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Hugo’s Corner: AI for Edge – The Mining Industry’s Digital Revolution

In this edition of Hugo’s Corner, we delve into the contemporary hurdles facing the mining sector and the pivotal role that Artificial Intelligence (AI) and Machine Learning (ML) play in offering viable solutions.

The mining industry faces notable challenges, particularly in the scarcity of discoveries in crucial energy transition metals like copper. BHP’s strategic pivot towards commodities, especially copper, in the fiscal year 2024/25, underscores the necessity of astute capital allocation.

With a decline in copper discoveries observed from 1990 to 2023, experts anticipate a growing interest in AI-driven exploration solutions. BHP’s significant investment in copper exploration, comprising 40% of its total investment, emphasises the crucial aspect of capital efficiency.

An overarching AI strategy is essential, focusing on exploration methodologies, workforce enhancement, collaborative endeavours, and regulatory adherence to optimise resource utilisation and mitigate operational risks amidst the evolving mining landscape.

The sector’s prosperity is intricately tied to the effectiveness of AI in tackling diverse challenges and fostering innovation toward sustainable mining practices.


AI In The Mining Industry: The Challenges


The scarcity of discoveries within the mining sector poses a considerable challenge, particularly concerning essential energy transition metals like copper, despite the escalating demand. Despite concerted exploration efforts, the industry continues to struggle in uncovering new viable deposits, thereby amplifying concerns surrounding potential future supply shortages. This scarcity underscores the urgency for innovative solutions and strategic planning to address the looming resource deficit.

In response to these challenges, major players such as BHP and similar companies are redirecting their focus towards copper exploration for the fiscal year 2024/25. This strategic pivot underscores the pivotal role copper plays in facilitating the energy transition and highlights the pressing need to secure future supply to meet the ever-increasing demand. The emphasis on copper exploration reflects a proactive approach aimed at safeguarding against potential supply disruptions and ensuring continued access to this critical resource.

Efficient capital utilisation emerges as a critical imperative within the mining industry, particularly in light of the scarcity challenges confronting the sector. Given the limited availability of new discoveries, investing in exploration projects with substantial returns becomes paramount for ensuring long-term sustainability and profitability. Strategic allocation of capital towards high-potential projects is essential to optimise resource utilisation and maximise returns on investment.

The emergence of AI solutions presents a promising avenue for addressing the complex challenges facing the mining industry. Industry experts anticipate a surge in interest in AI-driven technologies for mining exploration, recognising their potential to enhance efficiency and effectiveness. Leveraging AI can significantly improve exploration processes, enabling the identification of new mineral deposits with greater precision and speed. Furthermore, AI-powered analytics can aid in optimising capital allocation strategies, ensuring that resources are directed towards the most promising ventures. As the industry embraces technological innovation, AI stands poised to revolutionise mining exploration, driving productivity gains and facilitating more sustainable resource management practices.


Dry Up of Copper: 1990-2021


Studies conducted by S&P Global Market Intelligence delve deep into the persistent decline in copper discoveries, shedding light on a worrisome trend reverberating throughout the mining industry. Despite concerted and extensive exploration efforts, the frequency of new copper discoveries has steadily dwindled over recent decades, with a marked downturn evident since the 1990s. This sustained decline is of significant concern, especially considering the indispensable role copper plays across various industries, particularly amid the surging demand propelled by energy transition initiatives. The analyses underscore the formidable challenges confronting the mining sector in replenishing copper reserves to meet the escalating demand of the future. With such a pressing need, there’s a palpable emphasis on the necessity for pioneering solutions and strategic foresight to confront and mitigate this looming resource deficit. As the industry grapples with this critical issue, innovative approaches and proactive planning are deemed imperative to navigate the complexities of sustaining the copper supply chain and ensuring continued access to this vital resource.


BHP Major Growth Projects


BHP’s annual report for 2023 delineates a strategic focus on major growth projects, particularly in the realm of copper. One significant endeavour highlighted in the report is the Spence Growth Option project, designed to enhance the Spence copper mine’s lifespan in Chile. This initiative involves the development of additional ore reserves to optimise production and extend the mine’s operational viability. Furthermore, BHP emphasises its commitment to copper exploration and development, aiming to capitalise on the increasing demand for this critical metal, particularly in the context of the global energy transition. The report also underscores BHP’s dedication to responsible resource stewardship and sustainable mining practices, ensuring that copper extraction aligns with environmental and social considerations.


BHP FY23 Consolidated Capex & Exploration


As BHP transitions into a capital-intensive phase, the company is strategically directing its focus towards future-facing commodities, particularly copper. This shift is underscored by BHP’s allocation of approximately 40% of its capital towards copper exploration, highlighting the substantial investment being made in this pivotal sector. With such a significant financial commitment, it becomes imperative for BHP to carefully consider and prioritise the efficient utilisation of capital. The company recognises the importance of optimising capital allocation strategies to ensure that resources are effectively deployed towards initiatives that offer the greatest potential for long-term growth and value creation. By prioritising efficiency and effectiveness in capital utilisation, BHP aims to maximise returns on investment while minimising risks, thereby solidifying its position as a leader in the global mining industry and securing sustainable growth opportunities in the future-facing copper market.


Path to Cleaner Energy Success: A Strategic Blueprint


the integration of AI and machine learning technologies offers significant potential to revolutionise various aspects of the mining industry. Through advanced algorithms and predictive analytics, these technologies enable efficient analysis of geological data, leading to enhanced exploration efforts and optimised resource extraction processes. By minimising waste and energy consumption, mining companies can operate more sustainably while maximising profitability. Moreover, investing in workforce training programs to equip employees with AI and machine learning skills fosters a culture of innovation and technology adoption within the organisation. Collaboration with research institutions and technology providers further facilitates knowledge sharing and the exchange of best practices in AI implementation for cleaner energy production. Additionally, ensuring regulatory compliance and effective risk management strategies are crucial steps in navigating the complexities associated with AI adoption in mining operations. By embracing these initiatives, mining companies can position themselves at the forefront of technological innovation, driving efficiency, sustainability, and long-term success in the industry.