Robots Will Replace Hard-Hatted Copper Miners

Mining giant Rio Tinto PLC (RIO) is willing to go to hell and back for copper.

Its new mine near Superior, Arizona, bores nearly 7,000 feet below the Earth’s surface. There, temperatures routinely hit 175 degrees Fahrenheit. Warm water falls from overhead rocks like rain.

The 1.3-mile-deep shaft is being excavated by Resolution Copper Mining, a subsidiary of London-based RIO and Australian-based BHP Billiton Ltd. (BHP).

It’s a project no sane executive would have green-lighted a decade ago. The technical challenges are that daunting. The attraction is the opportunity to change the business of mining with more sensors, autonomous vehicles and data analytics than ever before.

If it all works, millions of hard-hatted miners will be the stuff of folklore.

It wouldn’t be the first time technology changed the landscape of the natural resources industry. Just as data analytics and advanced modeling made it easier to fracture shale and find natural gas, these tools will figure prominently at Resolution.

After engineers figure out how to deal with the heat and the water, they plan to completely reimagine mining. Caterpillar Inc. (CAT) and Komatsu Mining Corp. are already building custom electric loaders, excavators and other robotic gear. They will be equipped with thousands of sensors to achieve full automation.

The machines will find the ore, mine it and transport it to the surface under the watchful eye of technicians many hundreds of miles away.

Open-pit mines can’t produce enough copper for our high-tech world.

None of this has come cheap. The Wall Street Journal reports the project will cost at least $6 billion. And operation is not scheduled to begin until the mid-2020s, thanks to a byzantine regulatory process.

However, the payoff is potentially huge. The mining industry has exhausted the supply of easy-to-find, high-grade copper ore available at open pit mines. Copper deposits exist, but they are hard to get at.

The Resolution mine may have 1.6 billion tons of ore, and a 40-year productive life. However, because the development will lean heavily on automation, costs are expected to be on par with open pit sites.

And future prices are expected to be strong.

That’s because copper plays an outsized role in electric vehicles. EVs represent a tiny fraction of all vehicles sold today but their numbers are growing quickly.

BHP, a minority partner in the Resolution project, expects there will be 140 million EVs on the road by 2035. Today, there are 1 million. The Financial Times reports EVs use roughly four-times as much copper as internal combustion cars.

If BHP is right, and EVs displace 8% of traditional vehicles by 2035, the math works out to 8.5 million tons of new demand. That is about one-third of the total current demand. You can imagine what that imbalance would do to copper prices.

More importantly, think about the new business models possible. Think about the opportunities available to astute investors willing to look into the future.

Robots will eventually replace human miners as shafts bore more than a mile beneath the surface.

I believe we are living through an age of invention unrivaled since the Gilded Age. Increased computing power, robotics and sensors allowed Rio Tinto executives to dream about mining copper more than a mile below the Earth’s surface.

Data analytics will allow the mine to operate as cost effectively as a traditional open pit.

That’s the story of the New Gilded Age. Likely productivity gains from digitalization are not yet reflected in share prices. Finding the companies that will benefit is the service I provide to my members.

Likely productivity gains from digitalization are not yet reflected in share prices. Finding the companies that will benefit is the service I provide to my members.

I have spent the last several years developing proprietary algorithms. My team isolates trending sectors and stocks. Then we kick the tires, reading through research reports, SEC filings and trade magazines.

We know what companies are best positioned to capitalize on New Gilded Age trends. And we know exactly when to buy the stocks. Subscribe to learn which they are.

Best wishes,

Jon Markman

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Comments 5

  1. Jonathan June 22, 2017

    Great article John.
    If they can find a way to produce graphene cheaper then copper may become extinct as a conductor

    Reply

  2. Will June 22, 2017

    Dream on. By that time either South American copper countries will get their act together should demand justify, or demand will not require such expenditures to be justified. This reads too much like an advertisement.

    Reply

  3. Steve June 22, 2017

    This century we will probably see automation go into space to mine the asteroid belt, moons (starting with our own), and other planets (starting with Mars). Yes, basic human skills will no longer be enough. I can see A.I. replacing those technicians that are hundreds of miles away.

    Reply

  4. Rich June 22, 2017

    I know Mr. Markman seems to be in love with robots but human beings need jobs !!! Blue collar jobs are just as important as engineering jobs or management jobs. Mr. Markman seems could care less if the blue collar jobs go away. I keep coming back to this, who will buy corporate America’s widgets if no one has a job ? When are corporate profits enough ? Of course the answer is never, it is never enough !! It is always more, more and more billions. It is like the U S military, they always are wanting more and more money. We are five percent of the population but spend fifty percent of what the world spends on war. We have killed 500,000 civilians in Iraq with U S bombs, and thus created a thousand fold more terrorists. I would be very angry with the U S if I had lost my brother, mother or dad to the U S military for no logical reason whatsoever. The reason we went into Iraq was that they supposedly had weapons of mass destruction, those were never found. They had nothing to do with 911, You should see what Dr. Judy Wood on you tube has to say about 911. The buildings turned into a big dust cloud as they fell, the official conspiracy theory makes no sense at all. We are such hypocrites in this country given the fact we ourselves have tens of thousands of weapons of mass destruction.

    Reply

  5. Barton H June 22, 2017

    The idea of robotic mining has been in my thought for a long time. We shouldn’t worry about the cost of development and the time horizon because the ultimate use of this concept will be applicable to many other precious metals or radioactive materials such as uranium etc.
    Additionally, I foresee the robotic arm and the transporting carts should be remotely controlled and preferably equipped with digging mechanism, at least in one of the “team members” (possibly involves one human member) within the same working group at the underground. In other words, each working team should be ready to dig themselves out of the underground mining site in case of a sudden collapse of a portion of the tunnel ceiling.
    Also, it would be more efficient if the robot arms are attached to each of the carts, so that they can be self-managed to save themselves by the help of the digging mechanism of the carts.
    In this way, we will improve the safety of both the machinery as well the human workers, if any, that could be better than the safety system of the current status in a mining operation.

    Reply