Everybody loves autonomous vehicles. From Google to Uber to John Deere, they are an obvious symbol of our bright tech-driven future. Autonomous has been predicted to be a perfect fit for Mining for a very long time—specialized trucks, remote locations, minimal traffic, tough conditions. Autonomous vehicles are currently deployed at mines around the world, getting dirty, hauling loads, and going through maintenance cycles. Rio Tinto, BHP Billiton, and Fortescue Metals all have autonomous dump trucks deployed in the field. There’s no doubt that autonomous vehicles are exciting to the layman—everybody likes to see gigantic trucks operated with a remote control. But the real benefits come from the fact that haulage is the biggest operating cost for almost every mine, and autonomous trucks create a step-change decrease in costs. At Rio Tinto, autonomous trucks have proven to be roughly 15 percent cheaper to run than conventional trucks. There are also safety benefits.
There are numerous benefits of autonomous vehicles:
- They can run 24/7—no issues with hot seating, required breaks, etc.
- They have fewer safety issues— no issues with driver fatigue, speeding, aggressive cornering or poor judgement behind the wheel
- They are completely predictable—they pull into the exact same loading zone in the same way every time.
- They require fewer employees—a small number of new people at a remote operating centre replace a larger number of people in the field
- Lower spend on consumables-- the autonomous driving system is easier on brakes and tires
Even more exciting is how autonomy will affect intermodal. Already, autonomous locomotives are deep into testing and expected to be deployed next year. Autonomous trains should offer meaningful savings on train maintenance, because software is a lot gentler on the brakes and the other controls. And autonomous boats, while further behind on the commercialization curve, represent too good an opportunity to miss. (We already have self-driving tractors.) It’s reasonable to expect that the big mine/rail/port complexes will see large investments in autonomous vehicle and loading equipment capabilities. Diggers and bulldozers could be next to be automated, all being managed from a remote operating center, perhaps in an urban center thousands of miles away. (Could Perth become a global hotbed for Remote Operations talent?)
On one hand, this glorious future is not far away. All these technologies are being tested with local pilots. It is easy to mentally fast forward from these first steps toward the tidy autonomous future, with just in time delivery happening seamlessly between all modes of transport and an error rate approaching zero.
Except that’s not going to happen for a long time. The road to an autonomous fleet will be bumpy. Adolescence is always awkward. The mining industry will get there—it has always has found a way to leverage technology-- but the growing pains will be real.
- Most mines are in constant flux, but their basic operating routines are well understood by almost everyone. Going autonomous means tearing them up and starting again.
- Recruiting the best talent has always been a challenge for the industry—being perceived as putting machines ahead of people will make that recruiting challenge harder.
- Pilots are great, but getting pilots up to scale is a very different beast.
- And automating an imperfect manual process just means you are putting more volume through a flawed process, which means more waste. As Bill Gates said, “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.”
The first few years will be painful. So how can operators minimize the pain?
In our experience, the tenets of rigorous operational management don’t change because of new technology, but where you spend your time does change. Autonomous will disrupt everything in your current operating routine, so it forces you to think about things you usually don’t have to think about
- Operating Strategies. Your input KPIs will change as a result of reduced downtime and improved operating efficiencies —how many truckloads a day do you require now? How long should a round trip take? How high should the load compartment be filled? What are the actions that really drive performance when you change basic operating routines? There will inevitably be a period of trial and error, but most operators are not excited about trial and error when it comes to their basic KPIs like production volume.
A further issue is that you almost certainly will have to maintain two separate operating systems. For understandable safety reasons, most autonomous vehicles operate in areas with no people at all, with an exclusion zone around them. So on the same operation, you will be operating a conventional operation and an autonomous operation. Your production and cost targets will not be changing while you are testing autonomous technology, but you will have the complexity of running two separate systems.
- Operating Disciplines. Given these new input KPIs, what operating routines are required to make them happen? What about the Management Operating System? Today, you probably have the right set of meetings and reports that let you manage the business using conventional methods. But when you change the basics of your operation, you need to readdress this—what do I need to know now? How do I get the information? How often do I need to get the information?
Inside the organization, is everyone on the same page? When you run two systems at the same operation, you get into real issues about role clarity, responsibility for KPIs, and the direction of the organization. And the elephant in the room - you are making employees redundant. That will send ripples through the organization. Yes, there will be new positions supporting the autonomous trucks. But net headcount will go down. And if you’re committing to automation, who is next to lose their job? What about maintenance? What about operators? You have to clearly communicate to your workforce why you’re doing it and what the benefits are. Rio Tinto acknowledges that just like earlier technologies that boosted efficiency, the changes will tend to reduce staffing levels, even if some new jobs are created servicing and managing autonomous machines. “It’s something that we’ve got to carefully manage, but it’s a reality of modern day life,” says Rob Atkinson, Rio Tinto’s leader of productivity efforts. “We will remain a very significant employer.” Unfortunately, most mining companies have a long way to go on internal communications.
Outside the organization, how are you going to communicate the changes to the local community? As headcount declines in the mine, the social license to operate becomes less secure. A well-staffed mine spends money in many categories-- Local procurement of goods and services, Salaries and wages paid to nationals of the host country, Indirect impacts like spending by suppliers to meet demands from the mining operation (e.g., purchase of materials by camp builders), and Induced impacts (consumer spending by employees of the mine.) A study from IISD indicates that as mines move to an autonomous environment, their contribution to the local economy can decline by up to 19%. In that case, the operator should not be surprised if taxes and licenses go up to compensate.
Mining has traditionally been a source of well-paying jobs for people with limited education. Over the last decades, this has changed, as the technical knowledge required to operate modern mining equipment has increased. But automation only increases the speed of change. Instead of a blend of local laborers and overseas technicians, mines may be perceived as islands of rich foreigners operating expensive foreign technology (with a few local low-paid support personnel) to extract their local assets from the earth. Not a comfortable place to be.
- Visible leadership. Autonomous is a discontinuity that really demonstrates to people inside and outside the organization that mining is a modern, technology-intensive industry that requires fewer and fewer people. It’s a real test of Visible Leadership. The leaders of the Mining Company need to be in front of this, both internally and externally.
Nothing is going to stop the transition to autonomous—the benefits are too compelling. A study by AusIMM (The Minerals Institute) indicated that for an iron ore operation, the cost to implement an AHS across a fleet of ten trucks has a capital cost of A$18.5 million. This generates an annual employment cost saving of A$2.7 million, an annual tyre value increase of A$1.2 million and a production value increase of A$22.5 million. This doesn’t capture the benefits in increasing safety and decreasing risk, or the relatively minor new costs (including the need for better-groomed haul roads to suit the sensitive radar on the trucks.)
But there are organizational challenges that can’t be overlooked. Disruptive innovation is often challenging. If you’d like to talk about how to manage logistics transformation, please reach out to us.