The following article reflects some personal wide-ranging thoughts of Don Hunter, one of our employees who, until he joined Willis Towers Watson about five years ago, had been involved for nearly 40 years in the global mining industry. During this time, he has lived and worked in many countries and seen numerous changes in the mining industry as he progressed from the rock face to the C-suite. Don is therefore well placed to offer a perspective on how the mining industry might face a still uncertain, post COVID-19 future.
At the risk of stating what is already obvious, the world has undergone a major change and is unlikely to return to what it was like before COVID-19; this maxim applies to the economy, our way of life and how we work. Moreover, this pandemic has forced governments, businesses and us as individuals to re-assess firstly, how to adapt to survive and then, hopefully prosper in a post-COVID-19 world.
I will focus on the mining industry, but much of what follows will be wide-ranging and apply to industry and commerce in general. I will touch on the changes that the pandemic has forced on mining companies and will discuss some technologies that were already being applied before the pandemic and how their application has probably been accelerated by it. I will put forward some ideas on technologies that will be developed and their associated risks, and finally I will discuss possible implications for risk engineering.
First, I think we should remind ourselves that, although mining is generally unpopular and something no one really wants in their back yard, it is a primary industry. Everything we use must either be grown, derived from hydrocarbons or mined. Mining activity is influenced by commodity price cycles which are generally related to economic activity; however, we also see price spikes for certain metals and minerals in response to advances in technology, with semi-conductors, solar panels and batteries being just three examples.
Defining reserves On the downside, returns on mining investments have historically under-performed other industrial and commercial sectors, with the result that it has sometimes been difficult and expensive to raise the large capital amounts needed to build new mines. Defining reserves to the standard and level of confidence demanded by investors is also expensive.
In certain types of mineral deposits such as steeply-dipping, narrow vein deposits, it is often not practical to define reserves for more than a few years of mine life. In these cases, it may be difficult to secure funding because the window to return the initial investment and then harvest subsequent dividends may be uncomfortably short. Difficulties regarding predicting price cycles, long gestation periods to bring new mines on stream, community and environmental pressures, political and tax instability and now a hardening insurance market all add to the challenges. With this as a backdrop, let us now consider some things mining companies have done to survive the pandemic.
At Willis Towers Watson we observed that many companies quickly developed COVID-19 management plans. Arguably, some companies in West Africa that had successfully managed recent Ebola outbreaks were better prepared and able to build on that experience instead of having to develop plans from scratch. One company was able to quickly convert the construction camp used for a recently completed expansion project into a residential quarantine facility.
Changes to staffing and rostering Absences from work through sickness or quarantine requirements, combined with travel restrictions, have forced significant changes to staffing and rostering as miners sought ways to maintain production with reduced work forces. For surface workers at many mine sites, the nature of their work meant social distancing was not unduly difficult. By contrast, in some underground mines such as the labour intensive, deep level mines in South Africa, hundreds of workers are transported underground in crowded shaft conveyances where social distancing is impossible. In more mechanised underground mines with smaller workforces, the challenges of social distancing and hygiene may be less extreme but no less important. For mines that draw their workforce from their neighbouring communities, there is possibly a greater need to strictly adhere to distancing and hygiene rules on the mine site because of uncertainty about how well those rules are managed beyond the mine’s gates.
Workforce accommodation Some enterprises were forced into making organisational changes and modifying work practices to take account of travel restrictions, social distancing and quarantine requirements. Where this resulted in skills shortages, it was necessary to hastily implement training programmes to allow a greater degree of multi-skilling than previously. Mines which accommodate their workforce in hostels, on-site accommodation or camps are particularly susceptible to infection hotspots which, when detected, require quarantining, and, in some cases, closure. Employees at fly-in, fly-out sites have been required to spend extended periods away from their homes because of quarantine rules. In Australia for example, workers at fly-in, fly-out operations who had to travel across State borders were subject to 2 weeks isolation on-site before starting their extended work roster. On returning to their homes, these workers were then subject to two more weeks of self-isolation.
Impact on mental health These essential protective measures have an impact on employees’ mental health and well-being, as well as being highly disruptive to family life. The disruption to pre-pandemic workplace practices is obvious and has, I believe, incentivised employers to re-think well-established work practices which will probably now become the new norms. Importantly, but beyond the scope of this article, is the impact on people’s mental health and wellbeing which will probably only be fully apparent in the years ahead.
Project work postponements/cancellations Restrictions on contractors, third party technicians and consultants visiting mine sites have resulted in postponement or cancellation of some project work and postponement of major maintenance and inspection activities. This raises several questions:
As risk engineers, my colleagues and I need to provide insurers with answers to these questions; however, our task is made harder in the current circumstances by being unable to travel to sites and observe conditions at first hand. The challenges of remote, virtual surveys as an alternative to site visits are discussed below.
Looking to the future, what might the mining industry look like in a post-COVID-19 world?
Teleconferencing With the need for many of us to work from home, we have become accustomed to using teleconferencing where previously we met colleagues and clients in face-to-face meetings. This is likely to continue as companies try to reduce the on-site payroll; moreover, the ability to offer a combination of on-site and working from home may provide a lifestyle that would attract new employees with different training and skills sets. Video conferencing is an enhancement on telephone meetings, but its effectiveness is limited by the reliability, security and speed of the network used. Effective tele-conferencing also requires the establishment of rules of engagement and meeting etiquette to avoid unintended interruptions while allowing all participants to contribute without the frustration caused by overtalking one another. A further, some would say, important disadvantage is the reduced ability to read the body language of meeting participants; something which is often useful in tricky negotiations or dealing with difficult questions. Before COVID-19, internet development was already on an exponential growth curve. Because of development lead times which go back before the pandemic, we probably cannot say that it has significantly influenced this development rate. However, we can safely say that COVID-19 has provided an incentive for industry and commerce to explore and make greater use of tools such as video-conferencing and networking apps. An increase in the uptake and use of tele-conferencing is changing the way we do business; however, there are risks. In an article in last year’s Mining Risk Review we pointed out some of the cyber security risks associated with a growing number of increasingly malevolent, sophisticated and well-funded cyber predators. This risk has certainly not gone away and is in fact becoming increasingly significant for the security and confidentiality of our remote working activities.
High speed internet - SpaceX Demands on internet speed and coverage have led to an increase in the number of satellites providing internet access. Mining companies with operations in remote areas where internet coverage is poor or non-existent will particularly benefit from improved access to reliable, high speed and secure internet access. Since 2015, US-based SpaceX has been developing its Starlink internet access system which will ultimately use a swarm of small, mass produced satellites in low Earth orbit working in conjunction with ground transceivers to provide full global internet coverage. So far about 12,000 of these satellites have already been launched, with the total number expected to be over 40,0001.
The initial objective is to provide truly global internet access, but SpaceX has already signalled its interest to also sell satellites for scientific, military and exploration purposes. Although many of the potential benefits have yet to be discovered, this visionary project raises important questions:
These questions go well beyond the scope of this article and, indeed, the influence of the mining industry. Nevertheless, because it will definitely benefit from good quality, high speed and secure internet access the mining industry will also need to explore and develop ways to manage the associated risks.
Autonomous operation Prior to COVID-19 we had already seen some of the world’s largest mining companies develop remote operations control rooms, increase their reliance on telemetry and increase their use of autonomous vehicles within mine sites, both on the surface and underground. This trend will continue and almost certainly intensify; not so much as a result of COVID-19 but rather as result of mining companies seeking to increase efficiency, reduce costs and, in particular, minimise their on-site workforce costs while finding more productive ways to utilize employees.
Some well documented examples of autonomation include the Caterpillar company which recently noted that over 2 billion tonnes of rock had been moved by Caterpillar autonomous haul trucks since their introduction2. Another leading manufacturer, Komatsu, can probably boast a similar performance. Moreover, several operators who already use autonomous haul trucks are looking to significantly increase their fleets in the near future. Not only has full autonomous operation been successfully applied to open pit haul trucks, it has also been applied to underground and surface front end loaders, Load Haul Dumps and railway locomotives. There are also numerous semi-autonomous drill rigs, dozers and graders operating around the world.
One major equipment manufacturer, Hitachi, recently announced it will begin autonomous field trials next year of its ultra-large EX3600-7 excavator. Powered by a 1450 kW diesel engine and weighing in at about 370 tonnes, the ultimate objective is to create a fully autonomous excavator capable of safely loading autonomous haul trucks3. The prospect of a single operator remotely overseeing an integrated fleet of multiple loading units and haul trucks is surely not far away. With over a decade of operating experience, autonomous control, obstacle recognition and anti-collision systems have become increasingly reliable. Autonomous vehicles have provided significant, proven improvements in efficiency, reduced tyre wear and reduction of maintenance costs. To date, autonomous haul truck development has been focussed on the plus 240 tonne payload class; these units are no longer experimental or in prototype development and are being increasingly accepted by a traditionally conservative industry. Manufacturers are also now offering packages to retro-fit and convert conventionally driven units to full autonomation. Until now the users of autonomous vehicles are the major mining companies operating very high tonnage mines, but this will change. Significant market acceptance, coupled with the ability to retro-fit existing equipment and innovative ways to finance fleets, suggests that it is only a matter of time before autonomous equipment is more widely used, including by smaller operations.
Developments in remote maintenance support During lockdown it was not possible for consultants, technical experts and original equipment manufacturers’ (OEM) support specialists to visit mine sites to provide face-to-face, on-the-job support. As already noted, this led in some cases to project work being cancelled or delayed and some critical equipment inspections and overhauls being postponed with corresponding risks of premature failure/breakdown and safety. Delaying major overhauls or important inspections can only be sustained for a limited time before the equipment must be shut down or risk the consequences of breakdown or failure. Of course, insurers are very interested to know how postponed inspections, changed maintenance programmes or reduced budgets may alter a site’s risk profile.
In future, because COVID-19 is likely to be a long-term feature of our lives, international travel is likely to be more expensive than in the past. Moreover, the different rates at which countries ease their travel restrictions and the possibility that once lifted, quarantine restrictions may be re-imposed, create further uncertainty for international travellers. Consequently, site visits by consultants and technical support specialists are likely to be less common than in the past and alternative means of support will have to be found.
Remote condition monitoring hardware Many manufacturers already build remote condition monitoring hardware into their equipment. Remote monitoring has progressed from simply collecting and downloading data to a laptop on site to remote condition and performance monitoring in an off-site Control Room or OEM facility. Most large power generation and automotive engines are fitted with engine management systems, which enable the remote adjustment of operating parameters as well as providing trouble shooting and diagnostic information. However, at some point expert human intervention will be necessary; recognising this, manufacturers are developing ways to provide remote support and minimise the need for costly experts to visit mine sites in person.
Increasing complexity of maintenance skills As mining and mineral processing equipment becomes more complex, the maintenance skills required to keep that equipment operating safely are also becoming more complex and, in some cases, OEM-specific. Recruiting or training staff to provide on-site, high-end skills is expensive and would not necessarily overcome the challenges of a return to lock down conditions; so in future, greater reliance will likely be placed on remote specialist support. One way this is already being provided is by means of a smart device (or body camera) connected via the internet to a skilled specialist who may be thousands of kilometres away. By seeing in real-time the item that is being worked on and communicating directly with the on-site technician, the remote expert will be able to provide step-by-step guidance. As already pointed out, this requires a stable, reliable and high-speed internet service which will be susceptible to cyber malfeasance for which operators and OEMs must be prepared. Supply chain resilience One of the impacts of lockdown on the general population has been an increase in on-line purchasing. The sheer volume of this increase has necessarily been accompanied by a rapid growth in the capacity and efficiency of distributors and their logistical control systems. It is no accident that when many businesses were furloughing or laying off staff, distributors were recruiting drivers, packers, sorters and dispatchers to meet the suddenly increased demand. Most mining companies were already highly proficient at managing their supply chains before the pandemic but in a post COVID-19 world they will undoubtedly benefit further from the improvement of logistical support services available to their suppliers. A lesson that can be learned from the scramble to acquire PPE, cleaning materials and even some foodstuffs is that supply chains which work well under stable, predictable conditions can quickly fail when their operating environment suddenly changes. Governments trying to secure face masks, gloves and other items of PPE suddenly found themselves facing furious competition for limited supplies. Moreover, relentless market forces created by globalisation to reduce prices had also reduced the number of global suppliers of PPE to a few very large organisations that were severely tested by the Covid-19 scramble. Hopefully we won’t experience another pandemic such as this; however, a major earthquake or tsunami event may have a significant impact on local supply chains and recovery, albeit on a smaller scale. The lesson to be learned here is that although potentially more costly in the short term, there are advantages to not having all your eggs in one basket.
Risk control engineers have been prevented from visiting mine sites to carry out pre-renewal risk surveys since March 2020. This has been particularly challenging in the current hardening market, where insurers are demanding more detail and a greater understanding of the risk to be insured.
Reliance on documentation, photographs and teleconferencing During a normal on-site survey, the risk engineer is able to see conditions at first hand for him/herself and quiz site personnel, thereby building up an accurate picture of the quality of the risk in question. Now, with visit sites temporarily out of the question, risk engineers will have to rely more heavily on documentation and photo images provided by the sites as well as teleconferencing. Tele-conferencing works well where there is a good quality internet connection and participants speak the same language. However, where this is not the case it can be both difficult and frustrating to collect the information necessary for an accurate and objective survey report. Since not all sites have good internet access or the technology and resources for effective teleconferencing, how information will be collected needs to be carefully planned and coordinated with each site well in advance.
Replacing the site walkaround? During a conventional site survey, a significant amount of time is spent in round table discussions, during which site staff present information and risk engineers ask detailed questions. The full picture is then provided by being able to walk around the site to observe conditions and ask focussed questions to clarify or confirm information presented during the round table discussions. There are several ways to replace the site walkaround, none of which is entirely satisfactory.
Sharing still photos One way might be to get site personnel to share still photographs of key aspects of the site. The effectiveness of this approach is dependent on the quality of the photo images and how well they are described. An alternative would be to have someone on site take a video of key parts of the site according to a pre-determined “script”. The video is then shared with the risk engineer, possibly from a cloud-based host. If the video is date and time stamped, it will be possible during a subsequent tele-conference for the risk engineer to ask questions relating to specific points in the video. Again, this option will only be as effective as the quality of the images; moreover, it may not be possible to take useful video in some parts of the site, for example underground.
A third option, which is dependent on the mine site’s available resources, might be real-time interaction via a smart device or body/helmet camera with a member of staff doing a scripted walk through of the facilities. The remote observer could then ask the cameraman to zoom in on specific aspects or parts of the facilities that need greater clarity of understanding. A drone might also be used, especially for remote inspection of such infrastructure as tailings dams. Since this will require transmission of large amounts of digital data, this approach relies heavily on the quality of internet access and therefore may not be applicable on all sites.
It will probably be some time before the true extent of the pandemic’s impact on the mining industry will be known. This includes lost production capacity and the effects on employees’ mental health and wellbeing.
Working locations The lockdown, social distancing and travel restrictions not only required significant changes to on-site work practices, they also incentivised companies to explore ways for employees to work remotely. This in turn has created addition cyber security risks which companies have worked hard during lockdown to counteract. Lessons learned from remote working will probably become the new norm, with the expectation that mining companies will in future actively look for opportunities for staff to work remotely.
Maintenance The use and scope of on-line condition monitoring and remote expert support via the internet will probably increase, not because of COVID-19 but because it makes sense in terms of process efficiency and cost reduction. Maintenance and supply chains are inter-linked and supply chain resilience may have benefited from COVID-19. It is hoped, however, that where possible diversity of supply sources will not be sacrificed purely on the basis of lowest prices.
The internet Mining and, more generally industry and commerce, are increasingly dependent on the internet to realise the efficiencies needed to remain competitive. The development of a truly global system of high-quality internet access potentially offers huge benefits. At the same time, there are significant inherent risks of dependence on a system operated and controlled by a single player or small number of players, possibly with differing national interests.
Risk engineering reports Risk engineering reports are essential for providing insurers with the information they need to determine the risk quality and hence their conditions for underwriting the risk. However, the pandemic has temporarily changed the way insurance risk engineering surveys are conducted and for the time being, site surveys have been replaced by remote or virtual surveys. By their nature, virtual surveys will be less comprehensive but probably cheaper (in the absence of travel expenses) than on mine site surveys by an experienced engineer. Nevertheless, in the currently hardening market insurers are being more selective about which risks they are prepared to insure and so the need for objective, accurate information remains.
Resuming on-site engineering surveys Consequently, insurers require detailed information about all aspects of the assets to be insured, which virtual surveys may not be able to provide. For this reason, once travel restrictions are lifted, it is considered essential - for the benefit of insurers and insured alike - that full on-site risk engineering surveys are resumed as soon as it is safe to do so.
Don Hunter is a member of the Willis Towers Watson Engineering Risk Management team specifically responsible in the Latin American region, for conducting risk control surveys of clients’ mines and production facilities. Donald.Hunter@WillisTowersWatson.com
1 https://spacenews.com/spacex-submits-paperwork-for-30000-more-starlink-satellites/ 2 https://im-mining.com/2020/04/30/caterpillar-hits-2-billion-tonnes-hauled-milestone-with-autonomous-haulage-system/ 3 https://mqworld.com/2020/07/17/hitachi-takes-leap-remote-controlled-ultra-large-excavator-trial/
