My friend and mentor, Doug Casey, is famous for saying that mining is a “crappy, 19thCentury choo-choo train industry.”
By this Doug means that mineral exploration and mining is still largely done the way it was more than 100 years ago. We put on our trusty boots and scour the land, hammering on rocks to see what might turn up. If we find an anomaly that very subjectively looks worth the effort, we drill holes in the ground to take samples. In the unlikely event that this work defines an ore body that seems rich enough, we spend huge amounts of money building a mine on the theory that it will be profitable. Only after blasting rock out of the ground and dumping it into that delicate chemical plant do we find out if the whole thing wasn’t a huge mistake all along.
But this is, at long last, starting to change. Here are some of the technologies starting to drag our choo-choo train industry into the 21stCentury…
Hand-held devices like the Niton gun enable geologists to know what metals are in the rocks they’re looking at within 60 seconds. Detection limits need to get better, but this still beats sending rock chips off to assay labs and waiting weeks for results. It is now possible to know what metals are in outcropping rocks as one walks over them. We can also get initial assays on drill core coming out of the ground. Both can greatly accelerate the exploration process.
Explorers started using drones for reconnaissance some years ago, enabling them to get right to the more interesting rocks faster. Now drones can carry out geophysical surveys, which is valuable in itself, but it also makes it much easier to cover difficult terrain.
Drones are also being deployed for detailed mapping of mine tunnels. This is especially valuable for quickly mapping old mine workings that are flooded or too dangerous for humans to enter.
Autonomous Heavy Equipment
Even the best-designed open pits and mine tunnels can collapse—with or without help from an earthquake. Better to send in robot vehicles whenever possible. This will result in fewer jobs on the lower end of the skill spectrum, but more on the higher end, and a lot fewer fatalities.
This is a no-brainer that’s finally picking up speed.
I remember when a computer first beat a human chess master—a feat most people had thought impossible. Then it took years for a computer to beat a world go champion. Then it took days for a computer to teach itself to beat the computer go champion. I mention this history because geology has long seemed to me to be as much an art as it is a science. I’m skeptical that any cybernetic geologist could do better than a human one with experience and intuition. But then, I might have said that about computers beating chess masters, and I would have been wrong.
Today, there are companies applying machine learning to massive geological databases to see what they can learn. What the machines lack in intuition they may be able to make up for with the ability to look at far vaster quantities of data than any human ever could. And a machine could keep doing that millions of times until it finds something with predictive power.
This has already been done, and drills are being sent to follow up on the targets generated as I type. If the results give the machines a significant edge, it would change the exploration game forever.
All of the above and more is very good news for the mining business. It will be great news for investors in companies that do the best job applying new technologies. No doubt.
But there’s also a danger here…
Enthusiasm for new tech can make investors take on more risk than they realize.
The critical thing to remember is that what works in a lab may not work as well in the field—and what works in field tests may not work in full-blown commercial application.
I can’t tell you how many times, for example, I’ve heard of some revolutionary new processing method that’s going to change everything…until it doesn’t, and the company touting it fades into obscurity.
How does one separate the real innovators from the dreamers? Unfortunately, this is extremely difficult to do in advance. Honestly, I’ve never been able to do it.
Instead, I let them take all the arrows and wait to bet on whoever gets the innovation worked out and making money.
Yes, this costs me the upside I lose by not getting in at the ground floor. But it saves me from being wiped out if that turns out to be ground zero. I’m happy to multiply my money on ongoing success, rather than make all-or-nothing bets on what may or may not ever become a success.
This applies to new mining tech in spades.
Friday, March 8, 11:00am, EST, 2019