3 Ways AI is Revolutionizing Metals and Mining
Here’s How AI is being used to ramp up the energy transition in the near and long-term.
Last year, the world spent $1.8 trillion on the energy transition – yet we’re just scratching the surface.
According to BlackRock, by the end of the next decade, $4 trillion will be spent annually on the energy transition. That includes money flowing into all aspects of the energy supply chain, from resource mining to processing to necessary infrastructure.
That's because the energy needs of growing populations and booming technology demand are formidable.
As we’ve detailed over the last several months, utilities will continue to play a crucial role in transforming how energy is generated and distributed – but the story goes deeper than that.
You see, what’s unfolding is as much about the energy being generated as it is about the ability to harness, store and transmit it efficiently.
In order to do so, a variety of minerals and metals are essential. Without them, the energy transformation cannot progress. Everything from electric vehicles to battery storage requires them.
Even at a fundamental level, power cables are needed in nearly every step of the energy transmission process. In order to function, the wires need a significant amount of copper and other metals to ensure these technologies can transmit and distribute energy.
The business of researching, surveying, developing, extracting, processing and refining metals involves risk and time, along with intense investment. Mining is not simply digging a hole in the ground. It is complex and requires an abundance of resources and development, along with sustainable means of extraction.
Energy Transition: AI, Mining and Groundbreaking Potential
Around the world, businesses and consumers are driving an escalating demand for electric vehicles, batteries, renewable energy and even AI-driven technologies. That’s amplified the hunt for materials and metals like lithium, nickel, cobalt, copper and aluminum.
In a twist on the co-dependence of AI and energy, mining companies are now turning to AI to help them uncover the metals critical to the energy transformation. Below are specific case examples that show how AI is driving the world of mining and metals forward.
I. AI-Specific Prospect Generation
AI now allows companies to jumpstart the initial stages of geological analysis or prospecting. KoBold Metals is a startup mineral exploration company that is utilizing AI to revolutionize how critical materials specific to the energy transition are discovered.
The California-based company uses AI to search for copper, cobalt, nickel and lithium. How? By deploying a proprietary data system that uses geophysical data to quickly process, standardize and quality test data sources – all while running its organized data through machine learning programs.
Ultimately, KoBold is taking a massive amount of data points and reducing the uncertainty that often comes with mining. As you can see in the modules listed in the chart below, it uses a variety of themes and data behind them to make informed exploration and development decisions.
The ability to use AI as another tool in the mining toolkit will enable sites to be more targeted, specific, economical and efficient throughout the process – all the way through to ultimately deciding on the optimal hole for drilling.
Already, KoBold has signed a deal with one of the largest mining companies in the world, BHP Group (BHP). This summer, reports showed that KoBold located what could be the largest copper discovery in more than a decade – and when fully functional, the mine would produce at least 300,000 tons of copper a year.
II. Reducing Environmental Impact
By deploying massive amounts of data sets to generate more targeted analysis and even more specific locations (geological surveys, satellite imagery, etc.), AI can also work to reduce environmental impacts from mining. Earth AI is one company that’s using AI to make mineral exploration not only more efficient but more sustainable and responsible operations.
Earth AI and its innovative drilling system requires no groundwork and causes close to zero environmental impact. By using its mineral targeting platform, Earth AI is working to improve discovery success rates taking them from 0.5% to 66% – some of the most accurate in the industry. This unlocks AI and allows mining companies to reduce the need for extensive and potentially disruptive exploration activities across large land areas.
Last month, Earth AI, working in a joint venture partnership with Legacy Minerals (ASX: LGM), announced that they have located a large deposit of palladium, platinum and nickel in southeastern Australia with the help of AI. Earth AI claims that it could even be one of the largest platinum group elements (PGE) discovery prospects in the world. Palladium is an element that’s used in catalytic converters, electronics, fuel cells and many other areas of the energy transformation.
Not only does this palladium finding method signal what could be a massive global shift for commodity markets, but it demonstrates a method of discovery that can minimize land disturbance and reduce water usage all while promoting responsible practices.
III. Saving Money, Saving Time
AI also allows companies to actively improve their production process, which is saving money and time. Freeport-McMoRan (FCX), the Arizona-based mining giant that owns one of the world's largest copper and gold deposits, utilized AI to improve operations with advanced analytics while helping it increase the production of its copper mines.
The company maximized performance through data by utilizing AI and setting up sensors to collect data on everything from company trucks to stationary machines. Freeport was then able to adjust its work settings every hour, which allowed the mining company to boost production by 5-10%. After it did this across multiple sites, the move saved billions of dollars, all while becoming more efficient.
One report by McKinsey found, “The amount of additional copper production Freeport is projected to unlock over five years is equivalent to one new processing facility without the eight to ten year wait to bring a new facility online.” In fact, Freeport is now able to increase its annual copper production across mines by 200 million pounds.
Because AI is unlocking this type of steady and innovative production, and at a time when copper demand is surging for products from electrical infrastructure to EVs, mining companies that deploy AI can become even more efficient. For Freeport, its copper operations across three continents could continue to see sales and production steadily increase.
Going forward, our expectation is that mining companies will not only play a crucial role in how the energy transformation is developed – but AI will play a crucial role in how miners develop as well. By watching this space, investors and market watchers can stay ahead of the trend.
For those looking to monitor this trend, following the iShares MSCI Global Metals & Mining Producers ETF (PICK) which tracks a broad range of global mining companies is one route to consider.
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