Sydney, Australia, 25^th August 2015 – Transformation through the forces of technology change and disruption is a significant dynamic only recently seen in the mining sector. In fact, many may ask what it means to be transformative for an asset intensive industry like mining. IT and technology investments that are enabling the connection of the physical with the virtual - through a raft of technologies, sensors and solutions – are enabling mining companies to create transparency across their operations. The transformation we are seeing though is not just about being able to see what is happening across the mine, but to create the ability to control and ultimately to respond predictively. The future of mining is to create the capability to manage the mine as a system – through an integrated web of technologies such as virtualization, robotics, Internet of Things (IoT), sensors, connectivity and mobility – to command, control and respond.

The mining sector is facing a period of enormous challenges. The fall in prices across commodities continues to impact the cost, asset and debt settings mining companies need to have. Prevailing challenges that have been present for a long time but have been unresolved are now becoming critical. Globally, productivity has been falling despite commodity price boom and supply chain investments. The physicality of many mining operations is becoming increasingly difficult. Therefore, it’s not surprising that in IDC Energy Insights’ recent survey of 190 miners globally, the top priority is saving costs. Mining companies are under more pressure than ever to get more materials from the ground at the lowest possible cost and the highest possible grade. Hence, mining companies are looking for new ways of doing things, profit maximization is the top business concern of mining companies as they work to change the cost and efficiency settings of their operations. This is an environment of change and within that one where the role of technology and its importance to the core activity of mining is becoming a critical enabler for the mining operations – that consistently meet leading financial and production performance metrics.

IDC Energy Insights research shows that mining companies are looking to a future where technology is changing the operations of the mine. The top strategic objective of mining operations in 2015 are: safety improvement, automation of assets, mine operations management and control. IDC research shows that 69% of mining companies globally are looking at remote operation and monitoring centres, 56% at new mine methods, 29% at robotics and 27% at unmanned drones. Globally, 83% of mining companies say that their technology budgets will increase or stay the same in 2015. The ability of data intelligence, data integration and technologies like robotics to change the physical nature of mining is real and across the sector, with leading mining companies taking steps to take advantage of these capabilities.

Breaking digital transformation down into its parts helps demonstrate what digital transformation means to mining companies. IDC's perspective on digital transformation is made up of five parts – experience transformation, work source transformation, operating model transformation, information transformation and leadership transformation. Digital transformation is not all about the technology, but for each of these components of transformation, the technology of IDC's third platform – cloud, mobility, big data analytics and social business – are enablers. The third platform in combination with innovation accelerators such as robotics, IoT and cognitive computing are fundamentally changing what it means to operate a mine as mining companies make the interconnection between the virtual and the physical.

For mining companies, the creation of competitive differentiation through going digital, is about how technology is changing the physical reality of managing mining operations – by changing work practices, changing the types of roles and changing the processes that are core to mining operations – and in the process contributing to a significant improvement in productivity.

Out of the five elements, three of which are of most critical importance to mining companies’ transformation now. First is Operating Model Transformation – the connection of people and things to create efficient and effective operations. This is a critical focus of investment we are seeing across the mining sector now. Asset management – particularly employing more predictive maintenance approaches to minimize equipment outages and its impact on production performance. Dynamic planning and scheduling is another area that we are expecting to see a lot of movement in the way operating model transformation takes place in mining. Second is Information Transformation – to enable utilization of data across operations to create greater value and ultimately to treat data as an asset. Third is Work Source Transformation – not just about having the right skills in place to support the transformation but also engaging and connecting with external stakeholders. This is a process that is starting for many mining companies as we see the importance of innovation and collaboration across senior leadership, IT and operational technology as mining companies seek more effective ways to utilize knowledge across the organization. Looking across the mining companies that have been most successful with their transformation initiatives to date, the stand out characteristic is the nature of their leaders' vision. While still developing across the mining sector globally, leadership transformation - where senior leadership has a vision for the transformation of their organization and a sophisticated understanding of technology - needs to play a role with more impact than we are currently seeing across the sector.

Companies that have been able to successfully transform their digital capabilities display the following characteristics, and for mining companies taking steps to move their digital maturity, IDC makes the following recommendations associated with each area:

• A willingness to openly experiment with new technology. Work across your organization to create research insights with internal and external stakeholders. Look externally, collect examples and look to other industries for examples of successful approaches across process innovation and technology initiatives.

• A willingness to change the norms of their business model. Data-led insights and automation will only deliver value if there is a culture of change. Be willing to change the established ways of doing things, change work practices and approaches.

• A willingness to make bold bets when the time is right . Mining companies have significant legacy data investments in place already. The investments required to create visibility and control are often challenging and have an associated level of risk. To achieve a significant improvement in productivity, there will ultimately need to be a willingness to take on measured risk. Start with short sharp examples to demonstrate value, and as you work towards larger investments, demonstrate value to stakeholders at each stage. Remember the critical importance of marketing internally to drive support across all stakeholder groups.

For more information about the research or to purchase this data, please contact Shari Jane Jansen at sjansen@idc.com. For press enquiries, please contact Alvin Afuang at +63917 797 4586 or aafuang@idc.com.

If you would like to hear more from IDC about the impact of digital transformation in mining, join us in September for a webcast with Emilie Ditton and Dr. Chris Holmes. For more information contact editton@idc.com or www.idc.com

About Energy Insights

IDC Energy Insights assists energy businesses and IT leaders, as well as the suppliers who serve them, in making more effective technology decisions by providing accurate, timely, and insightful fact-based research and consulting services. Staffed by senior analysts with decades of industry experience, our global research analyzes and advises on business and technology issues facing the utility and oil and gas industries. For more information, please visit www.idc-ei.com , email editton@idc.com or call +612 9925 2211.