MINING WHITE PAPERSTRENGTHEN MINING OPERATIONS WITH A RELIABLE COMMUNICATIONS BEDROCK

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STRENGTHEN MINING OPERATIONS WITH A RELIABLE COMMUNICATIONS BEDROCK

MINING WHITE PAPER | FEBRUARY 2015

MINING WHITE PAPERSTRENGTHEN MINING OPERATIONS WITH A RELIABLE COMMUNICATIONS BEDROCK

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Mining is a complex sector facing complex challenges. Unstable commodity prices, lower productivity, increased costs, project delays and asset write-downs are putting considerable pressure on the industry. At a time when mining companies across the world are seeking new standards of safety and productivity, investing in the right communications solutions has never been more critical to their success. This white paper explores the challenges currently facing the industry and how technology can be effectively applied and deployed to provide the right solutions.

MINING WHITE PAPERSTRENGTHEN MINING OPERATIONS WITH A RELIABLE COMMUNICATIONS BEDROCK

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Each stage of the life cycle of the mine has a unique set of operational requirements and changeable quantities of resources – workers and equipment – to monitor and manage. In mining exploration, communications needs start with the basics: reliable voice communications and a supporting system that is easy to deploy, even in potentially remote or treacherous terrain. As the mine is built and becomes fully operative, more dynamic capabilities are needed as enhanced voice communications and supporting infrastructure are critical to the ability to locate key resources, including workers and equipment. Other essential needs include instant access to real-time video, production data and metrics such as load quantity and quality, effective freight tracking mechanisms and management of increasingly sophisticated remote control equipment.

Transportation entails the safe and efficient transport of loads, as well as maximising the capacity of transport infrastructure. Finally, arrival at the port requires efficient unloading and loading of vehicles while keeping workers safe.

In all phases of mining, time is money. In today’s environment, operational costs are high and continue to climb. Daily, weekly and monthly productivity targets must be met – all without compromising the safety and security of people and key assets. From exploration to construction through to extraction and transportation, an effective communications infrastructure and the technologies it enables are at the very heart of keeping mining operations connected and running productively, profitably and, most importantly, safely.

COMMUNICATION IS CRITICAL AT EVERY STAGE

MINING WHITE PAPERSTRENGTHEN MINING OPERATIONS WITH A RELIABLE COMMUNICATIONS BEDROCK

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Mining prices have been volatile in the past few years. In the 12 months to January 2015, iron ore shed 47 per cent to about $US71 ($88) a tonne.1 Further, in October 2014, the price of iron ore fell to approximately US$70 per tonne, continuing the downward trend of that year. The decline is not predicted to end in 2015.2 According to ANZ’s head of Australian economics – corporate and commercial, Justin Fabo: “Iron ore has been one of the weakest commodities this year, and likely to continue in this vein” with key consumers such as China, which “still don’t seem convinced higher prices are warranted, while high iron ore port stocks and rising seaborne supply remains on offer”.3

Therefore one of the biggest hurdles facing the mining industry today is increasing profits and productivity

in the face of fluctuating prices.4 However, the real challenge is to maximise productivity while the industry’s boom enters its “twilight”. The focus is now on getting lower costs and better profit margins out of existing projects.5

The industry clearly agrees. The annual Australian Mining Industry Report 2014 (“the AMIR survey”) asked participants what they considered to be the biggest challenge in the industry in the previous year. Compared with past results, the intense financial focus of all the respondents was a striking result: of the 12 options available, the top six were all connected to prices, costs or investment.6

LIFTING PRODUCTIVITY

CHALLENGES FACING THE MINING INDUSTRY

*Source: Australian Mining Industry Report 2014, Mining IQ in assoc. with Shell, p 3. Note that respondents could choose more than one response.

TOP THREE CHALLENGES EXPERIENCED BY THE MINING INDUSTRY IN 2013*:

COSTS REMAINING HIGH DESPITE FLUCTUATING COMMODITY PRICESFLUCTUATION IN RESOURCE PRICES

IDENTIFY COST REDUCTION INITIATIVES

MINING WHITE PAPERSTRENGTHEN MINING OPERATIONS WITH A RELIABLE COMMUNICATIONS BEDROCK

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REDUCING COSTSAlong with the desire for increased productivity comes the need for reduced costs. In the AMIR survey, 54 per cent of respondents chose “costs remaining high despite fluctuating commodity prices” as one of their top challenges of the previous year.12

According to a global survey by Boston Consulting Group, mining costs at Australian open-cut copper mines more than quadrupled between 2002 and 2012, rising from US79¢ a tonne to $US3.26 a tonne.13 Australian miners are among the best paid in the

The sector’s challenges have come even though new technologies, mining methods and projects of ever increasing scale were expected to insulate against declines in productivity.7

For some, autonomous mining – touted as the leading solution for the industry – is not happening fast or broadly enough8, even though several large companies have found success with some autonomous solutions, such as autonomous trucks. Rio Tinto, for example, is the most advanced user of autonomous technology of Australia’s three biggest miners, with 53 autonomous trucks in the Pilbara region.9

But autonomous mining is not achievable for every mining organisation, particularly in the short to medium term, or the small to mid-sized operation.

One commentator asks:

“So if the benefits are so great, why haven’t we seen next generation automation and industrial systems deployed across the industry? The most common deterrent is perceived complexity and cost. Reinventing mining also requires a significant cultural change – from the traditional structure of functional silos to modernised, integrated operations.”10 Another commentator states that “the business case for automation in the industry is certainly there. But the path is a rocky one! Whether it’s communication hardware capability and latency issues, system integration, supplier collaboration, measuring return on investment (ROI) and improving automated processes or engaging the end users, any operation looking to automate has its work cut out for them.”11

world.14 Nikki Williams, CEO of the Australian Coal Association, recently told SBS that the Australian coal sector is at “a terrible junction where not only has the international market come off in terms of prices, but our costs and productivity have gone to a terrible place.” She adds that while Australia used to be the world’s cheapest place to produce coal, “in just five years, we’re now the highest cost producer in the world at AUD$176 a tonne compared to the rest of the world at AUD$106.”15

AUD$176 PER TONNE

= =AUD$106

PER TONNE

COST OF PRODUCING COAL IN AUSTRALIA

COST OF PRODUCING COAL ELSEWHERE

MINING WHITE PAPERSTRENGTHEN MINING OPERATIONS WITH A RELIABLE COMMUNICATIONS BEDROCK

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KEEPING WORKERS SAFEMining is one of the most dangerous occupations in Australia.16 Safety is always a critical priority for the sector, and “improvement of safety levels” was listed as a challenge by 22 per cent of respondents in the AMIR survey (bearing in mind that more than one item could be selected by respondents).17 Statistics show that there were 15 mining

fatalities in 2014, compared with 10 in 2013. (Mining fatalities include those that occur in the coal mining, oil and gas extraction, metal ore mining, gravel and sand quarrying, and services to mining sectors.)18

Of particular concern to mining occupational health and safety is the welfare of contractors who are more likely to be killed at work than permanent employees. From 2003 to 2013 statistics on the Queensland mining sector revealed that nine out of 10 people who died in the coal mining industry and 10 out of 20 people in the metalliferous mining industry were contractors.19

Another consideration in the safety of workers is the growing trend for mining organisations to outsource emergency and rescue management to third parties, including prevention, preparation, response and recovery phases. While this tendency has the potential to improve incident management, it also underlines the need for seamless and

connected communications between the third party organisation and the mining company, especially in the case of an incident.

Simon Lever, managing director of CROSS Asia Pacific Pty – an emergency response organisation – explains: “During the resources boom we have seen more operators outsourcing in order to bring in experienced and multi-skilled professionals with emergency response management as a core business. One of the issues facing operators – whether during construction/operation mode or programmed maintenance – is the inability to communicate as one organisation, particularly with subcontractors coming onto the site. This is critical in the time of an event when clear communication and time counts.”

MINING FATALITIES IN

IN AUSTRALIA

MINING IN THE TOP

MOST DANGEROUS JOBS IN AUSTRALIA

NINE OUT OF 10 MINING DEATHS IN QUEENSLAND WERE CONTRACTORS

MINING WHITE PAPERSTRENGTHEN MINING OPERATIONS WITH A RELIABLE COMMUNICATIONS BEDROCK

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MAINTAIN CONTINUOUS OPERATIONS

HOW CAN TECHNOLOGY HELP?The right technologies can deliver the precise benefits that mining organisations are looking for: greater productivity, reduced costs and better safety for workers.

The most obvious method to increase production is to prevent downtime. Any equipment downtime, even lasting a matter of minutes, can impact the productivity and profitability of mining operations, not to mention the risk to the entire operation and worker safety if voice and data communication systems are unavailable.Always on, always available network technologies must withstand the rigours of constant operation in difficult environments and have built-in redundancy to ensure uninterrupted service.

This means designing an architecture that conforms to required specifications and has redundancy in all key elements for voice and data, including call processing servers, routers and LAN switches. These features help to eliminate any single point of network failure. Base site redundancy options are essential, ensuring protection against multiple levels of failure, from component to subsystem to applications. Additionally, built-in fallback modes provide an additional secure service method in the unlikely event of base station link failures or multiple system failures. So what is the end result of having these features? It’s a network you can trust to keep workers safe and business operations running reliably and profitably.

Managing and maintaining your own communications technology and networks is expensive, and requires specialised expertise. One method of maintaining reliable continuity is to outsource various aspects of business operations.

From a communications perspective, an outsource model helps to ensure maximum network uptime with full system surveillance 24 hours a day. This enables communications infrastructure to run securely and reliably, ensuring its availability at all times. Many mining organisations around Australia have outsourced their remote operations and maintenance services,

enabling them to a focus on the core business of mining with the peace of mind that the communications system is reliable and always on.20

This trend is set to continue with Gartner estimating that “over the next two years, IT spending in the natural resources and materials sector will grow by a little over five percent and be worth more than AUD$5 billion as the emphasis switches from exploration to production.”21

Rio Tinto is the latest in a growing number of companies looking to make savings by outsourcing non-core process work to global suppliers:

“Like others in the mining industry, Rio Tinto is facing the challenge of increasing costs. We are actively seeking ways to reduce costs and improve productivity across the company. Our core business is mining and it makes sense to partner with other companies for back office and transactional work. We are working with our partners to find opportunities to reduce our costs in support functions like HR, finance, IT and procurement across Rio Tinto’s global operations.”22

Additionally, having no monitoring tools or a mix of different monitoring tools can make it difficult or even impossible for an organisation to accurately measure productivity. Outsourcing can provide organisations with a single, integrated, “big picture” perspective on productivity that could reveal patterns and allow managers to alter or streamline certain tasks or processes to optimise their operations.

Moreover, organisations cannot manage what they cannot measure. Outsourcing key elements of productivity measurement gives organisations the flexibility to focus on sustaining and growing their core operations and increase their competitiveness.

MINING WHITE PAPERSTRENGTHEN MINING OPERATIONS WITH A RELIABLE COMMUNICATIONS BEDROCK

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BETTER DECISION-MAKINGReliable, real-time data and information leads to better decision-making, helping mining organisations to be more nimble and to predict potential issues before they occur. The viability and efficiency of operations directly bear the impact of decisions made on the basis of data and its analysis. Solid accurate and up-to-date data means good decisions. Conversely, inefficiencies caused by a lack of visibility of important data are considerable and costly. Inaccurate modeling and decision-making can cost companies millions of dollars annually in productivity losses as well as increase the total cost of ownership.23

Modern mining generates considerable amounts of data, but using that data effectively is a real challenge for mining organisations.24

Technology solutions can help cut through complexity to provide easy access to accurate data, which in turn leads to better reporting and decision-making. Solutions that enable organisations to work smarter by accessing the most relevant information when needed, onsite or remotely, ensure extraction targets are met, correct tonnage weights are achieved and mineral grades are not mixed. Having the right communications technology can help streamline processes to maximise production, as well as track and monitor key aspects of the business in real time to optimise asset utilisation. In Jason Nitz’s article “The ‘Big Data’ evolution” he demonstrates that harnessing data can reduce cycle times (cycle times mean the length of time the truck takes for the load-haul-dump process) by one minute, which over a year can potentially yield an extra AUD$51.6 million in profit.25

CYCLE TIMES REDUCED BY 1 MINUTE = +AUD$51.6 MILLION IN PROFIT PER ANNUM

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PROTECT WORKERSMost importantly, reliable communications solutions will help protect mining teams – no matter how remote the location – and create a better workplace and more intuitive workflows.

Reliable, secure, mission-critical voice communications provide a lifeline at every phase of mining operations. When it comes to mine infrastructure, land mobile radio systems provide the critical link that delivers instant voice and data connectivity, enabling better collaboration across work teams.

Radios used in mining must keep workers safe and connected while withstanding the rigours of daily use in some of the most extreme environments in the world. Having loud and clear audio with noise suppression to ensure workers can hear and be heard is absolutely essential. ATEX/FM compliant devices are critically important in many hazardous and explosive

environments, particularly in coal mines where hydrogen is present. Portable radios should be designed with the user experience in mind, making them easy to hold and operate with or without gloves. A wide variety of impact housing colours – bright green, red or blue – can also help to organise the device pool based on specific functions or task while also ensuring radios can be seen easily in dark, dusty and dirty environments. The housing should be internally sealed so it can withstand water, heat and dust, even if the housing is cracked. Radios for mining also require large colour displays that can deal with frequently changing lighting conditions and which feature intelligent lighting, switching readily from day to night mode. Advanced battery technology that can go the distance, covering eight to 10-hour shifts, is another key requirement when communications downtime is not an option.

These purpose-designed devices should also support applications developed to improve mine productivity and efficiency. Two-way radio technologies make it possible to confirm tasks, provide location tracking via GPS and monitor lone workers.

Alert tones inform workers when blasts are occurring and warn them of potential dangers. Embedded man-down sensors add another layer of protection, automatically triggering an emergency alarm to send help. Radio sensors can also monitor worker health, environmental conditions and movement. Voice recording functionality provides not just a critical record of interactions for post-incident analysis, but

sophisticated applications can detect extreme fatigue or distress in the caller’s voice and alert the required personnel. Workers in mining industries are highly prone to fatigue and stress26, and a solution to identify early warning signs could assist greatly with the management of their occupational health and safety.

LOCATION TRACKING VIA GPS

ALERT TONESMONITOR LONE WORKERS

MAN-DOWN SENSORS

WORKER HEALTH SENSORS AND ALERTS

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MAINTAIN REAL-TIME VISIBILITY Just as important as rugged and reliable voice communications for managing worker safety is a constant, holistic view of the entire mining operation. Maintaining visibility and control over the mining operation – remotely or onsite – can help keep work practices safe, monitor changing conditions and minimise worker loss time to injury (LTI) but also help to keep operations running safely and at peak efficiency. With sensors, video surveillance and scanning connected to a reliable, secure wireless backbone, mine supervisors can make smarter, faster decisions to ensure efficient operation.

External monitoring: The remote control centre

Some mining organisations are already reaping the benefits of a remote operations centre, such as BHP Billiton Iron Ore which officially opened its Integrated Remote Operations Centre (IROC) in Perth in mid-2013, and the trend is set to continue.27

“This is a milestone in technology and innovation for Iron Ore and centralises control of our Pilbara-based mine, fixed plant, train and port operations in one location. For the first time we can see our total supply chain, in real-time and in one place, enabling us to proactively make the right decisions for the whole business,“ said BHP Billiton Iron Ore president Jimmy Wilson.28

Onsite command and control for better emergency management

An onsite command and control centre also provides great benefits, especially in effective emergency management. With real-time monitoring of the location of all personnel and equipment, a response to any incident is greatly enhanced. Data from GPS-enabled two-way radios constantly updates a console at a command and control centre so controllers can quickly see incidents on-screen and the location of affected workers, first responders and any potential dangers. This data provides an entirely new way of managing a critical incident.

For example, in an emergency such as a fire affecting part of the mine site, fire alarms are activated and the location of the emergency is displayed on the console using unique icons. The location of first, second and third responders is also displayed with unique icons for each. Security, safety and first responder management can dispatch needed resources and equipment in line with Health, Safety, Security and the Environment policies (HSSE) or social impact plans. Where necessary, escorts for responders (usually police, fire or ambulance) can be quickly arranged. Within minutes, injured workers are rapidly assisted and potentially affected workers evacuated to a safer location.

Lever, of CROSS Asia Pacific Pty, has seen this work firsthand: “By far the most important key to any incident management is communication, coupled with reliable and accurate information delivered on the spot. A communication system with the ability to “see” the location of actual personnel or equipment via radio GPS locations is so important for the fast response and execution of incident management, thereby reducing the chance of incorrect locations and loss of valuable time. Onsite command can get a snapshot view of the situation by looking at the onsite control panel without increasing over-the-air communication, allowing responders to carry out their role more efficiently. The time saved in the correct response reduces the risk of loss of life, asset loss and downtime to recovery.”

“Also, with sites now having more and more service providers in the field of emergency response, interoperability is paramount for a seamless and timely response approach. Having the ability to have control of correct processes of communication is critical. A timely response cannot be effective if there are two or three different communication modes on site. Integration via a control room is paramount. The right communication system is paramount for any business and the best business continuity tool an organisation can have.”

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CONCLUSIONThe challenges facing the Australian mining industry are significant: productivity must be sustained and maximised at a time when both the value and demand for commodities is in decline. Operating costs and wages remain high and emergency events pose significant and costly risks to the sector and its workers, with contractors over-represented in fatality statistics.

Effective communications technology is essential to mitigating and solving these issues. While voice communications have been and always will remain critical in mining operations, extending the capability of voice and data capabilities presents new opportunities.

Through these solutions productivity is not only improved but can be more accurately measured, enabling further performance analysis and improvement. Emergency responses can become faster and more efficient, minimising safety risks and loss time for workers and allowing for more effective communication with third parties involved in major incident management.

Most importantly of all, the wider use of solutions available today, including man-down, lone worker applications, GPS and other technologies, can help improve safety, ensuring that all workers get home safely at the end of their shift.

MINING WHITE PAPERSTRENGTHEN MINING OPERATIONS WITH A RELIABLE COMMUNICATIONS BEDROCK

FOOTNOTES

MOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. ©2015 Motorola, Inc. All rights reserved.

1. Binsted T, ‘Falling dollar tonic for Arrium’s iron ore pain’, Sydney Morning Herald, 5 January 2015 2. Latimer C, ‘The 2015 metals outlook series: Iron ore’, Australian Mining, 26 November 2014 3. Ibid 4. Mining for Efficiency, PricewaterhouseCoopers, August 2014, p 3 5. Frazer S, ‘Mining survey shows productivity now biggest industry challenge’, ABC News Online, 28 July 2014 6. Australian Mining Industry Report 2014, Mining IQ in assoc. with Shell, p 3 7. Mining for Efficiency, p 2 8. Validakis V, ‘Mining needs to leap forward by twenty years, Anglo says’, Australian Mining, 7 January 2015 9. Diss K, ‘Safety expert to develop autonomous worldwide mining safety standards’, ABC News Online, 17 September 2014 10. Court N, ‘The future in resources: next generation mining’, Australian Mining, 16 July 2013 11. Mine Site Automation & Communication Industry Report H1 2014, Mining IQ, p 2 12. Australian Mining Industry Report 2014, p 3 13. Roberts G, ‘Australian mining costs have rocketed to the highest in the world’, The Courier-Mail, 29 May 2014 14. Validakis V, ‘Energy companies balk at Australia’s high-cost environment’, Australian Mining, 4 March 2014 15. Heber A, ‘Top 10 mining trends for 2013’, Australian Mining, 22 January 2013 16. Ting I, ‘10 deadliest jobs in Australia’, Sydney Morning Herald, 20 October 2014 17. Australian Mining Industry Report 2014, p 6 18. SafeWork Australia, Worker fatalities, accessed 15 February 201519. Queensland Mines and Quarries Safety Performance and Health Report 1 July 2012–30 June 2013, Department of Natural Resources and Mines, Queensland Government, p 1 20. ‘Strategic outsourcing: Leveraging knowledge capabilities’, Magazine: Summer 1999, Research Feature, 15 July 199921. Birmingham A, ‘What do mining giants want from resellers?’, CRN, 31 March 2014 22. Smith P, ‘Jobs to go as Rio Tinto signs $100m outsourcing deal with IBM’, Financial Review, 22 October 2013 23. Haug A, Zachariassen F, van Liempd D, ‘The costs of poor data quality’, Journal of Industrial Engineering and Management, Vol 4, No 2 (2011)24. Nitz J, ‘The “Big Data” evolution’, Australian Mining, 14 January 2015 25. Ibid 26. Heber A, ‘R U OK? Mining fatigue initiative’, Australian Mining, 29 July 2013 27. Australian Mining Industry Report 2014, p 7; Envisioning the Future of Mining, IBM, p 20; MacFarlane M, ‘Technological Change is Coming to Mining’, Special Report on Mining Innovation, Dassault Systèmes GEOVIA, p 5 28. Crozier R, ‘BHP Billiton opens Perth remote control centre’, iTnews, 3 July 2013