The gold mining industry is one that is time, capital, and labor-intensive. According to the World Gold Council\u2019s comprehensive survey, which was conducted across 15 key gold mining players, the industry has experienced outsized expenditure growth relative to total gold output; expenditures increased 85% from 2009 to 2012, whereas gold output increased by a mere 7% in the 3-year timeframe [2]. Moreover, since the California Gold Rush, over 90% of the world\u2019s gold has already been mined [3].<\/p>\n
Gold Mining Process [4]<\/u><\/strong><\/p>\n The gold mining process involves extracting ore (metal-rich rock) from the earth. The first step in gold mining and production is the exploration phase<\/strong>. This step can take up to ten years and requires significant resources and technical expertise. Geologists need to analyze a location in depth, focusing on concentration and grade of potential gold as well as the technical feasibility of mining in that specific location. On average, a deposit contains only 1.01 grams of gold per metric ton of ore [8].<\/p>\n The development phase<\/strong> takes anywhere from 1-5 years, and involves acquiring necessary licenses based on local regulation and determining the size and type of the mine at that location.<\/p>\n Once the ore has been extracted from the ground, gold must be extracted from the ore itself. This step requires additional processing, such as leeching, which is a chemical process to separate the minerals from the ore.<\/p>\n Barrick\u2019s Digital Evolution<\/u><\/strong><\/p>\n Gold mining has undergone minimal changes over the past century. In fact, the way we extract gold is the same as the process undertaken 100 years ago. To position itself as a trailblazing leader, Barrick has heavily invested in digital technology; in the words of John Thornton, executive chairman of Barrick, digitization has \u201cdramatic applicability for the mining industry\u2026this is like the 19th<\/sup> century meets the 21st<\/sup> century\u201d [5].<\/p>\n In 2012, Barrick partnered with Cisco and installed solar-powered wireless mesh technology around and inside its mines in New South Wales, Australia [6]. This technology provides internet connectivity across mine pits at all locations and depths; the mobility of the wireless network enables Barrick to enhance communications for its mining dispatch operations [6].<\/p>\n This past September, Barrick partnered again with Cisco to digitize the traditional mining process. Piloting at Cortez mine in Nevada, the new initiative involves advanced sensing technology, real-time operational data, predictive algorithms and automated equipment to improve efficiency and productivity in the mines \u2013 in fact, every single piece of data, from fuel use to tailings waste, would ultimately be digitized [5] [7]. Real-time data will enable Barrick to revolutionize what is currently an antiquated, manual operating model, shifting from human-driven processes to technology-driven processes. Instead of wasting time manually diagnosing conditions in the mine, Barrick is able to immediately pinpoint issues and solutions through the technology \u2013 thereby eliminating time-consuming steps along its operating model.<\/p>\n Being able to react quickly to factors such as weather patterns and market prices will fundamentally impact its business model in a powerful way. Barrick will not only generate cost savings on improving manual processes, but will also be able to expand into less efficient mines \u2013 those that were previously overlooked due to economic infeasibility \u2013 and turn them around [7] with the technological enhancements.<\/p>\n Barrick ultimately aims to expand the digital technology across all of its mines. The alignment in communications across the entire mining chain allows for informed, optimal business decisions. Moreover, the digital technology will enable Barrick to better manage its use of energy, water, and emissions and build stronger partnerships with local stakeholders \u2013 key to its core business.<\/p>\n Though digitization is crucial to revamp the gold mining process, Barrick must address the potential ramifications of its technology investment. First, Barrick must consider how it will incorporate its existing human capital into the new technology-centric operating model. Second, as mining can never become 100% digital due to its manual nature, Barrick must figure out how to best balance its existing, human-led processes with the digital platform. Third, the new platform appears to add the most value to the extraction step in the mining process; ultimately, Barrick should look into technology that also drives efficiencies in the exploration and development phases, which can take more than a decade.<\/p>\n Despite the upfront investment, it is important that Barrick follows through with such an ambitious plan. By being a pioneer in the industry, Barrick will be able to influence other key players to follow suit.<\/p>\n <\/p>\n Word count: 790<\/p>\n Sources:<\/strong><\/p>\n [1] Barrick Gold Corporation 2015 Annual Report, Barrick<\/u>. March 2016. http:\/\/quote.morningstar.com\/stock-filing\/Annual-Report\/2015\/12\/31\/t.aspx?t=:ABX&ft=&d=f2ba3b3a93310edfb8cefa36eb5fc37f<\/a> Accessed November 2016.<\/p>\n [2] \u201cResponsible gold mining and value distribution: A global assessment of the economic value created and distributed by members of the World Gold Council,\u201d World Gold Council.<\/u> October 2013. http:\/\/www.gold.org\/download\/file\/3212\/Responsible_gold_mining_and_value.pdf<\/a> Accessed November 2016.<\/p>\n [3] \u201cFacts about gold,\u201d World Gold Council.<\/u> http:\/\/www.gold.org\/history-and-facts\/facts-about-gold<\/a> Accessed November 2016.<\/p>\n [4] \u201cHow gold is mined and the project life-cycle,\u201d World Gold Council.<\/u> http:\/\/www.gold.org\/gold-mining\/how-gold-mined-and-project-life-cycle<\/a> Accessed November 2016.<\/p>\n [5] Bochove, Danielle. \u201cCar Talk Triggered Barrick-Cisco Plan to Add Tech to Mining,\u201d Bloomberg.<\/u> September 12, 2016. http:\/\/www.bloomberg.com\/news\/articles\/2016-09-12\/car-talk-spurred-barrick-cisco-plan-to-reshape-mining-with-tech<\/a> Accessed November 2016.<\/p>\n [6] \u201cGold Mining Company Lowers Costs and Improves Productivity,\u201d Cisco.<\/u> http:\/\/www.cisco.com\/c\/dam\/en\/us\/products\/collateral\/wireless\/barrick_gold_cs.pdf<\/a> Accessed November 2016.<\/p>\n [7] \u201cBarrick and Cisco Partner for the Digital Reinvention of Mining,\u201d Barrick.<\/u> September 12, 2016. http:\/\/www.barrick.com\/investors\/news\/news-details\/2016\/Barrick-and-Cisco-Partner-for-the-Digital-Reinvention-of-Mining\/default.aspx<\/a> Accessed November 2016.<\/p>\n [8] Fickling, David. \u201cFool\u2019s Gold in High Tech,\u201d Bloomberg.<\/u> September 13, 2016. https:\/\/www.bloomberg.com\/gadfly\/articles\/2016-09-13\/fool-s-gold-in-high-tech<\/a> Accessed November 2016.<\/p>\n![\"gold-output-industry\"](\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/gold-expenditures-industry.png\")
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