How Australian Mining Boomed—Until Cheap Laziness Caught Up
In an extract from the book "Boom and Bust," VICE regular Royce Kurmelovs examines the way that greed, irresponsibility, and failing to learn from the past brought down the mining boom.
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Simon Vincent is 29 years old and over six feet tall. He is blond haired and blue eyed. He holds a degree in economics and finance from Curtin University. He is a hacker and a hustler. When Simon was growing up, his father worked in the same job at the same insurance company for his entire working life. Simon’s had five jobs and counting.
Almost as soon as he graduated university, he took his parchment and booked a seat on the first plane to the UK. As luck would have it, London was a global hub for start-ups catering to the financial services sector, otherwise known as fintech, and it was there Simon’s two interests converged.
At university he had taught himself about hardware and how to code, so landing a job working with venture capital at an investment bank whose business was fintech start-ups seemed like the right choice. His job was to get into the heads of the founders. He was there to monitor their progress, to give them a shoulder to cry on in the bad times and help pop the champagne in the good. With start-ups something changed every day, and whenever it crashed and burned it was up to Simon to do the autopsy.
Three years later, Simon returned to Perth looking to start his own venture. It was 2014, the year the boom ended. Once he settled, he started asking around to find out what was happening in the start-up scene. There he found his way to event called Unearthed, a hackathon to bring people to focus on mining industry problems. There Simon would meet his future business partner, Michael Del Borrello, when they both joined a group and decided to focus on the largest problem.
Their problem was rocks. Big ones. When it comes time to blow up or drill a rock face, engineers on a mine site do their best to blast or drill in a way that generates mid-sized rocks that are easily manageable. The process is more art than science, and sometimes larger rocks survive the blast. If they make it to a crusher, it can take down the machine for an hour while repairs are made. The problem can become a $100 million issue per site.
Simon and Michael’s idea was to use sensors. They pulled some cheap, knock-off sensors and strapped them to one of Michael’s daughters’ Tonka trucks, and filled it with garden rocks. They wrote a quick app for an iPhone and taught it what to look for. The algorithm learned which readings were the big garden rocks and which were normal operations. That Saturday night, they projected their app onto a big screen in front of a few hundred people and ended up winning the competition.
What they couldn’t know was that it was a great idea had at the worst possible time.
The first thing Simon learned about mining companies is that you can lead a boardroom to an oil well but you can’t make them drill no matter how many ways you promise it’s good for them.
“We really thought we could change the way they thought, at least until the market corrected itself and we realised how slow these people are to adopt technology and the reasons for it,” Simon says.
Pretty quickly, Simon started to work out that change didn’t come easily. Just getting through the door seemed to require proving you were an established company with a billion-dollar bottom line.
More fundamentally, many managers couldn’t understand the need for the type of service Simon and Michael were offering. The younger engineers and geologists who were comfortable with technology could see the potential of what they were doing, but the old-school executives who controlled the operations couldn’t understand it and didn’t want it.
Sensors, they said were nice toys, but mining companies are in the business of making money. Across the industry, the attitude seemed to be that if it ain’t broke, don’t fix it. Neither did it help that the industry was in a downturn. Across the state, every mining project that had taken the last half-decade to get going was just starting to produce. Every project seemed to be debt-financed and the market was being flooded with iron ore from producers desperate to sell. This made it a buyer’s market. And so, a correction began.
By the time the situation had stabilised, Simon and Michael had quit the game out of total frustration. They had no interest in wasting their time with an industry that talked about innovation but was so resistant to change. Then, out of nowhere one day, a senior representative of Rio Tinto called Simon asking if he and Michael might reconsider. The first thing the rep did was apologise. He explained what had happened on his end and wanted Simon and Michael to come in for a presentation and a trial.
At the first meeting they had, Simon asked for assurances that the company was serious. He asked for a purchase order, for a site where they could run a trial, and for the freedom to be escorted wherever they wanted on that site, and the company agreed. Everything they had been painstakingly fighting for over two years was organised in the space of days.
“Three years after sitting in an office, demonstrating on a Tonka truck, we were putting our sensors on a two-million- dollar piece of equipment,” Simon says.
Their first trial run was at Hope Downs 1, one of Rio Tinto’s oldest standing sites, at the start of February 2017. With 30 to 40 300-tonne ultra-class trucks driving around on site, it was a perfect playground for the kind of test runs they wanted to do. In hard hats and fluoro vests, Simon and Michael stepped out into the wet-season air of the Pilbara and set to work. Over twelve days, they met truck drivers, engineers, geologists, they were shown maintenance workshops and crushers, spoke to the managers to learn the ins and outs and what the issues were. Wherever they could, they attached a sensor to any bit of machinery that seemed to make sense. It was the equivalent of putting a thousand eyes and ears on a single truck or piece of equipment. Pretty quickly they worked out that they could tell the company about the size and grade of the material they were moving, but also things like swing times, productivity benefits and payload bias for sub strains on their trucks. The stuff they learned could help maintain the company’s fleets and predict breakdowns before they happened.
From that point on, word got around pretty quickly. BHP and FMG started putting in calls. Other operations within Rio Tinto even gave them a call asking if they might come out to their port at Cape Lambert and take a look at their chutes. The mining industry, it seemed, had woken up to the future.
* * *
Australia may be just one mineral-rich nation among dozens, but the problems are always the same. When a boom comes, it inflates commodities prices so much that companies focus most of their efforts on rapidly building the capacity to produce. Very little thought or attention gets paid to improving the efficiency or productivity of their operations, because everyone is looking to get ore out of the ground as quickly as possible. And then when the downturn hits, Australia’s mining companies discover a newfound interest in technology.
* * *
Simon survived. That was enough. These days things are picking up around Perth, he says, and everyone he talks to has a kind of hopeful optimism. Companies are hiring. Businesses are talking. It may never reach the same heights, but deals are starting to be made, projects planned and that’s where Simon is carving out a niche.
Nothing is changing overnight though. It’s been a three-year fight just to get his start-up this far, though he never set out to build a high-growth start-up of the fail-first, fail-often variety. Mining is different. Perth is different. What happens in the US has a way of happening in Australia eventually but, when it comes to technology, Australia tends to be a late adopter.
“Don’t worry about technology replacing your job,” Simon says. “Worry about the senior managers who can’t forecast a downturn resulting in sweeping redundancies across the business.”
This is an edited extract from "Boom and Bust" by Royce Kurmelovs. Published by Hachette Australia, RRP $32.99. Available in all good bookstores and online.