John Chambers is executive chairman of Cisco. John Thornton is executive chairman of Barrick Gold.
Canada was built on its mining heritage. Today, the industry contributes about $54-billion a year to Canada's gross domestic product – a driving force of the national economy. Yet mining lags behind other industries in one critical aspect: digital innovation.
That shortcoming significantly threatens the industry's ability to meet future demands and survive in the digital age. By 2020, 75 per cent of businesses will be a digital business or preparing to become one. Companies that fail to embrace this trend will not survive.
Compounding this challenge, the mining industry faces lower commodity prices and maturing mines that are becoming more expensive to operate and less productive. In 2014, the combined value of the top 40 global mining companies shrank by $156-billion (U.S.), approximately 14 per cent. Last year, Canada's resources sector (oil, gas and mining) shed 15 per cent of all its jobs, nearly one in six workers. With the Canadian mining sector directly contributing nearly 375,000 jobs, this is a battle the country cannot afford to lose.
Mining needs to reinvent itself. The only way companies will cut costs and increase efficiency will be to embed digital technologies in every dimension of how mines are operated and managed. This transformation will require technology companies and the mining industry to partner together in new ways.
We are already seeing such partnerships take root. Last week, Cisco and Barrick Gold teamed up for the digital reinvention of Barrick's business. Over the course of the partnership, Barrick and Cisco will bring digital capabilities to Barrick's entire organization, from its mines around the world to Barrick's head office in Toronto. For instance, advanced sensing technology and real-time operational data will improve decision making. Equipment will be automated for increased productivity and worker safety. Predictive algorithms will enhance the precision and speed of maintenance and metallurgy. And real-time data will provide greater transparency to local partners, from indigenous communities to governments.
Digital technologies will enable Barrick's leaders to make decisions with greater speed, precision and productivity, and will better equip them to assess and mitigate risk. For example, real-time data, analytics and predictive tools will allow company leaders to work together across the organization. An enterprise-wide analytics hub will enable performance management and financial and operational benchmarking. And new digital tools will improve scenario planning and portfolio management.
Finally, digital technology will improve Barrick's environmental and safety performance. Predictive data and analytics will improve management of energy, water and emissions. Real-time data capture will allow the company to be even more transparent with, and accountable to, its local partners . And the use of digital technology will enhance Barrick's permitting activities, further increasing transparency to stakeholders.
Together, these innovations will enable Barrick to deliver better, faster and safer mining. Here is just one metric: Barrick expects to reduce its production costs from approximately $800 an ounce of gold to less than $700 on a sustainable basis – a quantum improvement that would be unmatched in the gold-mining industry. More broadly, the partnership could serve as a model for digital transformation across Canada's business community, which has the potential to grow the economy and create jobs.
Yet to seize the full potential of digital technology, we must prepare today's workers for tomorrow's jobs. By 2020, a third of most occupations' core skills will be ones not considered crucial today. We need to refocus education on where the jobs of the future will be, in areas like network engineering, data analytics and cybersecurity. Cisco's Networking Academy is a catalyst to creating these new essential skills. Established in Canada in 1997, today the program serves 22,000 students enrolled in more than 200 Canadian institutions across Canada's provinces and territories.
Above all, we need to break out of a prevailing illusion: That investments in resource development and technology development are mutually exclusive. For today's mining industry, they must be one and the same.