Mining for Value

However, Ives said that demand cannot increase as much as it did in the past simply because industry is using fewer commodities per unit of GDP. To Ives, that is a positive trend because he also anticipates that while demand will continue to increase, supply may become something of a problem.

“Most of the major mining companies in the world have new CEOs because the market says the last CEO chased growth and didn't make the stockholders enough money. So now the new guys in the CEO suites do not pursue aggressive growth.” This defensive strategy means there will be continued decline in production at the same time it is a struggle to find new copper, lead, zinc, gold and silver mines. Ives anticipates this will lead to a significant price increase across all commodities.

2014 Trends

“While technical innovations could do much to improve the financial outlook for mining, miners are really conservative people,” said Ives. “We do things the same as we did them in 1900. Yes, we have bigger, faster equipment. But it's hard to get productivity up by doing things bigger and faster. That means it is imperative that mining companies begin to innovate.”

Another reason to embrace technology is that mining companies are price takers, not price makers. It is the market that impacts commodity prices; costs of extraction are basically ignored by the market. According to Ives, that is a threat to profits and exploration. “As a result, for the first time, in the last couple of years,” he said, “we are actually seeing mining companies thinking about how to do things differently to change the outcome.”

Ives stressed that does not mean countries are taking away their mines; they are just increasing the taxes and royalty rates. Mining companies are being taxed higher in many South American countries simply because mining is a significant chunk of their economy. “Governments look at oil and gas and mining as the same,” said Ives. “They think that if they can put a 10% net revenue royalty on gas, they can do it on mining. But these are very different industries. Lifting costs are much higher in mining than oil and gas. A mine can't bear a 10% revenue royalty. It will not get built.”

Another trend affecting the mining industry affects pretty much all industries. “Mining is suffering a talent gap. I am one of the few people that joined the mining industry in the 1980s. Nobody did it in the 80s and 90s. Now that talent gap is at senior levels,” he said. “The only saving grace is that the global financial crisis wrecked the retirement savings of many older mining guys so they have to keep working. Generally at the mines, there are very experienced guys and very young. That has contributed to some of the problems with costs.”

Driving the Future with Technology

Ives believes that technology integration is the only way the sector will become healthier in the long term.

Mining Technology

“We have to get fatalities out of the industry,” said Ives. “If you're using technology effectively, you can get people out of harm’s way. As a result, we’re looking at more and continuous automation.” He pointed out mines in Australia that are actually using remote-controlled trucks to haul ore, reducing the need for personnel to be out in desolate areas.

Energy Technology

Ives suggested that efficiencies and advantages being developed by valve, actuator and control companies could help the mining industry achieve energy savings, which would not only reduce costs but also make the sector more attractive to investors. "If the mines were electrified using only natural gas and renewables, they could increase profits by 40% and emissions would go down by 98%,” he said.

By building from the electrical plant up, mining companies can actually make money on the power they generate, which would ideally be from renewables and/or natural gas. Ives pondered the possibilities: “In the mine of the future, why not build the electrical stuff first? And, why not do the grinding and other energy-intensive work in off-peak hours and then sell your excess power during peak hours to the grid? You will also have to have good energy storage, especially when working with renewables.”

3D Printing

“3D printing will be essential to all businesses,” said Ives. “It is going to change the world. That’s how spare parts are going to be created. The question is, how are you going to make money when the mine is going to be manufacturing its own valve, on site, with 3D printing?”

Ives predicted that, in the mine of the future, there will be barrels of different metals at the mine, and a printer, and they will actually be able to replace valves right there. He asked what valve manufacturers could do, then, to make their products more “sticky.”

“You will do best by leveraging materials technology and by embedding smart technology that will provide information that will be valuable to the mining companies. When the companies realize how important this is, they will embrace suppliers that provide them with the technology to reduce expenses and expand efficiencies,” he said.

Information Technology

"Data analytics absolutely is the future,” said Ives, "and has a big part to play here. Valve manufacturers are going to have to consider the need for information when designing valves to be used in the industry."

Conclusion

More automation, remote operating centers, renewable resources and alternative scheduling are among the design changes that will transform the business of mining. The companies that will be most successful working with this necessarily changing industry must understand how their products will work within a new structure and provide the added value and technologies that will reduce costs and drive mining intensity.

Kate Kunkel is senior editor of VALVE Magazine. Reach her at kkunkel@vma.org.