Australian mining giant Rio Tinto is taking a leadership stance on automated mining while backing away from pricey acquisitions.
Chief Executive Jean-Sébastien Jacques says Rio Tinto is 10 years ahead of its rivals in autonomous technology. At the company’s operation in the Pilbara region of Western Australia, driverless trucks and unmanned drilling rigs and trains dig, load and haul iron ore, controlled remotely by engineers in Perth. The work is certainly getting done. Now the question, for Jacques and newly appointed Chairman Simon Thompson, is if the technology can help Rio Tinto weather the boom-and-bust cycle of the mining industry.
The company is seeing productivity gains from automated mining, with a marked difference between 12- and 24-hour periods. Over the course of 12 hours, production from manned trucks is about equal to that of unmanned ones. But autonomous trucks stop only once a day to refuel. At the 24-hour point and beyond, having no breaks, fatigue or worker changeover starts to tip the balance in their favour. According to Chris Salisbury, Chief Executive of Iron Ore, autonomy allows drilling to run for almost a third longer on average.
Rio Tinto is playing the long game with autonomous mining. It introduced driverless trucks nearly a decade ago, and has since progressed slowly. Jacques expects technological improvements to provide only a third of the $5 billion in additional free cash flow the company plans to generate over the next five years, The Economist reports. However from 2021 on, he expects technology, particularly automation, to be a bigger revenue driver.
Higher returns, brought about by more careful spending and quality improvements, are also on the company’s agenda. Under previous leadership, Rio Tinto spent big on acquisitions such as Alcan, a Canadian aluminium company, and Riversdale, a coal mine in Mozambique, slashing returns in the process. Chairman Thompson will need to manage the legacy of these expenditures.
Overall the core mining business is in good shape. There is healthy demand from China for the high-grade iron ore in which Rio Tinto’s Pilbara operation specialises. Aluminium demand is likely to grow as a result of rising demand for lighter cars. Rio Tinto’s longer-term plans include starting iron ore production at Koodaideri in the Pilbara with an “intelligent” mine. It recently ran a nearly 100km test run of the first autonomous iron ore train. Yet Jacques is firmly against making high-priced acquisitions, insisting that not even prized battery minerals such as lithium will get the miner off its determined course.