Nanalyze

How Rio Tinto Uses Technology For Ethical Mining

Ethical mining. It seems like a contradiction in terms, like ethical hacking. Or it might even sound like fake news. But in a world where companies monitor social media channels for PR damage control, it pays to be more socially responsible these days. Mining is obviously a dangerous occupation – how many miners-trapped-in-a-mine disaster stories have we seen? – but it’s far from the most deadly (that dubious honor goes to jobs in logging and fisheries). It’s also a dirty industry that can damage the health of both people and the environment, but it’s a necessary evil unless we want to return to our Platonic cave. So, for those who balk at the concept of ethical mining, the idea is that technology can help make mining less evil. One company that’s using technology to make mining less evil – in other words, greener and safer, as well as more efficient – is Rio Tinto.

What is Rio Tinto?

A multinational corporation headquartered in both London and Melbourne – so the 47,000 employees are going to at least sound pretty smart – Rio Tinto was founded way, way, way back in 1873 for the purpose of mining copper in Spain near the Red River (Rio Tinto). It’s a pretty fascinating history, including ownership by the famous Rothschild family (a favorite of conspiracy theorists), intrigue surrounding the Spanish Civil War and World War II, and some of the usual allegations of pollution and corruption that seem to dog any large corporation that extracts natural resources as its core business from poor countries.

A ship is loaded with bauxite at a mining port.

A ship is loaded with bauxite at a mining port. Credit: Rio Tinto

Today, Rio Tinto is one of the largest mining companies in the world, trading on exchanges in London and Australia, as well as the New York Stock Exchange (RIO). Its major products are aluminium, copper, diamonds, gold, industrial minerals (borates, titanium dioxide, and salt), iron ore, and uranium. While clearly a product of Old World politics and values, the company has embraced new technologies like few others in its industry.

Autonomous Mining Trucks

The technological transformation seemed to have really taken hold back around 2008 when Rio Tinto kicked off its Mine of the Future program. That’s when the company started using autonomous trucks the size of a two-story building. Capable of carrying 350 tons, the vehicles use GPS and other technologies to operate autonomously. About a quarter of their giant trucks are now autonomous, and they reportedly have reduced fuel consumption by 13% along the way.

Rio Tinto has a fleet of 80 autonomous trucks.

Rio Tinto has a fleet of 80 autonomous trucks. Credit: Rio Tinto

The innovation doesn’t just stop at autonomous driving. It also encompasses the Internet of Things (IoT), as each of the truck’s tires contain somewhere around 40 sensors. When human intervention is needed, human drivers can come online from a command center more than 930 miles away. In February 2018, their autonomous trucks surpassed hauling one billion tonnes of ore. Plans are in place to increase the number of autonomous trucks in the field from 80 today to more than 140 by the end of 2019.

The World’s Biggest Robot

But the company’s biggest pivot toward automation was last year when it deployed AutoHaul, billed as the world’s largest robot and the first automated long-distance rail network. The nearly $1 billion project automates the transport of iron ore in Western Australia from the company’s 16 mines to four port terminals. The average journey is about 800 kilometers (nearly 500 miles) and takes about 40 hours to complete, including loading and dumping the ore.

The Rio Tinto AutoHaul train is 2.4 kilometers long.

The Rio Tinto AutoHaul train is 2.4 kilometers long. That’s about 1.5 miles to you, Yanks. Credit: Rio Tinto

Onboard cameras enable remote operators to monitor the whole operation, and more than 60% of all train kilometers are now completed in autonomous mode with a driver on board for supervision.

Digital Twins and Data

The company is marching toward a pit-to-port intelligent mining operation that will combine its proven mining technology with machine learning and other analytics that will enable the machines to make most of the day-to-day decisions. One of the many innovations toward that goal is the use of digital twins, an emerging technology that creates a virtual model of a real-life thing – in this case, a mining operation – that can be created and updated in real-time from data in the field. Rio Tinto certainly has the data: Its operations “generate 2.4 terabytes of data every minute from hundreds of pieces of mobile equipment and sensors.” That’s what we call big data. And a big investment: Rio Tinto has earmarked $2.6 billion for its intelligent mine project in Western Australia, which is expected to create 600 permanent jobs, in addition to 2,000 construction jobs. The mine is expected to deliver its first tonnes of ore in 2021, assuming it meets regulatory approvals.

Drones and Video Games

When it comes to how technology is being used by Rio Tinto, autonomous automation, robotics, and data are all recurring themes. But some of their technology applications are quite innovative, such as the Bingham Canyon copper mine in Utah where they use “remotely operated land rovers and drones to do risky jobs – like checking high walls in open pits and parts inside big machinery.” In human resources, they’re using virtual reality for new employee orientations and they’re using augmented reality to show workers hazards in the field or provide them with complex instructions for a task. Like video games? Their futuristic rock-breaker is operated by a gaming console exactly like the ones in living rooms and bedrooms across the country.

Rio Tinto video game operator

Source: Rio Tinto

The mining employee of tomorrow may not even need to go out in the field. Rio Tinto was the first mining company to have an automated blast-hole drill system that enables an operator using a single console at a location remote from the machinery to operate multiple drill rigs from multiple manufacturers.

Environmental Friendly Mining?

Anyone who has seen images of mountaintop removal mining, a technique in coal mining that involves blowing off the tops of mountains, is probably pretty skeptical when it comes to greenwashing any mining operations. And, as we said earlier, Rio Tinto itself has been embroiled in its share of alleged environmental mismanagement, particularly at a copper and gold mine in Indonesia that eventually led one of the world’s largest pension funds to divest itself of $870 million of Rio Tinto stock.

Rio Tinto and its partners have developed a carbon-free process of processing aluminum that only produces oxygen as a byproduct.

Rio Tinto and its partners have developed a carbon-free process of processing aluminum that only produces oxygen as a byproduct. Credit: Rio Tinto

However, the company appears serious about its environmental reputation, going so far as to sell its entire interest in the Indonesian mine last year. It also recently sold off its coal mining operations and has signed on to the Paris Accord to reduce carbon emissions. Rio Tinto says it has reduced its own emissions by 30% since 2008, and nearly 75% of the electricity it uses comes from renewable sources. Last year, it announced a partnership with Alcoa, Apple, and the Canadian government to develop a carbon-free aluminum smelting technology. It also supplies Nespresso, maker of enough coffee capsules to reach to the moon and back a hundred times over, with “responsibly-sourced” aluminum that is supposed to be 100% sustainable by 2020.

Just this month, Rio Tinto commissioned a new $1.9 billion bauxite mine and port in remote Cape York Peninsula, an ecologically rich and sensitive region in northern Queensland that is also home to a sizable Aboriginal community and some of the world’s oldest rock art. Bauxite is the main source for aluminum. The facility was built in modules and then connected on the site in order to reduce impacts from construction, which ended up reducing construction time by a year. That strategy also potentially saves lives by removing the need for 300,000 work hours.

Mining for Gold

But is it financially sustainable for a company like Rio Tinto to be environmentally sustainable while deploying these big technological projects? Well, last month, Rio Tinto announced record returns to shareholders of $13.5 billion including a final dividend of $3.1 billion and the special dividend of $4 billion. However, it’s important to keep in mind that last year was a bit of an aberration, as Rio Tinto dumped the last of its coal mine assets (about $4 billion there) and interest in the pesky Grasberg mine in Indonesia (another $3.4 billion). Along with a few other moves, that brought total divestment in 2018 to $8.6 billion. At the same time, it completed $5.4 billion of share buy-backs in 2018 in off-market and on-market moves.

Rio Tinto Financials

Source: Rio Tinto

What many dividend income investors look for is a track record of consistent dividend increases over the years as opposed to sporadic one-off payments. Using technology and automation, Rio Tinto is able to secure tomorrow’s dividend increases.

One thing Rio Tinto hasn’t done in recent years is make many acquisitions. In fact, it hasn’t acquired anybody or anything in at least three years, aside from the joint venture with Alcoa, in which it invested $5 million. Given the company’s technological proclivities, we wouldn’t be surprised if it someday explores some more edgier investments or acquisitions, such as in a startup like RS Metrics that uses satellites to forecast metals and other commodity prices. Just last year, Rio Tinto Ventures was formed which means they’ll be proactively seeking out technologies in addition to what they develop in house.

Conclusions

Until we can mine asteroids or the moon for all of the minerals and precious metals we need for our gadgets, we’ll need to continue extracting resources here. However, as Rio Tinto illustrates, it’s possible to mine the Earth in smarter and greener ways using the latest mining technology with big data, robotics, and other automation-enabling technologies like the Internet of Things. In fact, based on Rio Tinto’s recent history of big, ambitious projects, we wouldn’t be surprised if it was the first commercial operator to mine an asteroid. The only question that remains: Will Bruce Willis be available for the sequel?

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