Deloitte expects digitisation to transform the African mining sector

26 March 2018 Authored by Consultancy.africa

Commodity-based industries are not immune to digital disruption; according to a new report from global professional services firm Deloitte. The mining industry, in particular, is set to undergo changes in its operational structure, nature of work, and regulatory framework, and will face an entirely new set of threats, says the firm.

The digital age is upon us, ushered in through what Big Four accounting and advisory firm Deloitte describes in its new report as the fourth industrial revolution; the first being water and steam, the second being electricity, the third being the dawn of electronics, and the fourth being the integration of technology into every aspect of life.

Such is the scenario across the world, as Internet of Things (IoT) entrenches technology in our private life, while AI, FinTech, cloud, and a plethora of other advancements revolutionise the professional space. In the latter case, some sectors have been affected at a slower rate than others. 

Commodity-dependent sectors, for instance, which form the foundation for a number of African economies, are characterised by physical work, and have remained relatively immune to the dawn of software integration. According to Big Four firms PwC and Deloitte, this is set to change substantially. PwC recently published a study detailing the future role of innovation in the oil industry. Deloitte has now predicted the same for the mining sector with the advent of the “digital mine.”

Two major trends characterise economies across Africa at present; the digitalisation of its population, and the diversification of its economy. In order to survive such a scenario, the mining sector needs to modernise in tandem with the surrounding ecosystem, and use technological tools to push beyond its traditional infrastructure.

The cycle of continuous and periodic change

As mining companies begin this process, Deloitte, in a report that it presented at the World Economic Forum earlier this year, classifies the entire process of change into five broad categories. The first is the emergence of the digital mine, which entails new features such as “digitised geological information, outsourced identification of mineral deposits, autonomous mining equipment, real-time data capture and feedback, wearable devices for maintenance and operator safety, drones for inspection and monitoring, a mobile connected workforce,” just to name a few.

The process of introducing such a novel concept, however, needs to be an intensive and continuous one, according to the firm. In essence, digital methodology not only needs to be integrated into the mining process, but needs to become a driving principle for the management and decision-making process as well.

The second area of prominent change will be the “Future of Work” in the sector, which involves significant upgrades in safety measures to begin with, but will also shift the labour requirements of the industry. On the one hand, automation will threaten a large number of jobs in the sector, while on the other, digitisation will enhance flexibility in the process, enabling fairer working hours and better compensation.

Defining value beyond compliance

Regulatory policies represent the third broad area of change. The mining process has implications that stretch across various aspects of society, from environmental considerations, to labour rights, to ambiguous considerations of ownership. In this respect, the report recommends a ‘shared value’ approach to mining regulations, which entails the shift in priority from merely ensuring compliance to actually generating value for all stakeholders involved. 

Similar to the considerations about the future of work, the fourth area of change, i.e. the socio-economic impact, also revolves around the consequences of automation on jobs in the mining sector. Jobs will not only reduce, but will take on a new character altogether, which entails the requirement of skill-training both within the sector and outside of it for workers in need of rehabilitation.

Lastlly, the adoption of digital techniques brings with it the threats of the digital world. Although physical safety will be greatly enhanced, digital mines must now be weary of threats in the cyber realm, which are increasingly prolific across a variety of sectors.

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