The Near Future of Mining in the U.S.

January 2018

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INNOVATION BREEDS NEW SPECIES
PREDICTION 1

MINERAL X
Driven by innovation in the sector, a currently unknown mineral will become an integral part of the US's energy mix by 2020. 

The US mining industry spans a diverse set of familiar minerals, with coal, iron ore, copper, zinc,  and limestone topping the list. By 2020, we predict there will be a new mineral among that list that will be a core contributor to the national energy mix.

A December executive order (EO) issued by President Trump could spur US mining companies to increase exploration for, and excavation of, a new commodity. The EO aims to reduce the nation’s reliance on imports of critical minerals—a goal which “mineral X” could be instrumental in achieving.
 
Innovation will be a focal point of mining through 2020. Beyond discovering new minerals, research and development initiatives will play an essential role in a new commodity’s emergence. Unmined resources remain unexplored largely because a practical use has not yet been identified, so no demand exists yet. 
Mining companies that prioritize exploration in new minerals will also need to engineer demand. Minerals in isolation often don’t immediately have a concrete use, but when they are combined with other entities, their value could be tremendous. There are very few practical applications of zinc, for instance, but when it is adhered to steel, zinc stops it from rusting. Today, zinc has grown to be among one of the most valuable minerals in the world. In August 2017, the price of zinc hit a 10-year high. Once a practical application is identified, many industries are likely to tap into the new mineral. 
 
Leading into 2020, innovative mining executives will adopt the mindset: Drill it, and they will come. 
 


MINING DOES THE ROBOT
PREDICTION 2

AUTONOMOUS TECHNOLOGY
Most mining companies will grow to spend 10 percent of revenue on IT by 2020, compared to just 1 percent in 2015. As a result, many US mining entities will continue to expand efforts to integrate autonomous technology by 2020.

Driverless technology, deep sea excavations, and mining expeditions on the moon were once just the ideas of sci-fi movies. Today, they’re near reality. Companies that fail to boost their investment in technology will be eclipsed by those that do.

As subdued commodity prices are expected to stay the norm, the value of harnessing technology is clear. Internet-connected devices allow mining companies to streamline operations, reduce expenditures, and keep prices competitive. Take Rio Tinto for example. It recently opened a processing center in Brisbane, Australia, to monitor and analyze processing data in real time from seven of its operations in the US, Mongolia, and at home. It will use the data it collects to optimize its mineral processing at those sites.

Driverless technology, meanwhile, increases mining output by 15 to 20 percent, and, at the same time, decreases fuel and maintenance costs by 10 to 15 percent and 8 percent, respectively, according 
to the International Institute for Sustainable Development. But self-driving trucks are just the 
beginning. US mining companies that digitize all their drilling—turning to automated drillers and Internet-connected sensors—will realize  far more savings than those that don’t. In fact, globally, we predict mining companies’ per ton digging costs to decrease by more than 30 percent because of automation. As mining operations become increasingly digitized, the career path of a traditional miner will shift as demand increases for digital skill sets. Traditional operational positions—drilling, blasting, and driving—will be downsized and replaced by demand for remote operators and maintenance personnel.

Increased investment in technology—to the tune of 10 percent of revenue spent on IT—will make autonomous mineral excavation the norm for US mining companies. This will allow them to realize savings in reduced labor costs, maximized output, fewer safety incidents, and an increased ability to make data-driven decisions. Those that up their investment in technology will hold onto their customers over those that don’t, as commodity pressures remain.
 


INCREASED FUNDING FUELS A NEW (CLEANER) BREED OF US COAL
PREDICTION 3

INFRASTRUCTURE FUNDING BOON
More than 10 percent of U.S. national infrastructure projects funded through 2020 will be projects in the mining sector.

The mining industry is on the brink of an infrastructure boom. Likely to jumpstart the increased exploration, resident Trump signed an executive order in 2017 expediting environmental reviews and pprovals for high-priority infrastructure projects.

Removing some regulatory roadblocks could pave the way for US exploration in minerals and entities outside the nation’s core energy mix, such as lithium. The US currently has just one active lithium mine, the Silver Peak mine in Nevada. As more states follow California’s lead leveraging lithium batteries to store renewable energy and supplement their electrical grid, the US mining industry could be incentivized to meet increased demand.

In addition to investment in emerging minerals, we expect coal mining will continue to drive a large portion of mining activity in the US through 2020. While coal production has decreased in recent years—declining nearly 20 percent in 2016—the sector will continue to refine the mineral for reduced environmental impact to remain competitive with renewables. Cleaner coal’s market share has already started to grow. Refined coal—processed to remove pollutants—comprised nearly one-fifth of last year’s US power sector’s coal consumption through September 2017, compared to 17 percent in 2016, according to a September 2017 US Energy Information Administration (EIA) report.

Expanded investment in US infrastructure—regardless of the types of projects initiated—is welcome news to miners.  
Minerals like iron ore, which is used to make steel, form the backbone of new buildings, roads, and railways. The construction industry also drives nearly 50 percent of the nation’s copper demand. Contractors put copper to work in roofing, electric wiring, and plumbing, to name a few uses. As the nation breaks ground on infrastructure improvements, the mining industry could see a spike in demand. 
 


CONTINUED DISRUPTIONS (NOT THE GOOD KIND)
PREDICTION 4

DISTRIBUTED DENIAL OF SERVICE
By 2020, more than one in five mining companies in the US will be the victims of a Distributed Denial of Service attack.

The same technologies empowering US mining companies to streamline operations, reduce expenditures, and eep prices competitive open them up to new cyberattack vectors. Mining companies that fail to update cybersecurity controls in line with the pace of their technological innovation risk putting their entire operation in jeopardy.

“In today’s competitive global market for commodities and manufactured goods, the reliance on natural resources for economic development and fluctuating geopolitical climates have all contributed to making industries targets for cyber espionage campaigns, and in extreme cases disruptive and destructive cyberattacks,” Trend Micro wrote in a report on cyber threats to the mining industry. “Cyber campaigns
are…used for conducting carefully planned strategic or retaliatory cyberattacks against a nation’s critical infrastructure.”

Any disruption to the US power grid—the electricity source of mining companies—has the potential to impact autonomous and semi-autonomous grinding mills, ball mill drives, conveyor belts, crushers, shovels, bucket chain excavators, and other major mining equipment. Already in October 2015, a data-destroying parasite known as KillDisk entered the systems of numerous notable Ukrainian companies through a malware program known as BlackEnergy. Just two months later, that same parasite took down a power grid in western Ukraine after lying dormant in the systems of three major power companies for months. 

In 2017, Europe and North America’s energy sectors were highly targeted by a group known as Dragonfly in a wave of attacks meant to severely disrupt infected operations. We see US mining companies as the ones with the target on their backs in the next few years. By 2020, 1 in 5 will be the victims of a large-scale DDoS attack—either through a direct attack or indirectly through attacks on the power grid.
 


BRINGING DEEP-SEA MINING TO LIFE
PREDICTION 5

DEEP-SEA MINING
Deep-sea mining expeditions will become common by 2020 in the US industry, and there will be a US law established to regulate the practice and its environmental impacts.

Following President Trump’s 2017 executive order to streamline US mining projects in minerals—from cobalt and lithium to rare earths used in magnets for turbines and electric car motors—momentum will be strong for S expansion into deep-sea mining.

According to scientists, engineers, and industrialists, mining the deep ocean floor for metals is inevitable and vital. “The special metals found in rich deposits there are critical for smart electronics and crucial green technologies, such as solar power and electric cars,” The Guardian reported. “But as the world’s population ises, demand is now outstripping the production from mines on land for some important elements.”

Adding more urgency to the US’s shift toward deep-sea mining is the fact that China is currently the single source of rare earth elements that can also be found in the deep ocean. As of 2017, the UN’s International Seabed Authority, the regulator  of the seafloor that lies outside of nation-state jurisdictions, has already granted more than 24 contracts for deep-sea mining. And one of the world’s first and largest deep-sea mining expeditions is set for 2019. Canada’s Nautilus Minerals Inc. is set to lower three remote-controlled mining robots to the floor of the Bismarck Sea off the coast of Papua New Guinea in search of copper and gold reserves. This operation will unleash a deep-sea mining tsunami as companies around the world rush to compete. 

But while proponents of the practice say the extraordinary richness of the deep-sea ores equate to lower environmental impacts than land mining, opponents argue that ecosystems could be destroyed 
and should be protected. By 2020, the Organisation for Economic  Co-operation and Development 
(OECD) countries will agree to an international treaty to ensure the responsible exploitation of deep-sea resources. And the US will follow suit. By 2020, a presidential election year, environmental protections could shift back to pre-2017 norms, depending on who is ultimately elected. Environmentalists, pushing for US regulators to develop their own domestic laws around deep-sea mining—ones stronger than those of the OECD—will succeed. Mining companies will turn to new types of technologies to ensure low environmental impact in compliance with the regulation, and a new subsector of comply-tech will take shape in the industry.

Return to BDO’s Energy 2020 Vision: The Near Future of Mining