensors that we looked at is putting sensors on the

lip of a shovel truck. So when that truck digs a new bucket of material from the ground, these sensors can send kind of X ray beams into the material and the dirt in the bucket, and then it can instantaneously show you, the driver or the operator, how much of the material in that bucket is, for instance, gold, how much is cobalt, how much is aluminum? Basically how much is how much does it contain what you're looking for? And then you as an operator can then make the decision, oh,

there's too much waste in here. It's not worth it for me to spend so much fuel to transport it, so much water, so many chemicals, so much power and electricity to process it. Or if it has above a certain threshold, then that makes you helps you make a smarter decision about where to send that truck of material, so scan it, then choose to dump it or ship and then it just enables smart routing. Basically, it helps you avoid so much more downstream power, chemicals, water, energy

that you maybe would have otherwise wasted. Another cool technology is drones and robots. So in mining, oftentimes you'll dig up a whole bunch of material and then you'll just basically leave it in a stockpile on your site and then get to it later for processing. So humans have to walk around and take manual measurements or use their eyes to gauge how much material is in a aisle of rock. That takes a lot of time, and that takes a lot of people just walking about, sometimes an

inclement weather, sometimes maybe in dark, dangerous conditions. You can do that much faster, much easier with a drone that just flies overhead. It uses a smart camera on board to make an estimate of the volume of material. That is in a stockpile, and then that gets you information faster. That gets you information much more frequently, which is great. Same thing with robots. So precision mining is something that

a lot of companies are really really interested in. It means they're not just blindly digging material out of the ground. I'm not saying that they are now, but they can get better, right, they can become more accurate, and then if you have really agile robots that can dig in very very precise ways, that helps you reach your ultimate mineral better. Probably the hottest technology in the mining industry

is autonomous haul trucks. So these are the trucks that transport the mineral that you just dug up from your mind. Then they transport it to your processing site. Now, these are the big, giant trucks with the wheels that are bigger than people. Okay exactly. So I think a lot of the public and a lot of I didn't know this before, but the mining industry has been using fully automated hall trucks for a decade or more. Autonomous. Fully

autonomous so no driver there. Either they travel on a preset GPS route or they can be remote controlled by you know, like a joystick from a control tower, which is really cool and I think that UM sounds fun. So that's been a really great application of technology UM and it's spreading through that to those to be autonomous.

It's been popular. For instance, for one company that we profiled called Frio Tinto, a lot of their operations are in Australia, so compared to other major mining companies, Australia has a really high cost of labor. So for Rio Tinto, if you can automate as many processes as you can and avoid high labor costs, that directly translates into their bottom line. And it's not just cost right, it's also

removing humans from potentially risky or dangerous situations. On the equipment side, if you can put data and autonomy into that truck, you can route it. Again, it's with smart routing, so you can route it better, less wear and tear on the internal gears and tires, and sometimes you can see up to forty or increase in the lifespan of your tires, which is really cool. So it sounds like each one of these things is a percent here, percent there that really adds up to make a real impact

on the company's bottom line, I think. So, yeah, I think there's no magic bullet now that gets you with one technology yield. But yeah, it's it's a conglomeration of a lot of different things. And that's actually a good point is that many companies are experimenting with bringing a suite of these technologies altogether. So a lot of companies are experimenting with fully, fully automated and fully electric underground minds,

which is really really cool. So underground minds are tend to be more risky, right, um, and they tend to involve more investment. They start as open pit or above ground, and then once they run out of easy to dig material or mineral, then they move underground. So it's almost an evolution of the mine. Um. So a lot of companies are experimenting with going fully autonomous, fully electric for

underground minds, which I think is really cool. And again there's that human element of an improving workers safety and improving impact on the environment as well. So last Sunday, I was eating lunch and I was I was watching YouTube confession and I found myself watching a Bloomberg short documentary on space mining. I saw that you did. It was fantastic. You know, shout out to the Bloomberg media

team for making it. It was really fantastic. And one of the points they made was that a lot of the technologies that they are working on for space mining may not ever mine an asteroid, but they are being able to be used on minds here on Earth. Where are most of the advances coming from. So are these being you know, developed specifically for mining or from space mining, or they borrowing from other industries? No, I mean, believe

it or not. Even though mining has been using autonomous hall trucks, for instance, for a decade, a lot of other industries are very very far along. And that's one thing that I think the mining industry has been really good at is looking at other industries, other pure industries sometimes and then learning from them, learning what they did well, and learning what technologies had the most impact. A lot of airlines, for instance, use predictive maintenance on their aircraft

to Yeah. So it's a piece of software that uses AI to read the sensor data coming from each individual part, each individual um or something. Yeah, and then if it senses that, oh, the vibration is off by a tiny little bit, it can predict I think that means that the engine will break down, or I think it means that this gear will start to become more ineffective in two weeks time or something like that, and it'll raise

its hand and it'll send you an alert. And that means you can schedule your operations and maintenance at much much better times. You can avoid catastrophic failures, and you can schedule your maintenance to happen maybe on downtimes when you're not losing a lot of dollars by bringing that machine down. So Mining has been learning a lot from the airline industry on predictive maintenance and bringing a lot of that technology to for instance, it's hall trucks or

the mills and processors in mining refineries. Um, same thing for the automotive industry. I think Mining has done a really good job at looking at automation in the automotive manufacturing space and trying to figure out what it can learn,

what it can take from that. So I don't think it's necessarily a bad thing that mining has been a little bit late to the game to adopt digital technologies, because it means they have all these great lessons to learn from and maybe it gets them to their result faster. Even you mentioned that Rio Tinto has has autonomous hauling vehicles. Can you talk about some of the advantage that the other competitors have made, So who is leading in digital

in mining across all technologies? From our research at least, it seems that Rio Tinto is a pioneer and on the leading edge. Is there a reason for that? Um?

I think it has to do with the fact that they really did their homework and understood their own markets really well and then identified automation as the technology to make the biggest impact on their operations, and that a lot of that has to do with kind of the labor costs that we talked about earlier, UM, But they've just been really methodical about applying automation to high value segments and high value pieces of equipment over the past decade.

Like I said, they've had this program for ten years, so they've been able to reap a lot of rewards. So I think Rio as a leader there. We talked a lot about sustainability earlier, and you know, there are a lot of companies out there that are making carbon neutral pledges and even carbon negative pledges, which is really exciting. But the same thing is happening in mining, So Anglo American is a good example of a company that has

a goal of making mining carbon neutral. In a recent episode on the battery supply Chain, I believe it was with James Rith, he talked about Dimeler wanting to come up with a carbon neutral battery that would also involve carbon neutral mining cobalt, I would assume, or lithium. So how does how would carbon neutral mining work? Well, I think in the near term it will probably involve a lot of carbon offsets rather than technologies that actually avoid emissions,

but a lot of software. For instance, energy management software in a mining processing plant can cut down on your energy usage by so much and that can be really helpful. They're also thinking about the same thing in terms of water, so water use in mining is a huge issue, especially because a lot of mining operations happen in water stressed

regions or countries. So there's a lot of innovation going on with trying to help the industry be able to get that one percent of material out of the one percent that you dug up using as little water, as little energy, as little chemicals as you can. So more stuff is going to mean more mining, more advances, so the mining companies can survive all this, uh this more mining that's going to come. What's next? Is there a

big overarching theme you're seeing coming up? I think we're still in the early days in mining and in a lot of heavy industry overall. Actually a lot of industries are just figuring out how to apply these technologies make them work because a lot of these technologies, let's be honest, they're very expensive because a lot of them are new. So how to make them work and how to make them cost effective? I think strategy as well. There hasn't seemed to be one silver bullet digital strategy that has

emerged as the go to model in mining. I think oil and gas is actually a little bit further ahead in that, but it hasn't happened yet in mining, which I think is actually really exciting. So a number of the companies that we profile in our upcoming peace they're experimenting with different strategies. They're experimenting with who takes care or who takes responsibility for technology. Is that the central

office or is it each mining site? Or you know, do I develop more technology in house so that I can own it, or do I buy it from partners who maybe further along, but obviously that's an additional cost. So I think it's an exciting UM time because there's a lot of figuring out left to do UM and then just going back to what we said at the beginning, right, mining is directly linked to economic output. Mining is one of the oldest industries probably on Earth. It's probably the

oldest industry to find. You have to find the rock to make the tool right right exactly. So in order to create all of these promising new things, and in order to create the world of tomorrow filled with all these great technologies that we all want and look forward to, it's a lot of that is going to depend on mining. Daniel, Thanks for joining us. Thanks mor it's been fun. Bloomberg an e F is a service provided by Bloomberg Finance

LP and its affiliates. This recording does not constitute, nor it should it be construed as investment advice, investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg an e F should not be considered as information

sufficient upon which to base an investment decision. Neither Bloomberg Finance LP nor any of its affiliates, makes any representation or warranty as to the accuracy or completeness of the information contained in this recording, and any liability as a result of this recording is expressly disclained