TECHNOLOGY AT WORK

February 2015
Citi GPS: Global Perspectives & Solutions
53
We can see $1.4 billion of savings from
introducing full autonomy into just 10% of
existing mining trucks, a meaningful number
against total operating expenditure
reductions of $8 billion so far and $35 billion
of cost headwinds over the last decade
The Numbers – Calculating the Benefit
The biggest saving in applying autonomous technologies is undoubtedly through the
possibility to cut labour costs, with over 30% of a miner’s cash costs stemming from
staff. According to online media (Unmanned Systems News, Engineering and
Mining Journal), it takes 4-5 drivers to operate a truck 24-hours, but up to 10 people
in total once support staff are taken into account. Each driver is paid a salary on
average of $120,000 per year, thus around half a billion dollars in cash costs for the
operation of each truck (excluding the cost of support). According to an article in
Wall Street Daily in May 2014, the population of autonomous trucks today is a mere
0.5% of the 40,500 total global population of trucks. Our discussions with BHP
suggest that one-tenth of trucks could be autonomous in the near future, whilst the
most bullish comments suggest fully automated mines are a reality within the next
10-15 years (according to Unmanned Systems News and Science and Technology
World).
A simple calculation of the benefits just from cutting down staff (ignoring the
increase in productivity) looks as follows:
According to a study by Deloitte on the economics of autonomous mining,
introducing an autonomous truck could reduce the number of operators by 75%, i.e.
1-2 operators are sufficient instead of 4-5 today. This implies a $360,000 reduction
in cash costs, or $1.4 billion in total assuming 10% of the truck population is
autonomous (Figure 43). A cost reduction of $1.4 billion is meaningful and
compares to about $8 billion of total savings from the majors achieved so far and
$35 billion of cost headwinds over the last decade.
On the productivity gains and other costs such as maintenance, John Meech at the
University of British Columbia in Canada presented his findings in the paper
“Simulation of Autonomous Mine Haulage Trucks” in 2012, which showed a 15-20%
increase in output, 10-15% decrease in fuel consumption and an 8% reduction in
maintenance costs, by shifting to autonomous haulers. Compared to autonomous
drill rigs, this is interesting, as Sandvik and Flanders have presented figures
showing that autonomous drill rigs can increase productivity by near double the
level of autonomous haulers — by 30%, and in some cases by 60% when shifting to
autonomous drilling (Figure 44).
Figure 43. Implied cost savings by adopting autonomous trucks
Truck population (units)
No of drivers Salary per Cash costs Savings per Manual Autonomous Total
per truck driver ($) per truck truck ($m)
savings
($m)
($bn)
Today 4-5 120,000 600,000 40,500 203
Implied 1-2 120,000 240,000 360,000 36,450 4,050 1.4
Source: Citi Research, Deloitte, University of British Columbia
© 2015 Citigroup