Rio Tinto (
RIO
) is introducing the 4G LTE network to its existing operations at
the West Angelas mine in the Pilbara region of Australia. This
will be the first site in the Asia-Pacific region (outside of
China) for the resource industry, which will be equipped with the
mobile broadband technology. The network will be rolled out by
Alcatel-Lucent for an estimated fee of $2-3 million over a
40-square kilometer area, and will replace the satellite and
standard radio networks currently used by mine workers.
Why Is It Needed?
The satellite and radio networks are used for voice and
basic data communications to control machinery at the mine. With a
number of automated technologies being introduced for various
mining operations, data requirements will increase in future, thus
necessitating introduction of faster wireless technologies. At
Pilbara, improved connectivity resulting from introduction of the
4G network will be used for in-pit mining operations, such as
safety systems and asset monitoring.
See Full Analysis for Rio Tinto Here
Rio Tinto has been focusing on increasing automation of its
mining operations in order to reduce labor and capital costs as
well as to improve productivity and efficiency. The company has a
dedicated division to work on its "Mine of the Future" program. In
the past, Rio has successfully tested driverless trucks and even a
driverless train.
Rio Tinto aims to expand its iron ore production at Pilbara to
353 million tonnes by 2015. Thus cost savings incurred here will
have a significant impact on overall cost of operations for the
company.
4G Network Will Enable Extensive Automation
Most of the easy and accessible mineral reserves around the
world have been tapped, pushing miners to find more remote
locations for iron ore, copper, coal and other metals and minerals
which are vital to economies. This keeps pushing costs upwards, not
just for exploration and drilling, but also for labor. It is
expensive to recruit workers willing to work in hostile
geographical and environmental conditions. Further costs are
incurred on setting up housing facilities for them at the mining
site and transporting them back and forth from the city in company
planes.
Automating operations allows companies to control activity at
the mining site from a remotely located operation center. But in
order to issue real-time instructions to robots and other
machinery, a dedicated network with the capacity to transmit huge
volumes of data is needed. This is where new technologies like 4G
come in handy. A 4G network will act as an enabler in bringing
everything together, allowing the mining activity to be run more
smoothly.
Robust Security Needed
But such a network system will require a secure firewall since
network attacks are an unfortunate reality and a common occurrence
these days. In order to prevent an electronic takeover of the mine,
it is important to have a dedicated network security team and a
number of security layers. For Australia, whose economy is heavily
dependent on mining, such a security system is all the more
critical.
We have a
Trefis price estimate for Rio of $45
which is nearly 15% below its market price.
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