Can Software Solutions Save The Mining Industry?
The Australian mining industry faces rising demand … and rising costs
According to Globam.com, Australia’s mining industry has always been a lynchpin of its economy, and currently contributes around 5.6% of its GDP and 35% of its exports. Pressure to deliver will only increase in the coming years, as the industry looks to profit from the “Asian century”, the term for the increasing spending power of growing economies in Asia and the opportunities this presents.
Asia has always been an important market for Australian goods, with Japan being the leading purchaser of Australian mineral exports since the mid-90s. But increasing Chinese investment in the Australian economy has made its presence felt in every sector, especially in mining, which produces the resources China needs to feed its burgeoning economy.
However, Australia’s mining industry faces obstacles that may hamper its attempts to seize these opportunities. Skill shortages are having a detrimental effect on every sector and mining is no exception, but that’s just one of the issues confronting it.
As the industry grows, so does its costs. This may be natural progression, but economists are concerned that the cost of operations in Australia’s mining industry is growing at a much faster rate than that of its competitors. This is something that is exacerbated by the strength of the Australian dollar, as well as by the impact of more stringent taxes and regulations.
If the mining industry hopes to take advantage of the hunger for minerals then it will need to upgrade its own capabilities, and Information Technology provides the means to do so. Collaboration with SAP is underway to develop technologies that can aid in logistics management and the location, excavation and distribution of resources. Improving safety standards is a priority, following recent high-profile international disasters, like the mining collapse in Chile. According to InsideSAP, this is especially important as the more easily accessible mineral deposits dry up, requiring mining companies to dig deeper underground if they hope to meet rising demand.
Reducing the cost of operations
Improving cost-effectiveness is the goal, and Newmont Mining believes integration of SAP infrastructure will help the industry do just that. The firm has mining operations throughout the world, including four gold mines in Western Australia. In 2010 it initiated a two-year project to implement SAP and shared services globally. It’s estimated the project will result in annual savings of AU$35 to AU$40 million.
Three-dimensional visualization technology can help plan mining operations, while remotely controlled devices can explore deeper parts of the mine that have not yet been deemed safe. Automation can provide aid where manpower is at a premium. Though these kinds of technologies are more difficult to maintain in the remote environments where mining takes place than they are in factories where they’re employed for manufacturing, advancements are being made in facilitating their incorporation into mining operations.
Improving logistics management
As mining companies are forced to move further afield to locate new mineral deposits, logistics management is put under increasing strain. This is an issue for small and medium enterprises in particular, as they do not have the resources to maintain complex supply chains; yet they need to establish such chains before they can grow. Mining by its nature requires expansion into remote locations, so even small and medium mining organizations will face intricate logistics management requirements.
SAP specializes in business solutions geared towards small and medium enterprises, and the mining industry is no exception. By making its Business All-in-One software available through a subscription service, it enables mining companies without the means to establish IT infrastructure to nevertheless make use of its services. These services include those designed to simplify logistics and supply chain management. The scalability of SAP software ensures that companies will be able to easily expand or reduce IT infrastructure to suit their requirements.
Taxes and regulations
Carbon Tax introduces further complexities to Australia’s mining industry, and related sectors, such as manufacturing. Though Australia is not the only place where environmental concerns have come to the fore, its industry has to deal with stricter regulations than some of its competitors. SAP business solutions for the mining industry includes functions that can track carbon emissions and help mining companies adapt accordingly.
A mining operation includes head offices, mining sites and the shafts themselves; these multiple locations are separated by great distances that can be vertical and horizontal in nature. Mobile devices can be a valuable tool in allowing workers to receive new information and instructions wherever they may be, without requiring them to drop whatever it is they’re currently involved in and come to the phone. They haven’t yet seen much use in the mining industry due to the difficulty of operating them in such conditions, but, according to InsideSAP, the company is working on developing specialized infrastructure and applications to facilitate the incorporation of mobile devices into the mining industry.
Throughout Australian history, its economy has leaned on its mining industry. Increased incorporation of Information Technology can help the industry shoulder that weight.