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New tech in the mining sector: Trends and impacts

Mining is on the verge of a wave of changes like those that have swept over and redefined manufacturing, communications, finance, and other technology-transformed sectors. While this is good news in terms of productivity, worker safety, environmental impacts and other metrics, some types of technology will replace significant numbers of low- and medium-skilled workers, and many of the new jobs created will be difficult for locals to fill.

What will these changes mean for the complex relationship between mining operations, host communities, and host governments? We know that changing technologies are changing the status quo, but can we anticipate how it should change? This is the theme of our New Tech, New Deal dialogues, presented by the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF), Columbia Center for Sustainable Investment (CCSI) and Mining Shared Value (MSV), in partnership with the GOXI platform of the World Bank.

Over the next several weeks, our panel of experts will explore the relationship between mining companies and the communities who rely heavily on the social and economic benefits created by direct employment and employment-related procurement. We’ll dive into four key themes in turn, probing the strengths and weaknesses of different policy options and arrangements.

There are so many questions I hope we’ll address. Are we looking at a net loss of jobs? What kinds of new jobs will be created? Is skills training the answer? More local procurement? Higher taxes on mining activities? Should governments and mining companies negotiate new forms of contributions, like shared infrastructure, community development funds, increased beneficiation? What will be the impacts of new tech on women in the mining workforce? All of these questions have very different answers, of course, in different specific locations.

Our discussions here on GOXI will feed into the longer-term New Tech, New Deal project and, in particular, will inform an in-person round table to be held in Paris in late June focusing on these same issues, in effect enlarging the table to bring in a wider array of voices.

I’m excited to bring the experience and collective wisdom of the GOXI community to bear on these critical and under-explored questions. These issues demand group thinking. I hope you’ll weigh in with your thoughts over the coming weeks, helping us kickstart a discussion that is ever more urgent.

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Comment by Aaron Cosbey yesterday

Thanks Luke, for those insights.  I hope you'll come back to the question of the role of mining companies in community development efforts when we get to that issue in week four of the discussions (starting June 3). I'm intensely curious as to how community development efforts like Anglo's work in Limpopo are working in practice, and whether they are scalable.

Comment by Luke Viljoen on Saturday

Aaron and Isabelle:  The social licence to operate will continue to be major themes for future mines regardless of the adoption of future tech. The crucial issue I think, is to ensure that there is good communication and transparency between all stakeholders, namely the government, extractive industry, and communities regarding who is responsible for what aspects of local development as the model changes. In essence - building trust and keeping communication channels open are key.

I remember visiting Lonmin mine in South Africa a year after the Marikana massacre and seeing the living conditions of mine workers in neighboring communities. A lot of the discontent leading to the protests can be attributed to the inaction of both the mine and government. The mine failed to meet their CSR promises to the community, and the government failed to invest tax revenue into the community for even basic infrastructure such as water and sanitation. If we take away local employment from the picture due to future tech, mining companies will have to play a larger role in ensuring community needs are met. 

Isabelle: I think the sharing of infrastructure is a great method to help foster local economic activity. While necessary for their operations, FQM in Zambia has invested heavily on national road and power infrastructure.

Comment by Osvaldo Urzua on Friday

Rene, My impression is that Social License to Operate (SLO) requires to be updated for quite a while now. For instance SLO still refers to transactional relationship, which is part of the challenge that needs to be addressed. Probably the long commodity price boom postponed to advance in that direction.

I have been working in a new approach to deliver sustainable value, this is through a Safe, Smart, Inclusive and Green Mining through collective action.   

Comment by Rene Roger Tissot on Friday

I would like to join the discussion although my experience is in oil/gas. It seems (see Heffron et al The emergence of the ‘social license to operate’ in the extractive industries? 2017) that in some cases even with the promise of large social investments and jobs, communities are just rejecting the presence of EI companies (oil, mining). why? Perhaps after more than 20 years, the SLO concept its due for an update. Also, if technology will further de-link the already tenuous relationship between industrial mining and communities, the expected technical revolution could lead back to enclave activities, and  further erode by local communities to IM. Moreover, how this technology would impact small mining activities? interestingly some research appears to suggest that ASM has more impact on poverty reduction than IM. So, the question for host countries in Latin America or Sub-Sahara Africa is: if IM (because of market competition and low commodity prices) offers only meagre tax revenues, declining jobs prospects, increasing social tensions and potential environmental damages, what is in it for them? If rents were high enough, as in oil, governments would be tempted to look at different nationalization mechanisms to maximize its capture. This of course poses a hole new set of problems.  My point:are host countries properly assessing the value addition of IM in light of these technological changes?

Comment by Osvaldo Urzua on Friday
Hi Aaron, your make an important point. The social Licence scope is getting larger. There is a very diverse group of stakeholders whose acceptance level can impact a mining project. This group of stakeholders exist at local, regional, national and international levels and might have different interests! Possibly the Social Licence approach is a bit outdated
Comment by Isabelle Ramdoo on Friday

Hi @Audrey - please do :-) You are most welcomed!

Luke and Aaron: to add to your points on fewer community issues with new high-tech mines. I think as long as mining operations will happen close to local communities, there will be expectations that the mine will provide economic opportunities - and not just jobs by the way, but also procurement of goods and services, which will also become scarcer or will be different, if the mines become more automated (fewer jobs = arguably fewer employment related procurement; increased OEM contracts; etc). 

One of the questions therefore is: if the mine can no longer provide 'traditional' economic opportunities, are they willing or able to provide/ share some of their infrastructure and/or technological know-how with the community, to develop other economic activities? Renewable energy is potentially one of them; water saving technologies is another one; unmanned aerial vehicles to improve agri productivity could be another one. What will the 'CSR of the future' look like, so it can provide some offsets to the current traditional forms of economic opportunities?

Do some of you have practical examples of such offsets? Have any local community benefited from technology as a way to promote diversification?

Comment by Audrey Cash on Friday

Hello,

I would like to join the discussion.

Comment by Aaron Cosbey on Friday

Luke, you raise an important point in closing. Obuasi in Ghana, and Onaping Depth in Canada are re-commissioned mines that would not have been viable with conventional technology. So, while they provide many fewer jobs than a conventional mine, it's better than zero.

But then is the bottom line that we need to adjust expectations for the mine of the future - eventually there will just be fewer jobs, similar to oil & gas? If we said hypothetically that it's not a matter of reducing existing labour (which runs afoul of expectations), but only rolling out tech at new mines, would there be any issue with social license to operate? I know that's not exactly what you're saying, but I'm just exploring this space.

I guess it's not only an issue of license from the host community, but also from the host country. The AMV envisions a powerful role for mining as an engine of development, based on a model that seems to be fundamentally changing.

Comment by Luke Viljoen on Friday

Similar to many other industries disruptive technology in the mining sector will be inevitable. Safety and the ambition for "zero harm" has been a large driver for implementing new technology and automating tasks in mines. However as the technology has advanced, many mining companies are also considering increased automation to reduce labour costs and increase profit margins. For example in South Africa, many gold and platinum mines are seeing automation as the answer to increase the life of mine due to increasing depths, rising wages, and years of labour upheaval. 

If the challenges of implementing automation can be achieved in existing South African gold and platinum mines, a larger number of semi-skilled workers will be replaced with "digital workers" located in remote control rooms.

While some workers will benefit from upskilling and new roles, many more will be left jobless. This will create increased tension between communities, mining companies, and the government in a country with already staggering unemployment.  As others here have pointed out, managing expectations will be crucial in implementing a smooth transition. Fortunately, most mines will implement change gradually so there is scope for change to be managed effectively. 

Future mines developed with automation integrated from the beginning such as Syama in Mali, may face fewer community issues due to a lack of employment as the expectation for work is lessened from the start. The oil industry may be used as an analogy for future mines as it is typically less labour intensive and requires more skilled workers. 

Mimicking the oil industry, increased taxes could compensate for a reduction in employment as miners see increased margins from automation. This would have to be carefully considered however, as future automation could see the development of mines that would otherwise not have been economic. 

Comment by Roy Jakola on Thursday

Disruptive change based on new technology is a daunting challenge. Technology is a peripheral enabler, not the facilitator of true change towards society acceptance. The issue at hand must focus on social licence to operate.

 All major industries are enacting some technology change based on AI, IoT, digitization, block chain and many more new developments. What we hear about is the dents technology makes on multi-national corporations and even then these companies pick the cherries off the top and look for a ROI.

 Major mining houses are playing with new technologies, but the challenge for mining is its very difficult nature; a transient materials handling exercise in a safety critical bubble. Throw a commodity cycle crash on top of this and everything gets derailed each decade. True technology implementation on an industry wide basis is at least daunting.

 If you go down a level into the mid-tier class of mines or to exploration companies, it’s typically always survival mode, not shiny toys like AI and digitization. All mining companies can however make improvements in community relations by building trust, communicating better and shifting the value chain towards the community, and reducing corporate risk as a result. Sustainable mining practice can prove a ROI, that drives mining decision making, but it needs to be proven. The battle is in the board room and then at the community interface.

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