DIGITAL REVOLUTION 4.0" IN THE RAW MATERIALS AND MINING INDUSTRY

by Philippine Resources - June 28, 2022

By: Christoph Klötzer, Hakan Arden Kahraman and Michalis Katapotis

The concept of 'Industrial Revolution 4.0' first introduced in Germany and has rapidly spread to other developed countries, describes the ongoing automation of traditional production and industrial applications using modern digital technology.  In this new era of Industrial Revolution 4.0, the mining industry too has inevitably started to focus on technology and digitalisation.  As there are many challenges ahead in this transformation process, DMT’s approach to this new era is to offer innovative and holistic Industry 4.0 solutions developed through a fastidious strategy which is expected in assisting to shape the autonomous mining vision of the future.  DMT’s approach to digital transformation is to go through initially a "Digital Due Diligence Process" to assess the existing business, identify digital potentials and operating opportunities and define a digitalisation roadmap.  DMT’s recommendation is that this process is accompanied by independent engineering and technology advice coming from an experienced partner in process design who will establish a Digital Transformation Office.  This approach includes three fundamental components:

  • “Operations” which cover the services used to provide companies with comprehensive guidance and support, systematic approaches to continually expand the offering of digital products and services covering the entire lifecycle of raw material extraction such as Reconnaissance, Exploration, Planning and Project Evaluation, Construction, Optimisation of Mining Operations, Environmental Aspects, Mine Closure and Site Remediation;
  • “People" which covers a corresponding digital transformation program for all employees of mining companies;
  • “Processes” which covers process optimisation for its Clients’ operations.

The Fourth Industrial Revolution (or “Industrial Revolution 4.0”), has already identified a number of structural transformation and paradigm shifts in the societies that are expected in the coming years (Schwab, 2016).  These include:

  • The Internet of and for Things;
  • Automated vehicles;
  • Artificial Intelligence (AI) and Decision-Making;
  • Robotics and Services;
  • Cryptocurrencies and the Blockchain;
  • The Sharing Economy (the use of a physical good/asset, or share service or provide a service by sharing);
  • 3D Printing in Manufacturing, Human health and Consumer Products;

As more of the “things” start to communicate and interact with each other in a more smart and artificial way in this Fourth Industrial Revolution particularly in the developed countries, it is inevitable that the mining segment will also benefit from this latest transformation in these economies. 

Considering the competitive nature of the business, the large international mining companies have already started to adjust themselves by digitising their mining operations across the value chain in line with the future generation of mines.  This obviously requires a remodelling of the business for growth and sustainability while using digital technology and innovation as a catalytic enabler within an existing legacy environment that behave like individual isolated units along the route from mine to processing to transport. 

Based on its long-proven ability to capture new developments and integrate them into its core competencies, DMT is passionate about the digitisation of existing products and services and on the development of new digital business models.


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Philippine Resources - November 28, 2021

INDEPENDENT LENDERS ENGINEER GUIDE – ENGINEERS’ VIEW

DMT Consulting Limited, United Kingdom Globalisation of economies and technological advancements as well as the increased level of communication between the investors and project owners around the world has intensified the race to bring many existing and mining projects into the market place.  Prior to the 2008 financial crisis, the financing of the mining projects was less formal than today.  However, the financial crisis has made Lenders and Financial institutions more alert to the perceived risks especially for complex mining projects. Since the Lenders are not technical experts in mineral extraction, they leave the technical aspects and technical evaluation of the projects to reputable consulting engineers in the field.  However, anyone who may be interested in investing in a mining project should be aware of three fundamental questions (Arden & Lewis, 2014): Is the quantity and quality/grade of the raw commodity there in the ground? Can it be extractable? Is it worth extracting? These questions seem to be very simple, but the underlying proof for the answers that will be sought in a bankable feasibility study by a large technical team made up of a number of engineers and technical experts in different disciplines, is painstakingly complex, expensive, long, and tedious and requires a level of expertise and accreditation that is not always available from the local market.  Once all these questions are answered positively in principle, then the fundamentals of the project can be said to be in place.  When the project is proven to be technically and financially viable i.e. due diligence has been performed, it comes to the stage of financing/syndication. It is possible that a number of lenders may decide to finance the project to reduce the risk exposure.  It is up to these lenders and the borrower to negotiate the best deal for the project amongst themselves. Although a bankable feasibility study may determine the project details to an acceptable accuracy level and establish the fundamentals and foundations of the project, the uncertainties and risks associated in winning the raw commodity as well as any deviation from the expected results defined at feasibility stage can still be influential in determining the final outcome. It is also a well-known fact that the selection of contractors and suppliers for the project construction phase will have a huge impact on the project’s fate.  For these reasons alone, the Lenders will seek the assistance of the technical experts to ensure that the finance provided for the project will be utilised according to the protocol agreed with the Borrower.  This is to assure that the project will reach the production stage from the beginning to the end as agreed between the interested parties. Therefore, it is common place for Lenders (Commercial as well as Development banks and other funding agencies) to require Independent Lenders Engineers (ILE) to oversee the execution of Technical, Environmental and Social aspects of a project in order to provide security of the loans to reduce the risk exposure.

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