A look at RACE21™, why it’s important right now and what it looks like on the ground.
You’ve heard that RACE21™ is transforming our business. But do you know why? Or how? Or who’s making it happen? Connect has set out to find the answers.
We also want to hear from you—let us know what aspects of the RACE21™ program you’d like to learn more about in the poll at the bottom of the page.
To begin though, we’ll look at the acronym.
Here are the basics: RACE21™ is about taking a company-wide approach to renewing our technology infrastructure, accelerating and scaling our automation and robotics program, connecting our data systems to enable broad application of advanced analytics and artificial intelligence, and empowering our employees, with a focus on making real progress between now and 2021.
Now let’s do a deeper dive.
Setting the Stage for RACE21™
No matter where we look, technology and innovation are rapidly changing the way we live and work. And that pace of change is accelerating.
The story for the mining industry, however, is much different, where the pace of change is considerably slower—and, in some cases, at a standstill. In fact, mining’s basic operating model has remained largely unchanged for decades.
For the most part, there’s been little investment in looking for ways to change that model. An example of this can be seen in Figure A, which illustrates the extent to which the global mining industry is lagging behind others in intensity of R&D investment, a key indicator of an industry’s pursuit of innovation.
At the same time, despite bigger equipment becoming more efficient in the way we operate, global mining productivity has been in a state of decline over the past 15 years (Figure B).
Profound Digital Changes
Moving outside the mining industry and looking at the world more broadly, change is everywhere. This is particularly true in the digital space, where advancements are having a transformative effect on almost every aspect of our lives at work and at home.
Here are four advancements most relevant to RACE21™. (See “RACE21™: Key Terms to Know” to learn more about each of the words in bold.)
- The first is the massive—some may say exponential—increase in computing power, created by the Cloud.
Why is this important? The Cloud provides the computing power needed to analyze large volumes of data, known as big data. This analysis generates insight, which leads to better decision-making.
- The second is the pervasiveness of sensors and data collection—they’re everywhere, from shovel buckets for sorting ore to our wrists for counting steps.
Why is this important? More data available to compute means better, more accurate insight, which allows for even better decision-making.
- This brings us to the third advancement in our list—unlimited connectivity—which is the connection or link between computers, sensors and data. (This is sometimes known as The Internet of Things.)
Why is this important? Computers, sensors and data individually are of limited value; however, when these are connected, the real-time input, analysis and insight made possible leads to quicker, more informed decision making.
- The fourth item on the list is cost. Many digital changes, particularly with respect to sensors and the collection of data, are happening at a very low cost.
Why is this important? Low cost means modest investment in technologies that have the potential to completely transform our business.
RACE21™: Making the Connection
So, there’s clearly a disconnect between what’s been happening in the mining industry and the digital innovation that’s taking place more broadly.
RACE21™ is making that connection and, as a result, RACE21™ is transforming our business.
The Dollars and Cents of Digital Innovation
Digital innovation has the potential to create significant value across the mining industry’s value chain. In fact, some estimates indicate the potential value at stake to be $375 billion annually.1
To put this into bottom-line terms: Digital innovation has the potential to add 11–16%1 to the industry’s net income.
How much of the estimated value is available to Teck?
Consider the list below of the world’s biggest mining companies2 and where Teck is positioned in this list. While the exact value available to Teck is not known, it’s expected to be material to our business.
Top Global Mining Companies by Market Capitalization as of December 31, 2018
- Rio Tinto
- China Shenhua Energy Company
- Anglo American
- Coal India Limited
- Newmont Mining Corporation
- Grupo México
- Freeport McMoRan
- Newcrest Mining Limited
- China Molybdenum Company
- Shaanxi Coal Industry
- ZiJin Mining Group
- Agnico Eagle
1100% opportunity ranges from USD $280 billion (lower range) to USD $410 billion (higher range) for the entire mining industry by 2025.
Source: McKinsey Global Institute.
2Top Global Mining Companies by Market Capitalization as of Dec. 31, 2018. Source: Mine 2019: Resourcing the future, PwC.
Digital Innovation 101 - Digital innovation is the application of new technologies to existing business problems or practices to:
- improve operational efficiency
- develop innovative products, services or solutions
- empower employees