Just how much will mine automation impact the workforce?

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We’ve been hearing a lot lately about developments in automation in mining and the massive impact this is going to have on the workforce. There’s no doubt it’s an exciting time for technology development, both in the individual pieces of equipment that are being invested in, from automated drill rigs right through to development across the whole process; pit to port.

It begs the question of what impact this commitment is going to have on the mining workforce, and it’s clearly a topic of much debate.

Rio Tinto recently commissioned a report by BAEcomonics on that very matter. The BAEconomics report warns that while some traditional mining roles will be lost "over time", the impact of not automating mine sites would have a broader effect on job growth in Australia.

The report also states: "In order to succeed in the global market place, Australian mining businesses must therefore innovate and change their operations to at least match the costs of their international competitors."

And it seems we aren’t the only ones questioning the impact and challenges this poses to labour. We posted an article on LinkedIn recently about the pit to port automation process and it sparked a

great debate around this issue. One which seems to have lots of uncertainty as to what’s on the horizon for the workforce:

Labour Augmentation Vs Labour Replacement

Shane Granger (Master of Economics and Regional Development at the University of New England)
“I think it has economic implications which are not being looked at in the level of detail needed, especially in the area of Employment Redesign.

Mervyn Sher (Risk and Compliance Consultant at Sher Associates):
“You’ve certainly identified the critical area that is requiring immediate and long term planning relating to this technology – Employment redesign. As previously stated, the technology is already here, it’s the management systems that need to be realigned to the technology – not the other way around.”

Labour Augmentation

Mervyn Sher: “In the long term we will definitely be seeing a rise in all process automation within the resource industry, that’s a given. However, if planned properly and implemented correctly this awesome technology can be implemented beneficially without the loss of a single job – simply by planning and implementing the re-skilling, retraining and education of the future workforce TODAY.”

“Take the motor vehicle as a technological advance. How many jobs did this invention remove globally? Simply put, it changed the face of how we live completely. It did away with beasts of burden, the stable-hands were no longer required, feed merchants took a dip in income etc. Yet as the technology improved on itself, the people who used it started to find new uses for it – way outside of the traditional square of previous thinking.”

“Yes, maybe there will be less human interaction on specific sites where automation is implemented, but such interaction will by its nature be more productive, efficient, higher skilled and therefore higher paid, and will always be the controlling factor.”

Todd Myers ( Principle Mining Engineer at BHP Biliton): “I still think we are talking about labour augmentation, not replacement. Just that we are getting closer to the pointy end of labour augmentation. Even in your example (self help checkout operational system), you still have one staffer looking after six stations (which are probably used less efficiently than a staffed station was previously). So you've probably cut your labour requirements at checkout by 2/3, but still haven't replaced it.

I think it will be the same with mine site automation. You are still going to require someone to turn the spanners and the operators will be replaced by people running the automation system. There might be a small drop in employment (which is a good thing - this is an increase in productivity which is how we all get pay rises), however, I see the biggest gain as potentially being more reliable and productive (i.e. capital efficient) operations compared to current systems that are let down by human factors (i.e. shift changes, crib breaks and inherent variability in ability to do things like back trucks up quickly).”

Labour Replacement

Shane Granger: “First of all, a theory of economics is the basic Solow model, that is once economies reach their long run potential then economic growth only matches population growth. Yet this hasn't explained why developed economies have continued to grow since 1820 with the missing component being technology. The underlying theory stresses that you can get a productivity benefit by labour augmentation, with excess labour being moved into more productive occupations.

The problem with this model in light of the mining boom MkII is that once companies reach a labour price that they find too expensive they will look around for new models to reduce their labour price, especially when commodity prices are on a potential cyclic reduction. Obviously, the EMA mechanism is one crude avenue to reduce unit labour cost price but the long game is in automation, that is replacing people with robots. In the short term this has the benefit of having less highly paid (& relatively low skilled people working on your site) with all their attendant support staff (safety, HR, admin etc), it also significantly reduces the requirement for FIFO/DIDO arrangements which is increasingly going to become a legislative risk & lessens the impact of Industrial Relations.

In the longer term and once you have the infrastructure built if you have reasonable control over your reduced labour costs you can run a mine producing 'insert commodity' at both the low & high end of the commodity price cycle without having to close production at the low points. This is a powerful incentive for the big players (Rio/BHP et al) and I think once this reaches a tipping point no mining business in a developed country will be able to run in a non-automated fashion.

Labour augmentation or job redesign activities are now being replaced with labour replacement or employment redesign activities. If I ran a mining business I would not want to be hiring semi-skilled labour (truck drivers, drillers etc) with their total cost of employment (salary, admin, HR, FIFO etc.) costs often exceeding $200K when I could be paying a similar resource in Africa, South America or Asia a fraction of that.

What we will see over the next generation of mine workers will be the replacement, first in the developed world then as the TCO reduces in the middle income economies etc. Rio Tinto first targetted train drivers but in recent years is now testing driving & drilling as other semi-skilled occupations that can be automated. These will be replaced by very technically competant staffing but at much reduced levels. Already you are seeing technology impacts of AI maintenance programs being inbuilt into complex airframes so I would also guess that this would be ideal area to look opportunities in employment redesign.

This will be the last great mining employment boom (as an aside mining only employs less than 3% of the Australian workforce, less than 300,000 in real terms) but the pickup in employment has been impressive in recent years (that is +10% improvements in employment where other trade exposed and non-traded sector employments have atrophied or grown in marginal percentile rates). Once the labour intensive infrastructure builds are in place you just won't need to replace them with the numbers you needed in our last resources boom (back in the 1960's) and as more labour replacement technology comes on board the mine of the future may look more like a much more employee diminished place that it has for the past few years and potentially the rest of this decade.

Now if you don't believe all of the above just have a think about this the next time you are in a supermarket where the cash-out terminal with the scanning technology implemented in the 1980's is being replaced by self-service technology (often 4-6 stations which is administered by a staffer).

Where once labour was augmented by technology it is now being replaced by technology. I believe we are now at the pointy end of labour augmentation and it will be interesting times ahead!”

The debate looks set to continue well into the future as it’s clear there are a number of views on the benefits that mine automation can bring to the mining industry workforce.

With the introduction of automation, job opportunities will be accessible to a new generation of engineers. The change in technology will also spark a development in existing roles and allow current employees to gain further education, qualifications, and training in their respective areas.

This issue, amongst many others, is set to be discussed by the companies at the forefront of the adoption of automated mining equipment and technology at the Mine Site Automation and Communication 2012 conference, taking place in Perth in August.

To find out more about the presentations and workshops being run at the conference download a copy of the agenda here www.mineautomation.com.au.