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Rigorous technology uptake could aid SA iron-ore market

HIGHER GRADE
The Simandou deposit, in Guinea, offers iron-ore with an estimated grade higher than 60%

HIGHER GRADE The Simandou deposit, in Guinea, offers iron-ore with an estimated grade higher than 60%

Photo by Bloomberg

26th July 2019

By: Mamaili Mamaila

Journalist

     

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The integration of technology into the iron-ore industry will reduce costs and improve the overall competitiveness of the sector in South Africa, suggests analysis and consultancy company Fitch Solutions senior commodities analyst Sabrin Chowdhury.

High production costs – owing to depleting reserves and high labour costs – are among the key challenges for iron-ore mining companies in South Africa.

“With the advent of the Fourth Industrial Revolution, artificial intelligence (AI) will play, and is already playing, a prominent role in driving miners’ transition towards automation and using modern technology.”

From the exploration stage to processing, AI has the potential to streamline operations, reduce costs and improve safety in the mining industry, she emphasises.

Fitch believes that using AI will prove particularly useful in improving the identification of exploration targets for mining companies. As ore grades and resources become more depleted, geologists will find it more difficult to identify new deposits with viable economic reserves for successful project development using traditional methods.

Therefore, Chowdhury points out that, in using Big Data, machine learning software can identify the combination of characteristics that predict the presence of ore in any given area.

“This will enable miners in Africa to not only improve the effectiveness of the exploration process but also potentially save significant costs. So far, we have seen how top gold miner Goldcorp partnered with IBM’s Watson computer system in 2016 to digest all available data and improve the mineral exploration programme at the Red Lake mine, in Canada. The same could be replicated by miners in Africa.”

Using vast amounts of data inputs, such as drilling reports and geological surveys, AI – and machine learning – can make predictions and provide recommendations on exploration, resulting in a more efficient process with higher-yield results.

“AI will also increasingly be incorporated into operations for the creation of ‘smart mines’ that will streamline entire operations. Unlike other technological applications – such as blockchain, which is only being tested by miners in pilot projects – AI is already being used by key players in vital areas of their operations,” she enthuses.

AI-powered predictive models will also enable mining companies to improve their minerals processing methods, through more accurate and less environmentally damaging techniques, Chowdhury explains.

“Moving forward, mining companies will continue to partner with specialised technology companies to effectively incorporate AI into their operations while developing their own in-house expertise,” she suggests.

Fitch Solutions highlights West and Central Africa as having significant potential in the iron-ore market, owing to large, untapped, high-grade deposits in countries such as Sierra Leone, Guinea, Congo-Brazzaville and Mauritania.

For example, the Simandou deposit, in Guinea, offers iron-ore with an estimated grade higher than 60%, which is significantly higher than the global average of between 40% and 50%. Congo-Brazzaville’s iron-ore reserves in the regions of Cuvette-Ouest, Sangha, Lekoumou and Niari are also estimated to have average grade higher than 60%.

Key challenges, such as investment in transport infrastructure and the establishment of stable political and regulatory regimes, which will improve investor sentiment towards the African mining sector and, therefore, raise the likelihood of projects coming to fruition, need to be addressed.

“One key constraint for iron-ore mining in Africa has been the subdued price environment in the past year. This has led to financial difficulties, as well as the suspension, delay or review of a number of projects,” says Fitch Solutions commodities analyst Diego Oliva-Velez.

Domestic operational challenges – mainly a lack of connecting infrastructure – also remain a significant constraint for iron-ore production in Africa.

For example, Fitch Solutions believes that a recent settlement that ended a legal dispute over the Simandou iron-ore project, in Guinea, is unlikely to lead to the development of the much-awaited project within its forecast period up to 2028, owing to logistical constraints.

“Like many African resource deposits, Simandou is located in a remote area with no existing transport infrastructure connecting the deposit to a viable port and any mining company looking to develop the mine will also have to invest in the associated transport rail and port infrastructure,” he asserts.

Should an agreement for the development of the project be reached, the scale of the surrounding infrastructure required to successfully export the ore, as well as potential challenges relating to its landscape, need to be taken into consideration, he suggests.

“The displacement of local communities and environmental concerns means that, realistically, it would take a number of years before the project can be commissioned,” concludes Oliva-Velez.

Edited by Mia Breytenbach
Creamer Media Deputy Editor: Features

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