‘Mining will not recover; it will evolve’
Being cyclical, the revival of the mining industry was never a question of ‘if’, but rather of ‘when’ and, more importantly, of ‘what’. When will the industry emerge from the downturn in the face of lengthening cycle times? What kind of mining industry will resurface from the ruins of the recession? In an exclusive interview, Majid Zahid, Group President of the Zahid Group's Energy Division, under which is temporary power provider Altaaqa Global, discusses the crucial role that electricity and technology played in the industry’s observed gradual resurgence.
The
mining industry is enduring a period of great uncertainty. In the face of extreme market volatility, stagnant commodity prices, weak demand for products, and suppressed levels of economic growth in established markets, many mining companies around the world are striving to remain buoyant.
In their quest to victoriously emerge from the recession, many miners have implemented cost-cutting initiatives aimed at maximizing customer value with fewer resources. Others have chosen to be cautiously proactive and embarked on exploration programs in a bid to boost long-term profitability. Some have turned to technology to optimize processes and facilitate existing methods.
Part 1: Streamlining operations
Going lean has now become one of the central trends in the industry, as mining companies seek to concurrently reduce manpower, capital, and energy intensity; exploit growth opportunities and maximize the value of their products and services.
“In a highly volatile market”, says Majid Zahid, Group President of the Zahid Group's Energy Division, under which is leading global temporary power provider
Altaaqa Global Caterpillar Rental Power, “it is essential for mining companies to strike a balance between controlling costs and capitalizing on growth prospects and profitable opportunities. It is, therefore, imperative for them to ensure the efficient utilization of their working capital.”
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| Majid Zahid, Group President, Energy Division, Zahid Group |
Zahid is of the view that power generation and supply represents an area where mining operations can make significant adjustments to their capital expenditure. “Electricity,” he says, “remains to be the life-blood of mine sites anywhere in the world. However, with the present economic situation, mine operators cannot afford to devote, rather strap, a large portion of their scarce capital to a major expenditure, like a permanent power plant. Considering this, mine operators can instead choose to hire
multi-megawatt temporary power solutions.”
A consistent, dependable and sufficient supply of electricity is vital throughout the life-cycle of a
mine operation. “Temporary power plants,” says Zahid, “can adequately provide for the electricity needs of a mine site. They can power camp sites during pre-feasibility, feasibility and exploratory stages, and support the establishment of the mine operation after a successful exploration. They can provide power to the machinery and the processing plants, and also to the temperature-control equipment. Obviously, they can also provide the necessary power for expansion.”
“Multi-megawatt temporary power plants could not be more relevant to the mining industry than in these times,” says Zahid, and adds that renting power is a logical decision for any miner looking to effectively streamline its operations.
“For instance, in this economic climate, one cannot overstate the importance of precise allocation of funds and of better management of financial resources. A key benefit of renting power is that payment schedules are fixed and regular over a contracted term. This can help mine operators formulate accurate financial forecasts.”
“Along this line, mining companies should also be mindful of associated costs that come with building or purchasing a permanent power plant.” He calls to mind the cost of spare parts and ancillary, which, he says, are indispensable to the continuous operation of a permanent power plant. “When a mine operator goes for the rental option, all spares and ancillary will be provided by the temporary power company.”
Zahid says that
renting multi-megawatt power plants can also prove beneficial for mining companies seeking to optimize their manpower resources. “Mine operators will be happy to know that in hiring power plants, they will no longer need to employ new operators or allocate or re-train existing staff members to manage the plant. Temporary power providers will provide the necessary expert engineering services to ensure the faultless operation of the power station.”
Temporary power plants can also assist in reducing the energy intensity of mine operations. “Hiring power plants will preclude the chances of generators being under-utilized because the capacity of rental power generation equipment can be increased or decreased with respect to the demand of specific mine processes.”
Zahid says that as conventional power plants are usually specified to meet the peak demand of a particular site, they are left under-utilised when the power requirement decreases. “When a power plant is running at part-load, it consumes fuel less efficiently. This will no longer be the case with rental power plants on board, thanks to their flexibility and scalability.”
Part 2: Refocusing on exploration
At the peak of the industry recession, many mining companies dramatically slashed their exploration budgets in the interest of making quick cost savings. SNL Metals and Mining, a global provider of mining information and analysis, supports this observation as it reports that global exploration expenditure declined by 26% in 2014, while exploration budgets nosedived to USD 11.4 billion from USD 22 billion in 2012.
However, industry insiders, like Deloitte, a global provider of financial advisory services, caution that huge cuts in growth CapEx and exploration budgets may have extensive adverse consequences for the miners and the industry at large. Sustained exploration, they say, position mining companies for growth once the market turns. Thus, they warn that foregoing the opportunity to stake early claims may be counter-productive to long-term profitability.
And the industry appears to have heeded their advice, as mining companies and governments have gradually re-focused on exploration activities and identification of new potential assets.
“Exploration”, says Zahid, “is the growth stimulus of the resources sector. Hence, having sufficient power to sustain this crucial activity is fundamental.”
Zahid says that renting power during the exploration stage of a mining operation yields myriad advantages. “By hiring temporary power plants, mining companies will have the freedom to start with a small power plant, and then grow as operations expand. When the long-term prospect of a project is still uncertain, it may not make sense to invest in permanent facilities.
Renting power, therefore, protects companies from the uncertain future of mining projects at the exploration stage.”
He also speaks about the latest temporary power technologies which make rental power plants operable anywhere in the world. “Rental power plants are highly suitable for exploration activities in remote areas because they are containerized and modular, so they are easily transported and installed. The latest-generation temporary power plants have state-of-the-art switching and transformation systems that give them the ability to connect to any location’s grid, regardless of its age, quality or condition. This is possible even without a sub-station, as the same systems allow the power plants to assume the role of a sub-station and connect to available overhead lines or transformers.”
“Temporary power plants also have cutting-edge electric power control and protection systems, which allow them to switch operational mode, from grid to island, to base load or to standby at a push of a button in mere minutes. This is particularly useful for
mining companies whose exploration activities take place in areas unconnected to the grid.”
Part 3: Embracing Innovation
In recent years, the mining industry has seen a slew of technological innovations. Technologies once regarded as tangential to the industry are now being tailored to respond to the needs of mining companies. Many of these innovations revolve around automation and the technological optimisation of established processes, primarily in response to the industry’s need to reduce costs and ramp up operational efficiency. And while some mining companies have opted to remain conservative in terms of uptake, many miners are gradually embracing the available technologies in a bid to future-proof their operations.
In a recent interaction with
GineersNow, a global engineering magazine, Jean Savage, Chief Technology Officer and Vice President for Innovation and Technology Development at Caterpillar, affirms the crucial role that equipment manufacturers play in shaping the future of mining operations: “Caterpillar has spent over 90 years committed to innovation and technology that help our customers succeed. Most of this innovation has been “in the iron”. Now, our focus has to be on making the iron ‘smart’.”
“Making the iron ‘smart’ means bringing digital solutions designed to improve productivity, efficiency, safety and profitability to our customers. This is not technology for technology’s sake. It is technology that’s focused on solving, and even anticipating, customer problems. We are taking the machines, locomotives, engines and parts we’re so well known for and making them smarter, while also equipping the people who operate them with data that makes them more productive, enhances their safety and improves sustainability.”
Zahid concurs: “Caterpillar believes that be an innovator, a company must be working directly in the service of its customers. As part of the Caterpillar family, we at Altaaqa Global are proud to be well positioned to offer our clients in the mining industry the latest technologies in temporary power generation.”
“For example, it is now possible for our engineers to monitor the status and performance of our engines from any location through Cat Connect. This gives us, temporary power providers, relevant insights on the go, so we can better manage our equipment, optimize their performance or perform preventive maintenance, if necessary.”
“There is also the Cat MicroGrid Solutions, which now allows renewable solar and wind power systems of any size to be delivered to and installed in literally any location on earth. In tandem with our temporary power plants, the solution guarantees a reliable, sufficient and sustainable power supply to any mining operation anywhere in the world.”
“There are also allied technologies gaining traction within the industry. Among these are drones, which can now be used to survey mining sites before breaking ground; 3-D printers, which can now print replacement parts; and augmented reality, which can now be used by technicians to simulate repair cycles. As these technologies are developed in the coming years, we at Altaaqa Global will definitely look into possible ways of integrating them into our systems and processes to further improve our products and enhance the service we deliver to our customers.”
“The list of technologies on offer goes on. And as equipment manufacturers and service providers continue to closely work with their customers to learn more about what they need to drive the growth of their businesses, the number of available technologies will continuously increase.”
The Bigger Picture
Just as the industry went tumbling down on the heels of the boom, industry insiders believe that it is poised for a gradual recovery in the coming months. The green shoots are emerging: Commodity prices are strengthening across the board, commodities has returned to a bull market, and many mining companies are seeing a consistent recovery in value. While the market remains cautious, it welcomes the early signs of the industry’s revival.
But perhaps, ‘recovery’ does not aptly define mining’s next cycle. The recent downturn pushed the industry to redefine itself. In the face of adversity, many mining companies adopted a fresh take on how they operate, allocate resources, engage with technology and seize growth opportunities. What were originally corporate strategies implemented to survive the so-called winter have disrupted the industry and, to a large extent catalyzed its transformation. With miners rising from the downturn stronger and smarter, the next cycle of the mining industry will not only be a recovery – it will be an evolution.
-Ends-
Sources consulted:
1.
“Top 10 Trends for Mining in 2016”. www.australianmining.com. 17 August 2016.
2.
“Caterpillar: More than Just a Business”. GineersNow. Issue 9. November 2016.
3.
“Big Data for All”. www.caterpillar.com.
