BDO'S ENERGY 2020 VISION: THE NEAR FUTURE OF MINING
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BDO’S ENERGY 2020 VISION: THE NEAR FUTURE OF MINING
CONTENTS EXECUTIVE SUMMARY........................................................... 01 GLOBAL PREDICTIONS...........................................................02 THE NEAR FUTURE OF MINING IN CANADA.....................08
01 EXECUTIVE SUMMARY
Driverless technology, deep-sea internal controls. If not, they risk SUMMARISING BDO’S 4. RENEWABLES:
excavations and mining expeditions seeing their entire operation crippled ENERGY 2020 VISION FOR By 2020, renewables will account for
on the moon were once just the ideas by a single attack. MINING: one-quarter of the world’s electricity
of sci-fi movies. generation as dependence on coal
Decreased coal consumption in 1. ROBOTS:
wanes.
Today, they’re realities or just around China—the world’s largest coal By 2020, robots will replace more
the corner. And by 2020, we expect consumer—meanwhile, is slowing than 50 percent of miners, and mining 5. IoT IN MINING:
(most of) them to be the norm. global demand for the commodity. As accidents will be cut by 75 percent. Global mining companies leveraging
dependence on coal wanes, we expect Half of the miners will themselves Internet-connected sensors and
As low commodity prices persist,
renewables to account for one-quarter be retrained to run the technology automated drillers in mines will
mining companies are under pressure
of the world’s electricity generation controlling the robots. decrease their per ton digging costs by
to reimagine their business models.
by 2020. more than 30 percent.
Those that have incorporated 2. EU CONFLICT MINERALS:
technology into their operations have Reflecting on this period of transition, Supply chain transparency will take Agree or disagree with our
CHARLES DEWHURST seen their revenue streams live on, BDO’s Global Natural Resources team the compliance spotlight for 2020 as predictions? We want to know—reach
t: + 1 713-548-0855 while those that haven’t have fallen is looking towards the future to help companies gear up for the European out to us here.
e: cdewhurst@bdo.com short. mining companies anticipate and plan Union’s Conflict Minerals Rule,
CHARLES DEWHURST
for the challenges and opportunities effective in 2021.
Mining is in the early stages of the Global Natural Resources
ahead. We believe that to prepare for
Fourth Industrial Revolution, or 3. CYBERSECURITY: Industry Practice Leader
success in 2020 and beyond, mining
“We expect renewables Industry 4.0, and further digitisation
companies must strive to become
By 2020, activist hackers will launch +1 713-548-0855
is on the horizon. The value of at least five cyberattacks on mines cdewhurst@bdo.com
to account for one-quarter harnessing technology is obvious.
“Lean, Green, Digital” machines.
around the world in Permanent Denial
of the world’s electricity Driverless technology increases The global predictions presented in of Service (PDoS) attacks aimed at
generation by 2020.” mining output by 15 to 20 percent this report are based on research and eliminating the environmental and
while cutting fuel and maintenance collective input from BDO’s Natural social threats they pose. They’ll use
costs by 10 to 15 percent and 8 Resources and Mining leaders. In workers’ connected devices to initiate
percent, respectively. It also improves addition, the practice leaders from the attacks.
mining safety exponentially. At five countries (Australia, Canada,
the same time though, these South Africa, the United Kingdom,
Internet-connected technologies and the United States) have provided
open the mining industry up to predictions for the industry in their
new cyberattack vectors that they local markets.
must hedge against through proper
02
BDO’S ENERGY 2020 VISION:
THE NEAR FUTURE OF MINING
GLOBAL PREDICTIONS
03
WHEN ROBOTS RUN THE MINES
PREDICTION 1
ROBOTS
BY 2020, ROBOTS WILL Robots will be at the forefront of The rise of the robot is not a death Digitisation also promises to reduce
REPLACE MORE THAN 50 most mineral extraction by 2020, knell for the mining workforce but safety risks for miners. Not only will
PERCENT OF MINERS, AND reducing safety risks for miners, will inevitably lead to a demand for robots assume the most dangerous
MINING ACCIDENTS WILL maximising output, and streamlining reskilling. Traditional operational tasks, but they’ll also be key to
BE CUT BY 75 PERCENT. costs. By 2020, we predict robots positions—drilling, blasting, and minimising damage if disaster strikes.
will replace most miners. Most in driving—will be downsized, but Snake robots and the smart sensors
HALF OF THE MINERS WILL
the workforce will be retained, but replaced by demand for remote they’re equipped with will be further
THEMSELVES BE RETRAINED advances in technology and remote operators and maintenance optimised to capture real-time
TO RUN THE TECHNOLOGY mining equipment will transform personnel to create the new version data to predict or quickly identify
CONTROLLING THE what that workforce looks like. of the miner. Emerging digital equipment malfunctions and closely
ROBOTS. mining jobs—engineers, software track miners’ exact locations and
The global mining industry is already
developers, and data processing and vitals. With the aid of robots and new
well-acquainted with autonomous
data analytics specialists—are more technology, the number of mining
technology. Self-driving trucks and
likely to attract the technologically fatalities will be cut in half by 2020.
autonomous drillers and muckers
savvy millennial workforce. By
are employed onsite at almost Mining is in the early stages of the
2020, mining automation and data
every large multinational company’s Fourth Industrial Revolution, or
analytics will be key components of
mines. “Snake robots”—named Industry 4.0, and further digitisation
the curriculum for mining engineers.
for their agility—are equipped is just around the corner.
with Internet-connected sensors
and used to navigate narrow mine
shafts and collect data. Drones
are also beginning to play a role
in mapping the topography of a
mine and capturing aerial images
of inaccessible areas of the mine
to identify possible vulnerabilities
and areas of tension. Remote vein
miners (RVMs) are being developed
to eliminate the need to drill and
blast to excavate rock—potentially
reducing rock stress that can lead to
seismic events.
04
TRANSPARENCY COMBATS CONFLICT
PREDICTION 2
EU CONFLICT MINERALS RULE
SUPPLY CHAIN The EU’s efforts to stem trade in • The Organisation for Economic
TRANSPARENCY WILL minerals that finance armed conflicts Co-Operation and Development
TAKE THE COMPLIANCE and terror groups will turn a spotlight (OECD) laid out a five-step
SPOTLIGHT FOR 2020 AS on global mining companies’ supply framework for the due diligence
COMPANIES GEAR UP FOR chains by 2020. requirements:
THE EUROPEAN UNION’S The EU’s Conflict Minerals Regulation, -- Create strong company
(EU) CONFLICT MINERALS effective in 2021, establishes supply management systems
RULE, EFFECTIVE IN 2021. chain due diligence for imports of -- Identify and assess supply chain
tin, tantalum, tungsten, and gold risk
(3TG)—used to produce phones, cars,
-- Implement a program to
and jewellery. The rule aims to ensure
respond to such risks
European industries use responsibly-
sourced minerals, stemming proceeds -- Conduct an independent third-
that finance armed conflict in high- party audit of supply chain due
risk areas. diligence
What the rule means for the mining -- Submit annual reports on
supply chain due diligence.
industry:
• EU-based 3TG importers and All upstream companies are subject
their international supply chain to the due diligence requirements
partners—smelters and refiners— when they import—the riskiest
will need to update their supply area of the supply chain—as are
chain due diligence downstream companies that import
metal-stage products. This regulation
• Additionally, 3TG importers in
the EU will need to identify the will likely create a lowest common
smelters and refiners in their denominator effect across the global
supply chains, confirm their due mining industry—for EU-based 3TG
diligence practices comply, and importers and their international
report insufficient supply chain supply chain partners—requiring the
due diligence entire industry to put supply chain
due diligence at the forefront.
05
HACKTIVISTS TARGET MINES
PREDICTION 3
CYBERSECURITY
BY 2020, ACTIVIST HACKERS The mining industry is no stranger PDoS attacks are the next generation operating controllers and connected
WILL LAUNCH AT LEAST FIVE to environmental scrutiny. of Distributed Denial of Service devices. Damage and disruption to
CYBERATTACKS ON MINES Advances in technology have (DDoS) attacks—which temporarily automated equipment could also
AROUND THE WORLD IN introduced more sustainable mining disable operations—and aim for jeopardise the safety of workers in
PERMANENT DENIAL OF methods, including the emerging permanent destruction. In a PDoS the mines—as many of the systems
practice of bioleaching, in which attack, hackers’ goals include in place are designed to monitor and
SERVICE (PDOS) ATTACKS
companies extract minerals by destroying physical equipment and detect dangerous conditions.
AIMED AT ELIMINATING using biological assets instead of structures, disabling services, and/
THE ENVIRONMENTAL AND harmful chemicals. Despite those or wiping out data. For global mining
SOCIAL THREATS THEY POSE. advancements, environmental companies in the early stages of
THEY’LL USE WORKERS’ concerns persist, including water harnessing big data, losing seismic
CONNECTED DEVICES TO and soil contamination, carbon and reserves data would be damaging
LAUNCH THE ATTACKS. emissions, and impact on animal life. to their ongoing operations.
Pressure from environmentalists is
While the rapid acceleration and
set to increase by 2020. In fact, an
adoption of new technology will be
emerging type of environmentalist—
instrumental in bolstering mining’s
activist hackers (hacktivists)—will
future, it will also be the sector’s
soon have their targets locked on
Achilles heel when it comes to
the mining industry. By 2020, there
cybersecurity. The industrial control
will be at least five Permanent Denial
system, the central hub controlling
of Service (PDoS) cyberattacks on
a mine’s automated operations,
mines around the world, motivated
could serve as the hacker’s point
by eliminating the environmental and
of entry into the mine’s remote
social threats they pose.
06
COAL STRIPPED OF SOME POWER
PREDICTION 4
RENEWABLES
BY 2020, RENEWABLES Decreased coal consumption in Mining plays an integral behind- In 2019, Nautilus Minerals, a
WILL ACCOUNT FOR ONE- China—the world’s largest coal the-scenes role in developing Canadian mining firm, is set to
QUARTER OF THE WORLD’S consumer—is slowing global demand renewable energy. Electric vehicles, launch one of the first large deep-sea
ELECTRICITY GENERATION for the commodity. According to the wind turbines, and solar panels rely mining ventures in the Bismarck Sea
AS DEPENDENCE ON COAL International Energy Agency, global on minerals like aluminium, copper, with the aid of remote-controlled
coal consumption decreased about lithium, and various emerging, rare robots. The excursion is forecast to
WANES.
2 percent last year. In confluence metals. Powered by new technology, produce more than 72,500 metric
with the rapid growth of renewables, deep-sea mining is allowing mining tons of copper and more than 4.5
the world’s energy mix is set for a companies to tap into previously metric tons of gold. The International
shakeup. By 2020, we predict that inaccessible reserves of copper, Seabed Authority, a United Nations
renewables will grow to account for nickel, and cobalt, among others, regulatory body, has granted 25
one-quarter of the world’s electricity beneath the ocean floor to fuel contracts to nations including China,
generation as dependence on coal increased demand for these minerals. India, Japan, and Brazil to embark on
wanes. similar deep-sea mining projects.
By 2020, further advancements
will be made to overcome one of
renewables’ largest hurdles: energy
storage. The world’s largest lithium
ion battery—built by Elon Musk in
November 2017—is a 100-milliwatt
(MW) battery storage farm located in
Australia. Come 2020, the capacity
of energy storage is likely to evolve
well beyond 100MW, solidifying
renewables’ role in the world’s
energy mix.
07
AN ARSENAL OF AUTOMATION
BOOSTS PROFITABILITY
PREDICTION 5
IOT IN MINING
GLOBAL MINING COMPANIES In an environment of subdued Tapping into new technology is key These savings factor in reduced
LEVERAGING INTERNET- commodity prices, the value of to streamlining operations, reducing labour costs, increased output, a
CONNECTED SENSORS AND harnessing technology is clear. expenditure, and enabling companies decrease in the number of safety
AUTOMATED DRILLERS IN Mining companies’ end consumers to keep their prices competitive. incidents, and companies’ ability to
MINES WILL DECREASE THEIR closely monitor the price of The International Institute for enhance decision-making capabilities
commodities and are sensitive to Sustainable Development estimates leveraging the vast amount of data
PER TON DIGGING COSTS BY
the slightest uptick. For automakers, driverless technology, for instance, collected by smart mines.
MORE THAN 30 PERCENT. for example, steel is a significant increases mining output by 15
expense on their books. When to 20 percent, while decreasing
multiplied by a few thousand metric fuel and maintenance costs by
tons, a variance of a few cents 10 to 15 percent and 8 percent,
on steel price could incentivise respectively. Self-driving trucks are
automakers to find a new supplier. just the tip of the iceberg. Global
Global demand is not expected mining companies that digitise
to wane. In fact, steel and mining nearly all their drilling—relying on a
company ArcelorMittal forecasts a combination of automated drillers
36 percent increase to automakers’ and Internet-connected sensors—
global demand for steel by 2020. will recognise far more significant
However, which global mining savings. By 2020, we predict global
companies win that business is up mining companies’ per ton digging
for debate. costs will decrease by more than
30 percent because of automation.
08
BDO’S ENERGY 2020 VISION:
THE NEAR FUTURE OF MINING
IN CANADA09
DIGITAL: NO LONGER A BUZZ TERM
PREDICTION 1
MINING DIGITIZATION
BY 2020, "DIGITAL" WILL NO Digitization may not necessarily be
LONGER BE A BUZZ TERM, new to mining, but the industry is
AND BLOCKCHAIN WILL just now figuring out how to get the
BECOME A NECESSITY. most out of it.
Companies like Goldcorp, CISCO,
AWS, Microsoft, and Barrick Gold
have sponsored numerous developer
hackathons in recent years. The
sector has seen multiple waves of
digital transformation since the
1950s—from computer simulations
to modern GPS-controlled heavy
haulers. But how much has the
industry benefited from previous
digital waves, and how much will it
benefit from the latest wave?
We see blockchain as the next
wave—becoming a necessity to
Canadian mining companies by
2020. Think of blockchain as a
version of the Internet that can
carry out various transactions but
is virtually impossible to hack. It
has the potential to revolutionize
financial services by making
transactions cheaper, quicker, and
more transparent and trustworthy.
Blockchain in 2020 will change
the mining and metals industry in
Canada by lowering costs in mid and
back offices.10
DIVERSIFYING THE WORKFORCE
PREDICTION 2
EXPANDED LABOR FORCE
BY 2020, NEW AND The mining industry, both in Canada At the end of 2017, in an effort to
RECENT IMMIGRANTS, and abroad, faces many human combat this problem, the Canadian
ABORIGINALS, AND resources challenges. We see government announced a 7 percent
WOMEN WILL CONTINUE TO diversification as the answer. increase in its target for permanent
MAKE UP THE PERSONNEL resident admissions. Other proposed
Competition for skilled workers
actions to address the mining
SHORTFALL IN CANADA’S is fierce both within Canada and
workforce shortage in Canada
GROWING MINING SECTOR. globally. In fact, companies in other
include:
countries are actively recruiting
Canadian graduates and workers, • Promoting the industry to youth,
making retention challenging and aboriginal peoples, and non-
recruitment highly competitive. traditional worker groups
According to Natural Resources
• Developing programs that bring
Canada, the Canadian mining
back retired workers, retain older
industry will need to hire 106,000
workers, and increase mentoring
new workers by 2025.
• Improving educational programs
and employer-provided training
• Introducing standards for key
occupations to facilitate domestic
worker mobility and skills
recognition.11
BITCOIN OR GOLD: THAT IS THE QUESTION
PREDICTION 3
FINANCIAL REGULATION
BY 2020, THE DEBATE OVER Bitcoin or gold—that is the question
BITCOIN VERSUS GOLD for the mining industry in Canada.
WILL ONLY INTENSIFY AS But the answer may be harder to
FINANCIAL REGULATORS come by as financial regulators seek
LOOK TO CONTROL greater control over the former.
THIS NEW MEDIUM OF We see several factors—including
EXCHANGE AND AVOID regulation, meteoric rises and falls in
ANOTHER DOTCOM BUST. Bitcoin value, currency wars, crypto
currency hacking, and another major
recession—putting gold back in the
top seat.
Bank of Canada Governor Stephen
Poloz is sounding the alarm on
Bitcoin, calling the purchase of the
cryptocurrency “closer to gambling
than investing.” In a December
2017 speech Poloz said Bitcoin is an
unreliable store of value and does not
constitute “money.” He added that
buying the cryptocurrency “means
buying risk” and urged those flocking
to it to “read the fine print.”12
INTEGRATING SUSTAINABLE
STRATEGIES ACROSS SUPPLY CHAIN
PREDICTION 4
CLEANTECH
BY 2020, 30 PERCENT OF In such critical times for the mining Driven by emerging economies,
MINING INDUSTRY LEADERS industry, creating integrated demand for mineral resources
WILL HAVE DEFINED AND environments across equipment, continues to rise, but mining
IMPLEMENTED PLATFORM maintenance, planning and companies are under ever-increasing
CLEANTECH STRATEGIES. scheduling, and execution is key to pressure from governments,
addressing concerns around climate customers, and other stakeholders
change. to operate in a sustainable manner.
Many key industry players in the
mining sector have developed
energy saving strategies and are
investing directly into renewable
energy infrastructure. IAMGOLD, a
Canadian firm, signed a $20 million,
15-year power agreement for a solar
installation at its off-grid Essakane
mine in Burkina Faso. India is having
a clean energy renaissance, with key
mining companies joining in. Chile,
meanwhile, is seeing a huge clean
energy boost from its red metal
mines.
In 2020, climate change concerns,
greenhouse gases, and regulation
will continue to be top of mind and
a major issue for the mining and
metals sector—a major consumer of
energy and primary user of land. New
initiatives to combat climate change
will be introduced, and there will be
an escalating need for companies to
respond to increased regulation of
emissions.13
SHORING UP SPENDING ON DEFENSE
PREDICTION 5
CYBERSECURITY
CYBERSECURITY The key to mitigating the cyber Cybersecurity risk mitigation plans
SPENDING ACROSS IT threat will be information sharing. for mining organizations should focus
AND OPERATIONS IN THE on:
Companies like Goldcorp and a group
MINING INDUSTRY WILL of Canadian miners have moved to • Operational technology: This
INCREASE 20 PERCENT create a joint task force to increase function should work with
YEAR-OVER-YEAR BY 2020. knowledge sharing specific to the real information technology to make
and present cyber warfare dangers to sure the architecture around
mining assets. remote access is well-secured.
• Emerging technologies:
Luis Canepari, vice president of IT
Mobile technologies, machine
at Goldcorp, sounded the alarm
automation, and cloud integration
bell in 2017 at a Toronto security
are often adopted quickly, and
conference after hackers penetrated
before they can be tied into
the company’s computer network
cybersecurity systems. Beware:
and stole troves of data including
Their ease of use can provide a
bank accounts, wire transfers, and
window of opportunity for hackers.
payroll records.
• M&A: These generate a
“This was a real eyeopener for us and huge amount of confidential
we were quite frank about what had information. Security needs to be
happened and what we needed to loopedin early in the process to
do better,” he said. “You can’t wrap make sure that information is safe
yourself in a cocoon. Secrecy doesn’t
CONTACT
and both companies involved are
help anyone.” protected. Sean Bredin
Today, virtually all parts of the • Third-party management: (National Mining Leader)
mining supply chain are connected Different parts of the supply chain
+1 647-795-8008
to the Internet. Ventilation and can have fewer security controls
conveyor systems are managed and can put the whole ecosystem sbredin@bdo.ca
by supervisory control and data at risk. Any data generated
acquisition (SCADA) systems. Even between two companies needs to
Bryndon Kydd (Partner)
new hauling trucks come with 100 be protected, shared, and stored +1 604-443-4713
wireless sensors to be used. securely. bkydd@bdo.ca14
This publication has been carefully prepared by BDO.
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Editorial: BDO Global Office, Belgium
Copyright © BDO January 2018. Brussels Worldwide Services BVBA. All rights reserved.
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