Articles in Category: Product Developments

Every global business worth its name has or is going digital — the mining sector is no different.

But is the mining sector getting it right while it goes about the transformation? Not exactly, claims advisory agency Ernst & Young in a new report.

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In the report titled, “Digital mining: the next wave of business transformation” — not to be confused with the mining of data — it says digital maturity across the mining and metals sectors means that current digital solutions are merely “functional or siloed,” and only address parts of the value chain.

Global mining companies have started to make some headway in using digital technologies to improve productivity. But, as the report says, focusing on productivity alone is not enough to generate competitive advantage. Companies need to adopt “a more cohesive, end-to-end approach to integrate digital initiatives,” the report states.

In this paper, the E&Y team has explored more of the “how” to commence a digital transformation rather than the “why” businesses should embark on the change.

The report has identified around 60 digital themes and initiatives across the sector, though it finds few examples of a clear, integrated and businesswide approach among mining and metals organizations.

The team has proposed a “wave approach,” which seeks to balance risk and return, and the need for rapid action but also thoughtful planning for players in this sector.

“Mining & metals has so far lagged other sectors in the realm of digital effectiveness,” said Anjani Kumar Agrawal, partner and national leader for metals and mining at Ernst & Young. “The value from digital will only be realized when companies change how they work, rather than succumbing to the lure of individual technology programs and pursuing local optimization, which is not necessarily transformational.

“While a revolutionary approach to digital would be too disruptive, we believe companies with mining activities should adopt a progressive, multiyear strategy that also accounts for business risk and the primary drivers of value.”

Paul Mitchell, Ernst & Young’s global mining & metals advisory leader, stressed the importance of adaptability.

“We see the end-state vision for the mining sector as constantly changing and businesses will need to be ready to adapt and change course as required,” Mitchell said. “While we don’t believe the sector will see radical disruption, the opportunity for new entrants to disrupt existing players poses a real threat. Market leadership can be lost quickly if dominant players respond slowly or ineffectively to industry disruption and external changes. However, the pathway through the waves of digital transformation should not be viewed as inflexibly sequential or static.”

The “waves” that are referred to in the E&Y report are a series of digital transformation waves, which the agency feels “is the optimal way to transition a business from current to future state” and steadily introduce more digital hotspots and interconnections, all as part of a coherent overarching strategy.

Focusing on productivity and profitability alone is not enough to generate competitive advantage, say the experts, but focus must be given to innovation, too.

This approach is structured around these key components:

Digital pre-start: building out connectivity to prepare for digital transformation, which typically involves investment in infrastructure, communications and data.

  • Wave 1: activities that focus on the productivity or performance improvement agenda, and are typically operated within a single function. At this stage, digital can enable a mining operation to manage inherent variability & move toward manufacturing levels of productivity.
  • Wave 2: these activities are broader & span the whole value chain & include initiatives to better manage margin through interactions with customers & suppliers.
  • Wave 3: this stage refers to the rise of disruptive factors that may create significant changes in how the sector operates & may require a step change in business strategy.

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This new report comes in the wake of another report, ‘Top 10 business risks facing mining and metals 2017–2018”, in which E&Y identified “digital effectiveness” as the No. 1 risk facing the mining and metals sector.

The full E&Y report, “Digital mining: the next wave of business transformation,” is available here.

The recent AI Summit at the White House brought together industry figures in the world of artificial intelligence (AI), a term that has no doubt picked up momentum from something as the province of a futuristic, far-off world to something more nearly attainable.

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According to a White House release, the summit last month included “more than 100 senior government officials, technical experts from top academic institutions, heads of industrial research labs, and American business leaders who are adopting AI technologies to benefit their customers, workers, and shareholders.”

When thinking of AI, many conjure up images of intelligent robots or programs like IBM’s Watson (which, if you’ll remember, grew in prominence after competing against “Jeopardy!” champions in 2011).

But what about applications for AI in the metals industry? Well, who better to ask than Noodle.ai CEO Stephen Pratt, who worked on the IBM computer system and now works with companies like Big River Steel to streamline manufacturing processes with the power of AI.

Based in Osceola, Arkansas, Big River Steel teamed up with Noodle.ai — founded in 2016 and headquartered in San Francisco — in what they billed the world’s first “learning” steel mill.

In a recent phone conversation with MetalMiner, Pratt talked about his background, the founding of Noodle.ai, the partnership with Big River Steel and the future of AI.

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The Steel Market Development Institute (SMDI) presented results of a new study on steel’s lightweighting capabilities during the Chicago Auto Show on Thursday, Feb. 8, at McCormick Place in Chicago. Photo by Fouad Egbaria

Use of aluminum in automotive bodies has gained steam in recent years — and the metal’s rivalry with steel has heated up in the process.

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For example, Ford Motor Co. shook up the marketplace when it announced its all-aluminum body F-150 2015 model. Aluminum, despite being more costly than steel, is lauded for its lighter weight and, thus, ability to provide better fuel economy.

Not so fast on that front, according to a study presented by the Steel Market Development Institute (SMDI) on Thursday, Feb. 8, during the annual Chicago Auto Show.

SMDI, a business arm of the American Iron and Steel Institute (AISI), presented results of a study that concludes steel is a superior option to aluminum when it comes to lightweighting and curbing environmental impacts.

Tom Gibson, president and CEO of the American Iron and Steel Institute. Photo by Fouad Egbaria

Tom Gibson, president and CEO of AISI (and president of SMDI), touted the more than 60 steel-intensive vehicles debuted in the last year at auto shows in Detroit, Chicago, New York and Los Angeles.

“Steel continues to play an integral role in new vehicle debuts,” Gibson said. “In the last month, we’ve seen the 2019 Chevrolet Silverado, Ford Ranger, all-new Ram 1500, Toyota Avalon, Honda Accord and Kia Forte, all touting the benefits of advanced, high-strength steels.

“With the mix of materials available to designers and engineers today, no other material provides the complete package steel provides with performance, value and innovation, as well as being the most environmentally sound material for automakers and consumers.”

Jody Hall, vice president, automotive market, of SMDI, presented the Life Cycle Assessment (LCA) study findings, comparing steel with aluminum. The LCA study tested five different vehicles and went through a 10-month review, Hall said, and was validated by a “panel of experts” from Harvard University, Argonne National Laboratory, the Massachusetts Institute of Technology and consultancy firm thinkstep.

“The bottom line is, the result of this expert-validated study shows for the vehicles studied, lightweighting with advanced, high-strength steel produces lower greenhouse gas emissions than lightweighting with aluminum,” Hall said. “The difference comes, primarily, from the material production phase emissions of advanced high-strength steel and aluminum. These are emissions not captured when focusing only on tailpipe emissions under current EPA regulations.”

Hall further emphasized the case for steel, saying that if one lightweighted the five vehicles in the study with aluminum instead of steel, “the life cycle greenhouse gas emissions increase is estimated at 12 million tons of CO2 emissions. That’s the equivalent of the amount of electricity used to power 1.6 million homes.”

More details on the study, titled “Life Cycle Greenhouse Gas and Energy Study of Automotive Lightweighting,” and its methodology can be found at www.steelsustainability.org.

AK Steel CEO Roger Newport. Photo by Fouad Egbaria

During the presentation, AK Steel CEO Roger Newport also delivered some comments on the state of the steel industry vis-a-vis the automotive world. Newport said steel has evolved to meet changing consumer demands in recent decades, and noted there’s been a “remarkable change” in the importance of materials when it comes to automotive construction.

“Materials are front and center,” he said.

It remains to be seen how much market share aluminum can capture. In the meantime, the steel industry will no doubt continue to tout its virtues compared with aluminum.

“The SMDI along with AK Steel are very excited about the potential of new, innovative steel products,” Newport said. “We continue our efforts to support the changes in the automotive world.”

Odds and Ends from Day 1 at the Auto Show

A few other miscellaneous notes from the first day of the Chicago Auto Show on Thursday, Feb. 8:

Subaru Presents 50th Anniversary Lineup

Subaru presented its 50th anniversary lineup, composed of nine vehicles, during

Subaru’s 50th anniversary lineup of vehicles. Photo by Fouad Egbaria

an unveiling ceremony. Tom Doll, president and chief operating officer of Subaru of America, Inc., touted the automaker’s growth since 2008, a period during which its market share rose from 1.4% to 3.8%, he said, and has seen it become the seventh-best selling brand in the industry.

“We’re not that small, fledgling little car company anymore,” Doll said.

Production quantities will be limited to 1,050 for Crosstrek, Forester, Impreza, Legacy and Outback, while WRX, STI and BRZ will have a combined total of 1,050, according to a Subaru release.

Kia Stinger Wins MotorWeek’s Best of the Year Award

Thursday afternoon at the Grand Concourse media stage, MotorWeek presented its Best of the Year award, which this year went to the Kia Stinger.

MotorWeek’s John Davis (left) presents Michael Sprague, chief operating officer of Kia Motors America, with the publication’s Best of the Year award for the Kia Stinger. Photo by Fouad Egbaria

MotorWeek host and creator John Davis said they try to pick a vehicle each year that captures “that moment in the automotive landscape,” in addition to, simply, being fun to drive.

“Our Best of the Year for 2018 really is the perfect definition of our award,” Davis said. “It’s a lot of fun to drive but moreover it is the result of a brand setting and achieving a new bar of prowess that is on par with the world’s best.”

The vehicle has a 3.3-liter twin turbo V6, an 8-speed automatic transmission and available performance-oriented all-wheel-drive system.

Michael Sprague, chief operating officer of Kia Motors America, accepted the award from Davis.

“It was introduced back in 2011 at the Frankfort Auto Show as a concept vehicle,” Sprague said. “Many people here in the audience told us ‘you have to build this car.'”

Klairmont Kollections Brings Retro Vibe

You won’t see too many cars like these on the streets today, but Klairmont Kollections took drivers down memory lane during its first ride as an exhibitor at the Chicago Auto Show.

Photo by Fouad Egbaria

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The collection of unique vehicles, some dating back to the early 1900s, is based in Chicago and owned by World War II veteran and Highland Park, Illinois resident Larry Klairmont.

gui yong nian/Adobe Stock

This morning in metals news, China is aiming to meet its 2020 goal for steel capacity cuts this year, a new bottle technology makes aluminum bottles feel like plastic and copper output in the Democratic Republic of Congo rose significantly in 2017.

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Chinese Government Looks to Hit Capacity Cuts Two Years Early

The Chinese government plans to reach its previously set 2020 goals for steel capacity reduction this year, Reuters reported.

According to the report, the government plan called for the reduction of 150 million tons of steel capacity by 2020.

An Aluminum Bottle that Feels Like Plastic?

According to a report in Packaging World, one company has been working on a bottle innovation for about a decade that will produce aluminum bottles with the feel of plastic.

Betty Jean Pilon, president of Montebello Packaging, explained the company’s Ushape blow-molded bottle technology during The Packaging Conference, held Feb. 5-7 in Orlando, Florida.

“We know that Canada, the United States, China, and Brazil are the largest beverage markets in the world,” Pilon was quoted as saying. “They singlehandedly produce 100 billion bottles each year. The Europeans consume about 63 billion, the South Americans about 32 billion, and the rest of the world, approximately 20 billion. So that’s why we got into it.”

Congo Copper Output Up 6.9% in 2017

Copper output in the Democratic Republic of Congo shot up 6.9% in 2017, Reuters reported.

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The country produced 1.09 million tons of copper last year, according to the report, while its cobalt output rose 15.5% to 73,940 tons.

Zerophoto/Adobe Stock

This morning in metals news, Indian crude steel production jumped 6.2% in 2017, a Swiss steel firm was chosen to buy a troubled French steelmaker and Novelis announced that its aluminum will be supplied for the 2018 Jeep Wrangler.

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Indian Crude Steel Production Rises

India saw its crude steel production jump 6.2% in 2017, according to the World Steel Association’s recent report.

Indian production hit 101.4 million tons, the Economic Times reported.

Schmolz+Bickenbach to Buy Ascometal

A Strabourg court tapped Swiss firm Schmolz+Bickenbach to buy French steelmaker Ascometal, Reuters reported.

The Swiss firm won out over a bid from Liberty House, according to the report. Ascometal filed for court protection in November, Reuters reported.

Novelis Aluminum in the New Jeep Wrangler

Novelis announced today that its aluminum will be supplied for the new 2018 Jeep Wrangler.

“Novelis is proud to offer our unrivaled production capabilities and extensive technical expertise to one of the world’s most iconic vehicles,” said Marco Palmieri, SVP and president of Novelis North America, in a company release. “We work alongside our customers from program development to launch to meet the industry’s evolving needs.”

Although aluminum is more expensive than steel, its lighter weight offers higher fuel economy. As such, several automakers, including Ford, have turned to aluminum for some of their newer models.

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“Novelis aluminum offers a safe, sustainable and cost-effective way to lightweight vehicles,” said Ganesh Panneer, vice president and general manager of Novelis North America’s automotive division, in the company release. “Automotive aluminum applications result in better performance and agility, increased fuel economy and reduced carbon emissions.”

Coca Cola’s new lineup of Diet Coke flavors. Source: The Coca-Cola Company Image Library

In two weeks, Diet Coke is introducing four new flavors: Ginger Lime, Feisty Cherry, Zesty Blood Orange and Twisted Mango. They will come in a skinnier silver can, reminiscent of Red Bull’s popular caffeinated hit, and, it is hoped, will reinvigorate Coke’s fortunes by appealing to a younger, millennial buyer, CNN Money reports.

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The soft drinks market has been on the decline. According to the research group Cowen, diet soda sales fell 2% in the last three months of 2017.

The brand leaders, though, are falling faster.

Diet Coke sales fell by 4% and Diet Pepsi by 8%, while sales of the National Beverage Corp.’s LaCroix improved 43% in the sparkling and still flavored water category, as buyers switch not just to water but non-additive, more health-focused drinks. Diet Coke’s new offerings will be sold in slimmer tins, but the 12-ounce volume format remains the same – they will just rattle around irritatingly in your car cup-holder.

The move to slimmer cans is done for more profound reasons than just annoying me on long car journeys. The slimmer shape mimicks the younger image of successful brands like Red Bull — at least, that is Coke’s reasoning — but there may be a further advantage.

The slimmer cans give the impression of containing less fluid and research reported in the Washington Post suggests that may actually boost sales. David Just, a professor of behavioral economics at Cornell University, is quoted as saying their research performed over the years shows that people are incredibly responsive to labels. For example, participants, having been told that the food put in front of them was “double-size,” left 10 times as much food on their plates as those who were told their serving was “regular,” even though both groups were given the exact same amount of food.

The opposite, Just says, happens when servings are labelled as small. If products are marketed as minis, or are presented in a way that suggests they are somehow less, they can actually increase consumption.”

Much will depend, of course, on whether the new flavors find favor with consumers. Anecdotal evidence suggests they may not. Indeed it has to be said the firm’s previous attempts have not been a success, with new variances being withdrawn after just a couple of years.

It’s been a hard slog for reduced and sugar-free versions. Even with the tsunami of bad news about sugar, less than half, or 43%, of Coke sales are made up of Coca-Cola Zero Sugar, Diet Coke or Coca-Cola Life. As such, that raises the question as to how popular these new flavors will be, fancy cans or not.

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For the canmakers, the new, slimmer cans will require an investment in tooling to meet Coke’s volumes but technologically will present no issues, as plenty of products are sold in similarly shaped containers already.

Pavel Ignatov/Adobe Stock

Before we head into the weekend, let’s take a look back at the week that was and some of the headlines here on MetalMiner:

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Windsor/Adobe Stock

This morning in metals news, weaker demand in China could counterbalance other forces that would push the prices of copper and aluminum up, the Chinese perspective on potential looming trade actions from the Trump administration, and new research has produced a “super-strong” aluminum alloy.

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Could Flagging Chinese Demand Put a Damper on Metals Rally?

Last year saw base metals prices rise significantly, particularly aluminum and copper. With labor negotiations going on at a number of Chilean copper mines and China’s government program of steel and aluminum capacity closures, one could expect prices to rise even further based on supply dynamics.

However, according to a Reuters poll, slowing Chinese demand could conspire to depress the gains that the aforementioned forces might otherwise produce.

According to a UBS analyst quoted by Reuters, copper demand growth in China should slow down this year. Similarly, as the world’s biggest aluminum consumer, any fluctuations in Chinese demand has significant ripple effects on the global aluminum market.

The Impact of Trade Action on China

An article in the South China Morning Post speculated on the impacts of pending U.S. trade decision — like the Section 232 probes of aluminum and steel imports — on the Chinese economy.

However, the articles cites the Section 301 probe — investigating intellectual property theft — as the biggest “Trump card” in the U.S.’s arsenal.

According to Derek Scissors, a trade specialist at the American Enterprise Institute, the article quotes him as saying the Section 301 probe could “justify sweeping American sanctions” worth “many billions” of dollars on Chinese telecoms and semiconductor products, including consumer electronics.

A Stronger Aluminum Alloy

Research at Purdue University’s School of Materials Engineering has produced a “super-strong” aluminum alloy that rivals stainless steel in strength, according to phys.org.

A paper on the research was published Jan. 22 in the journal “Advanced Materials,” according to the report.

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According to Purdue professor Xinghang Zhang, the stronger, lightweight alloy could “revolutionize the automobile and aerospace industries,” Zhang was quoted as saying.

Silicon Valley and the modern-day entrepreneurs it has spawned cannot be accused of lacking blue sky thinking.

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Some of their ideas appear whacky and subsequently disappear from the news almost as soon as they are proposed. Others, however, have gone on to become real success stories, challenging our lack of vision and belief.

Take Elon Musk, for example. While he had his supporters for Tesla, there were many more detractors in the early days. Those detractors said he would never get his niche electric car company to a scale able to challenge the incumbents.

Here we are just a few years later and Tesla is worth more than Ford (optimistically in our opinion, but still in the market’s eyes).

SpaceX was ridiculed even more as a rich man’s ego trip, but the firm has achieved more in its few short years – on a much smaller budget — than the lumbering giant that is NASA.

So before we write off the following, think on the above. Elon Musk’s 2013 paper on the future of the Hyperloop (a futuristic, high-speed train running in a vacuum tube) seemed so much hot air back then. It has since been quietly gathering support, and undergoing tests, such that now results suggest that while his original Los Angeles to San Francisco route may not happen anytime soon, other routes and applications could be viable.

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Liquefied natural gas . donvictori0/Adobe Stock

Natural gas has long been promoted as a less-polluting alternative to coal and less-costly alternative to nuclear power.

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Its green credentials are not whiter than white, but relative to coal, modern combined cycle gas turbine power plants (CCGT) are highly efficient, emit low levels of pollution and crucially can be turned on and off quickly to provide intermittent or peak power demands, in addition to balancing more variable sources (such as renewables).

The Non-Nuclear Option?

After Fukushima, many major economies have moved away from nuclear.

In addition to Japan’s near complete shutdown of its nuclear generating capacity, Germany followed suit. Even France, long a champion of nuclear power, has said less of its generating capacity will be met by nuclear in the future.

The expectation was that natural gas would be the natural successor to nuclear power, as countries took an increasingly responsible view to reducing carbon emissions. But despite a surge of investment in natural gas liquefaction facilities and the construction of new liquefied natural gas (LNG) carriers, the growth in LNG consumption has been much lower than expected.

LNG Demand Drops in Europe

In fact, some markets are going backwards, the FT reports.

Natural gas demand in Europe is 12% lower than it was 10 years ago. Chinese and Indian demand continues to grow, but the dramatic gains by solar power and wind, where costs have fallen 85% since 2009, have severely limited the prospects for natural gas as a power source.

Indeed, India’s entrenched coal industry and coal-based electricity generating capacity means its future is likely to be predominantly solar and coal — not natural gas at all.

China, like Europe, has adopted renewable power (particularly wind) on the basis of cost, as costs have tumbled for both solar and wind (again, particularly wind) to below the cost of natural gas.

As new supply-side capacity comes onstream, the market for natural gas has shifted from long-term contracts signed prior to new LNG facilities even being started to a competitive spot market; yet even here, prices are not low enough to spur a significant switch from renewables investment to gas.

Only in the U.S., where shale gas prices are low, has natural gas consumption risen significantly. However, even that is more geared toward chemicals feedstock and to supply exports rather than to meet rising demand due to power generation.

Looking Ahead

The future, at least over the next few years, is not any rosier for gas producers.

U.S. production is rising, Russia is opening up new resources in the north and is looking to export more, projects in Australia have created a major competitor to Qatar and Middle Eastern suppliers. Meanwhile, the world’s second-largest reserves in Iran are waiting for investment to bring them to market. The Financial Times suggests new finds in the eastern Mediterranean by Israel, Egypt, and off East Africa may never see sufficient investment to develop liquefaction and export, and are destined only for local consumption.

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This is not exactly music to the ears of aluminum producers for whom LNG liquefaction and regasification plants and the construction of LNG carriers has been a particularly profitable niche industry over the last decade. LNG gas codes call for controlled chemistry and manufacture that has created a higher value add industry for more sophisticated and capable producers.