Thriving in disruption: changing the mining game

As South Africa celebrates a generation of freedom, Anglo American acknowledges its deep roots in the country and looks ahead to its contribution in the next 25 years and beyond.Over the next five weeks experience 25 Reasons to Believe with City Press as we explore the economy, job creation, enterprise development, health, land reform, sustainability, education, technology and – most important of all – the communities

The transition to modern, sustainable mining is a necessity and an opportunity. SA should lead the way, says Anik Michaud 

Mining has always been an industry that enables human progress. Whether it is through the precious metals and minerals that make modern life possible, or mining’s direct economic contribution through royalties, taxes and employment, mining plays a part in all our lives.

Like every economic sector, mining is evolving. Technological innovation is fundamentally changing the nature of the industry. With technologies that are available today and others that we are developing, we can now imagine mines with smaller physical footprints. We’ll use more precise extraction techniques that will enable us to mine only the most valuable ore, thereby reducing waste, using a fraction of the energy and drawing almost no fresh water.

Anik Michaud made these observations at February’s Mining Indaba in Cape Town

These will be mines where people will be out of harm’s way, so everyone goes home safely at the end of each day. In a world of diminishing ore grades, constraints on water and energy, and the resulting increasing costs, the changes are not just an opportunity, they are a necessity if mining is to be truly sustainable – in every sense. These changes are a non-negotiable for a mineral-rich country like South Africa to compete for capital and grow its mining industry.

While these changes are exciting and aligned with society’s rightly increasing expectations of us as an industry, some may feel unsettled about what role they will play and what it may mean for jobs. The reality is that no one knows exactly. What we do know is that mining is not alone – the fourth industrial revolution is upon us. So, in considering the implications, we will need to work in partnership with governments, labour, other industrial players, academic institutions and civil society to capture and responsibly manage the enormous opportunities that we see.

At its most basic level, think of a truck driver. They won’t necessarily need a driving licence and be physically in a truck to drive it. As autonomous trucks become the norm, the driver will instead control the truck from cutting-edge operation centres, utilising digital skills and technology to optimise efficiency. These shifts are well under way across the global industry, including in South Africa, and are opening up employment opportunities to a far greater diversity of people.

The nature of work is changing, the type of employment may change and the relationship between mines, their host communities and governments is likely to change. We must all be ready and repositioned for a future that embraces, and manages, this change responsibly. Together, we must build our “social licence to innovate”.

What we do know is that mining is not alone – the fourth industrial revolution is upon us. So, in considering the implications, we will need to work in partnership with governments, labour, other industrial players, academic institutions and civil society to capture and responsibly manage the enormous opportunities that we see.
Anik Michaud

This may mean a new social contract for mining in South Africa, one where innovation is seen as an enabler for mining’s sustainability as a business activity and one where economic opportunities in mining communities are not so reliant on mining.

To thrive in this new world, we must focus on education and training that is targeted at the skills required for mining’s (and other industries’) future – re-skilling our employees for broader opportunities and higher paying jobs. We must also collaborate with government on sustainable job creation programmes, and creating a modern and agile regulatory framework that fosters innovation and supports mining’s contribution to society. Forging this new approach will require a concerted effort by mining companies, governments, labour and communities to imagine a different future for the mining industry.

Ultimately, mining’s contribution to regional economies will continue and grow, but it will inevitably look different.

While Anglo American doesn’t have all the answers, we recognise that we must act.

Our efforts to realise sustainable development opportunities are based on what we call “collaborative regional development”. Partnerships and engagement characterise this approach. The aim is to identify socioeconomic development opportunities where new industries can flourish in a region through spatial planning and analysis.

Spatial planning enables us to start addressing issues in space and context. We can gather, collate, clean, improve and analyse large quantities of spatially referenced data from across a single region. This integrated approach provides the analytical support needed to identify economic opportunities and social challenges and determine how they are interrelated.

By working through partnerships, we are better able to deliver on our commitment to help facilitate long-term, sustainable development in our host regions, far beyond the life of the mine.

The substance of the model is important, but the process is critical to its success. We can only do this in collaboration with regional and municipal governments, other mining companies and industries, nongovernmental organisations and our communities – each bringing their own expertise, commitment and resources. It requires deep partnership and trust to help us map out a developmental path for mining communities to navigate this evolution in a sustainable way.

At Anglo American, we see the transition to modern, sustainable mining both as a necessity and as an opportunity to realise. South Africa should lead the way. To thrive, we must all embrace innovation. Doing so will unlock long-term opportunities for this great nation and all her people.

Anik Michaud is group director of corporate relations at AngloAmerican

Donovan Waller, group head of technology development at Anglo American, answers questions about the company’s FutureSmart Mining™ approach

Group head of technology development at Anglo American, Donovan Waller

What disruption is the mining industry facing globally?

Mining faces myriad challenges, from diminishing ore grades and availability of water and energy, to the increasing cost of extracting ore safely (particularly in deep-level hard-rock mining) and getting it to market.

We are moving 16 times more material, using 16 times as much energy and double the water to extract the same copper equivalent value as we did more than 100 years ago. This is clearly an unsustainable path.

As stewards of the Earth’s natural resources, we need to be precise in what and how we mine. Technology is shaping the journey to extracting and stewarding only what we need.

Concentrated Mine: Picture a mine that precisely targets the 5% of mineral or metal, without processing the 95% of waste rock to get to it – with all its associated costs, and energy and water usage

This is why we’ve developed FutureSmart Mining™, our innovation-led approach to sustainable mining.

This approach is not just about technology or the financial balance sheet; it’s also about a “sustainability balance sheet”, if you will. It began as a purely technical programme, but it didn’t take long to understand that environmental impacts, with people impacts – communities – were really an integral part of our Sustainable Mining Plan. In many ways, FutureSmart Mining™, in a technical sense, grew a heart and is driving us towards our sustainability and responsibility goals.

Why do you think South Africa needs to embrace innovation to secure the future of the mining industry?

The reality is that mining will have to be very different if it is to thrive for years to come in South Africa and elsewhere. For us, innovation is about more than the disruptive technologies that will continue to transform our business. It is about integrating broad innovative thinking with sustainability in all its forms – environmentally, socially, economically and politically.

Our belief is that we must be sustainable and innovative to supply everything the world needs. In other words, we are committed to continually improving safe, responsible production and reducing our physical footprint to become carbon neutral and positive in biodiversity, while adding value to the development of our communities in South Africa.

South Africa itself can embrace this step-change challenge and compete on the world stage with other mining jurisdictions. The conversations at play are encouraging and it is exciting that South Africa has an opportunity to host a new, modern mining industry that will continue to play a positive role in shaping and driving the country’s growth and development.

Anglo American sees this opportunity through our FutureSmart Mining™ approach. It is our innovation-led approach to sustainable mining and encompasses step-change innovation that will transform the nature of our industry – and society – from how we mine, process, move and market our products, to how we partner with our stakeholders in South Africa, our operations across the world and throughout our global value chains.

Waterless Mine:Picture a mine extracting precious resources without the need for fresh water

Why is this kind of thinking important for South Africa?

If South Africa’s mining sector is going to be competitive, we must be smarter and more cost-effective by using new (and existing) technologies and integrated thinking on sustainability to materially improve how we operate, and how we deliver value for all of our stakeholders. The Sustainable Mining Plan is driving us towards making mining more sustainable than before.

It’s clear that, to transform the debate about the nature of mining, we must bring everyone with us on the journey. We cannot reimagine mining in isolation. By partnering and using open innovation principles, we are accessing many more technologies and approaches than we would have done otherwise.

What are some examples that point to the practical application of FutureSmart Mining™ in South Africa, as well as the potential value it is creating or will create?

Some examples stand out in our FutureSmart Mining™ efforts in South Africa:

  • At our Amandelbult Platinum mine, we are working to combine rock-cutting, shock-break and hydraulic hoisting solutions (modern mine) to remove the need for a new shaft, replacing it with a pipe instead. In addition, by pumping material to the surface or to other backfill locations, this new mining process should incur significantly lower operating and capital costs.
  • We have brought bulk ore sorting to our Mogalakwena Platinum mine in Limpopo following a successful implementation at El Soldado Copper mine in Chile.
  • This technology brings substantial energy, water and overall productivity benefits by rejecting waste rock earlier in the process.
  • We have already embraced various technologies, including autonomous vehicles to improve productivity and safety, as well as the use of drones to collect data and conduct aerial monitoring at Kumba Iron Ore’s Kolomela and Sishen mines.
  • Another exciting development that we are proud of is our Sustainable Mining Plan. We launched the plan last year as part of our FutureSmart Mining™ approach, which sets out a series of deliberately ambitious commitments to achieve by 2030, alongside milestones in 2020 and 2025.

One of the stretch goals we have, as part of the Sustainable Mining Plan, is to position our schools in our host communities within the top 20% of state schools by 2030.

Last year, we identified 100 schools and 100 early childhood development centres to participate in the programme in partnership with the department of basic education and with the support and endorsement from Basic Education Minister Angie Motshekga and her team.

We are making good progress on this front and expect to see some positive results in the next few years.

You can see from the examples I’ve given that FutureSmart Mining™’s impact is clearly substantive given its broad scope and ambition. It will certainly transform and redefine Anglo American over the next few years.

It will also lead in changing the nature of mining and its place in the world, and, certainly in our view, for the better.

Safety is a big challenge for South Africa’s mining sector. How will your work on innovation improve safety?

Safety is our number one priority.

We’ve been on a journey to fundamentally change our safety performance, particularly around fatalities. What we’re seeing is that there is a need for a new generation of engineered controls to reduce the exposure of people to risk in the work process.

In an underground environment, the way we will address that effectively is to remove colleagues from high risk areas, and that’s where remote technologies and rock-cutting play a role.

Intelligent Mine: Picture a mine where data science and machine learning combine to create a truly smart mine, transforming vast quantities of data into predictive intelligence (from sensor to boardroom)

If you look at most underground mines around the world, they are constrained around their strategic development and never have enough stoping areas open to get flexibility of grade if the rock conditions aren’t what they expected. I would expect that, if we can change the whole nature of the development of underground mining – for example, by using technologies for hard-rock cutting – some of the underground mines today that are stressed in terms of cost will be safer and more competitive, in line with open pits.

Some would argue that there are a number of companies that are also thinking about innovation. How well do you compare against other mining companies, particularly those that also have operations in South Africa?

I believe our programme has a holistic focus. It looks at the entirety of mining – from what we extract, to our impact on communities, the environment, the value our shareholders get in return and how this lands up in one shape or another in products that people use in modern life across the world.

In one of our recent analyst forums, we received some very encouraging feedback.

There is a renewed sense that Anglo American is the leader in innovative and sustainable mining, and that this positions us well in the medium term as we have the best and clearest growth strategy among our global peers.

So it’s clear from some of this feedback that the market is starting to see FutureSmart Mining™ for the game-changing potential it has and as a great differentiator from our peers.

Have you ascribed any potential financial gains to the implementation of FutureSmart Mining™ within Anglo American? If so, how will Anglo American benefit from this?

Through the technology and innovation work, as part of FutureSmart Mining™, we expect to see a $1 billion uplift in earnings before interest, taxes, depreciation and amortisation by the end of 2022.

Of course, these are gains that will happen across the company, but with more than a third of our shareholders in South Africa – including the pensions of hundreds of thousands of South Africa’s public sector employees – I expect they will be pleased to see these kinds of material returns.

This is in addition to the environmental and societal gains that we will achieve through this programme – all of this is important for South Africa’s mining sector.


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