WWW.WIPRO.

COM

Digital Mining
Paves The Way
Is the Australian mining industry ready to
leverage technology to help reduce costs?

DO BUSINESS BETTER

Executive Summary

Key Insights

Industry Challenges

Digital Mining The Next Frontier?

What Next?

11

Where Next?

Executive Summary
The Australian mining industry has been reducing costs vigorously for the past three years. Mining
companies have been putting enormous effort into sweating the assets. Cost reductions have been
very successful, and yet the rate of company liquidations seems to be accelerating. For many, the
so-called Second Wave of cost cutting has come to an end further job cuts are becoming increasingly
problematic. The industry is being forced to examine transformational changes and innovations, and so
the Third Wave of Cost Cutting has now commenced. The Third Wave is all about process re-engineering, business improvement, automation and technology. Technology is being seen by many as a
saviour, particularly considering the high cost of labour in Australia. And yet, there are just as many
detractors. So, what do mining executives really think and how ready is the industry for a Digital Mining
revolution?

Mining is already on the way to Lights Out & Driverless. The Australian mining
industry is presently facing a watershed moment. Prices are down and costs have
remained stubbornly high, which means the margins are super tight. After
multiple rounds of belt-tightening, including wide ranging redundancies, mining
executives are searching for a pathway forward. The question is not whether
technology is ready, but whether executives are ready, willing and able to
embrace the implications of Digital Mining.

Kirby Johnson
Consulting Partner
Mining Advisory Services, Natural Resources at Wipro

Exhibit 1 The Three Waves of Cost Cutting

Opex
($/t)

First wave Cancel projects (2012-13)

Exploration projects, stripping contracts and consultants
Refocus on the basics - Safety, Production & Cost
Second wave Sweat the assets (2013-15)
Maximise the value of existing capital by maximising production,
squeezing suppliers, reducing staff / eliminating overlap
Third wave Re-Engineering focus (2015-)
Process re-engineering
Business improvement (Lean, 6sigma)
Automation & technology

Time / effort

To better understand the state of technologies and industry readiness, Wipro surveyed senior executives and technology leaders in mining companies,
as well as mining industry analysts.

Key Insights

Reducing the cost of extraction

IT infrastructure development

This was the most dominant trend in the industry recognised

For an industry that must operate in constrained conditions

by respondents. 88% of CIOs, Directors and above ranked it as

while aiming for higher levels of productivity, throughput and

the top trend, followed by CTOs (75%) and COOs (70%).

cost containment, IT has the potential to be a major enabler.

Although productivity gains with the falling cost of oil and

This is one of the leading drivers for IT being the primary focus

currency devaluation are expected to lower the cost of extrac-

area for Directors and above (76%) & CTOs (63%).

tion, respondents agree that digital mining technology can play

a significant role in the mix.

Integration of new solutions

Impact of new technologies on the sector

Industry practices will see the introduction of new technolo-

There are new technologies such as mobility, data, cloud and

gies, innovations and solutions. However, these need to be

the Internet of Things (IoT) which can be summed up under

integrated with existing operating technology and processes.

the digital umbrella. These are important to the future of

All CTOs surveyed agreed that integration of new solutions

mining and will bring in new operational and business models.

was important, followed by CIOs (38%), Directors and above

Most CTOs agreed (51%) that this was amongst the top 3

(38%), COOs (20%) and Industry Analysts (17%).

technology trends, followed by Industry Analysts (50%), CIOs

(39%), Directors & Above (38%), and COOs (30%).

Industry Challenges
Today the top concerns in the industry are commodity prices and the cost of extraction. However, a far more surprising result is that over 75%
of Directors and CTOs saw the need for wholesale strategic change in the way mines are operated, managed, monitored and manned, as
compared to just 10% of COOs. Evidently, Directors and CTOs are increasingly focused on transformation, whereas COOs are conservative
on this front. Other key trends include the cost of regulation and compliance, integrity and maintenance of operating assets. Less surprising is
that 88% of CIOs see that a key issue is lack of investment funds for new technologies.

Exhibit 2 Key Business Trends in the Australian Mining Sector

On a scale of 10 Very Important down to 1 Not At All Important, how important are the following key business
trends to the Australian mining sector?

79%
88%
75%

Reducing the cost of extraction

70%
88%
67%
76%
63%
76%
80%
76%
83%

Regulation and compliance issues

53%
63%
25%

Finding new exploration sites

50%
63%
66%
46%
63%

Wholesale strategic change in the

way mines are operated, managed,
monitored and manned

75%
10%
75%
34%

Total
CIO

43%
Reducing the costs of exploration

63%

CTO

26%
40%
38%

COO
Director & above

50%

Industry Analysts

46%
Optimising information ows
across the business
0%

50%
76%
30%
38%

From an operational and technology standpoint, the big issues, with very strong agreement amongst all the surveyed groups,
includes integration of new solutions with existing investments, and increasing data communication across the business. Overall,
5

integration looks to be a strong and recurring theme across all functions with CIOs (100%) and COOs (90%) expressing the most
concern followed by CTOs (88%).
Interestingly, very few respondents see mobility as a key challenge. Also, very few are concerned with moving IT to the cloud (capex
to opex), which suggests that nance options, scalability and/or exibility are not on the top of the mind. This is somewhat surprising,
given the amount of noise in industry press almost daily about both these areas. These are huge trends in other industries. Perhaps
mining executives are waiting to see the benefits more clearly illustrated.

Exhibit 3 Key Operational and Technology Challenges

On a scale of 10 Very Important down to 1 Not At All Important, how important are the
following key business trends to the Australian mining sector?
88%
100%
88%
90%

Integration of new solutions

75%
71%
75%

Increasing data communication

across the business

63%
70%
75%
59%
63%

Understanding the business unit needs

50%
40%

88%
53%
50%
50%
50%

Being able to scale up and down IT

solutions to meet demand

63%
50%
63%

Developing a digital strategy for

mining activity

38%
40%
63%
50%

Total

25%

Implementing exible IT solutions to meet

changing business needs

63%
60%
50%
35%

CTO
COO

25%
25%

The need to reduce the dependency on

legacy based systems

CIO

Director & above

40%
50%

18%
25%
Moving IT from OpEx to CapEx.

0%

10%
38%
15%
13%

Moving to the cloud

25%
0%

25%
6

Digital Mining The Next Frontier?

The results show a strong consensus around connectivity, data sharing, optimisation of production, improved monitoring, collaboration
and integration.

Exhibit 4 Constituents of Digital Mining

What do you consider being the constituent parts of digital mining and maturity?

88%
88%
75%
Greater connectivity

90%
88%
100%
83%
88%
75%
90%

Improved data sharing capabilities

75%
83%
83%
88%
88%

Allowing for the optimisation

of production

Total

70%

CIO

88%
83%

CTO

83%

COO

75%

Director & above

88%

An increased / improved
monitoring capability

80%

Industry Analysts

88%
83%
78%
88%

Easier to share employee

knowledge / experience

100%
50%
75%
83%
73%

Integrated solutions across

the entire business

50%
63%
90%
75%
83%

With respect to digital maturity, clearly CTOs and CIOs rate it high, but interestingly there is a significant number of Directors who see maturity as
very low on the scale. This seems to fit with a result already noted, that many Directors see the need for Digital Mining transformation, rather than a steady state.
8

What Next?
Overall, our results show a very strong consensus amongst executives
surveyed on the need for significantly greater maturity in adoption of
digital mining technologies in the next two years. The strongest aspirations
stem from the CIOs and CTOs.
However, there are challenges (see Exhibit 5 below). The cost of the
technology (including training) is the number one, which is not at all
surprising in the current difficult economic conditions. Likewise, understanding integration (and connectivity) with existing technologies is
obvious for an industry noted for high capital intensity. In addition, the
return on investment and a lack of budget are hurdles that prevent
organisations from moving towards digital mining technologies.

Exhibit 5 Technology and Operational Challenges

And which of the following are the key technology and operational challenges that you currently face?

88%
100%
Integration of new solutions

88%
90%
75%
71%
75%

Increasing data communication

across the business

63%
70%
75%
65%
75%

Understanding the business unit needs

38%
60%
88%
53%
50%
50%
50%

Being able to scale up and down IT

solution to meet demand

63%
50%
63%

Developing a digital strategy for

mining activity

38%
40%
63%
50%
25%

Implementing exible IT solutions to meet

changing business needs

63%
60%
50%
35%

Total

25%
25%

The need to reduce the dependency on

legacy based systems

CIO
40%
50%

18%
Moving IT from OpEx to CapEx.

25%
0%

CTO
COO
Director & above

10%
38%
15%
13%

Moving to the cloud

25%
0%

25%

It would seem that determining the value of digital mining is a major challenge. Clearly, identifying and communicating the value of technology is also
a key issue.
When executives think of integration, the results show executives are preferring integration to real time equipment reporting, asset management, real
time diagnostics, real time planning & scheduling, mobile communications, eet monitoring and data management.
10

The list has a very strong Operations Technology (OT) bias, rather than the traditional Information Technology (IT) focus. A challenge that many
mining companies face today is that critical IT/OT technology skills may be missing and that business improvement skills have been lost. The last time
the industry seriously did process re-engineering work was 10+ years ago (in the 1999-2003 downturn). Since that time, technology advances have
revolutionised many sectors in the global economy. Now, more than ever, mining companies need employees steeped in the basics of mining, yet, are
also tuned into latest technology advances that can help lower costs, increase production and/or reduce risk.
So, are the Directors and CTOs right in believing that there is a need for wholesale strategic change in the way mines are operated, managed,
monitored and manned? Is Digital Mining part of the next frontier of cost cutting? Or are the COOs correct - steady as she goes? What we do
know is that the Digital Mining is already well entrenched and the trend looks to be accelerating.

Where Next?
From Wipros expertise, here are a few ways to accelerate Digital Mining, a trend which already seems to be entrenched

Weigh up the Business Case.

Technology must compete for scarce capital. Mining companies must evaluate the cost-benefit and risk equation for technology, on the same basis
as the other demands on shareholder funds. In our view, there should be a strong focus on Doability (i.e, ease of integration into the existing mining
conguration) and Value (using standard nancial metrics). Only the most doable and highest value technology projects should be adopted.

Consider your current Technology Quotient.

Do your people have the skills and experience to evaluate, select and integrate Digital Mining technologies? Mining technology is evolving fast, and
the rate of change seems to be increasing. To our mind, there is an increasingly important role for the Captain/Coach model. A well-chosen
(external) technology mentor/Coach can provide enormous value, given the depth of experience at (relatively) low cost, to support (internal)
operational Captains at site.

Take Action.
Mining companies are crying out for technology that can help reduce costs, increase production and/or reduce risk. The irony is that much of the
production-ready technologies available to mining industry today have actually been forged in other industries, including oil & gas, manufacturing,
military, aerospace and retail. For example, in oil & gas, dynamic integrated production and scheduling using real time data is already 15 years old.
In manufacturing, Lights Out and Driverless (24/7 robotics) is well entrenched and there is much that mining can readily adopt. The task for mining
companies is to efficiently evaluate and integrate, rather than invent and develop.

11

Methodology
Earlier this year Wipro conducted a research to study the digital mining landscape in the Australian mining industry. The research
covered C-Suite executives, IT decision makers and mining industry analysts of major and minor mining companies. The sample
included COOs (25%), CIOs (20%), CTOs (20%), Directors and above who were IT decision makers (20%) and Industry Analysts
(15%). The qualitative and quantitative inputs for the study were gathered through interviews conducted telephonically using a
detailed questionnaire.

12

ABOUT WIPRO LTD.

Wipro Ltd. (NYSE:WIT) is a leading information technology, consulting and business process services company that delivers solutions to
enable its clients do business better. Wipro delivers winning business outcomes through its deep industry experience and a 360 degree view
of "Business through Technology. By combining digital strategy, customer centric design, advanced analytics and product engineering
approach, Wipro helps its clients create successful and adaptive businesses. A company recognized globally for its comprehensive portfolio
of services, strong commitment to sustainability and good corporate citizenship, Wipro has a dedicated workforce of over 160,000, serving
clients in 175+ cities across 6 continents. For more information, please visit www.wipro.com

DO BUSINESS BETTER
WWW. W I PR O.C OM

CONSULTING | SYSTEM INTEGR ATION | BUSINESS PR OC ESS SE R V IC ES

CORPORATE OFFICE, WIPRO LIMITED, DODDAKANNELLI, SARJAPUR ROAD, BANGALORE - 560 035, INDIA. TEL : +91 (80) 2844 0011, FAX : +91 (80) 2844 0256
North America Canada Brazil Mexico Argentina United Kingdom Germany France Switzerland Nordic Region Poland Austria Benelux Portugal Romania Africa Middle East India China Japan
Philippines Singapore Malaysia South Korea Australia New Zealand

WIPRO LIMITED 2016

No part of this booklet may be reproduced in any form by any electronic or mechanical means (including photocopying, recording and printing) without permission in writing from the
publisher, except for reading and browsing via the world wide web. Users are not permitted to mount this booklet on any network server.
IND/B&T/JAN-FEB2016