Economic Impact Analysis of Automated Mines in Australia

29 Pages Posted: 3 Oct 2017

Date Written: February 1, 2015


The purpose of this work is to provide economic evaluation of a transformative innovation in the open cut mining industry in Australia. The innovative technology reviewed in this case study is mostly focused on Autonomous Guided Vehicles (AGVs) that, according to experts, can provide the most significant contribution to productivity improvement (Durrant-Whyte, 2007). This study looks at automation of the full supply chain, which has the potential to improve the whole planning process of handling minerals, from the drilling stage through haulage by automated trucks, to the loading and transfer of minerals at ports. Although the contribution of each operation in the supply chain involving automated mining was analysed separately, this document provides evidence that having a full end-to-end automated mine can significantly reduce production costs and increase productivity, even allowing for a relatively slow adoption rate over a 20-year timeframe by the mining industry in Australia. The mining industry has an important role in Australian economic growth. According to the Reserve Bank of Australia (RBA), in 2011 the value of resource exports rose by 16%, accounting for 2 percentage points of the 5.5% growth in nominal GDP over the year to December (RBA, 2012). While the volume of export capacity did not change significantly (only increasing by 1%), the prices of minerals have steadily increased in the last 30 years. This gap between the value and volume of export growth can be addressed by technological solutions to increase productivity. Any technological solution that can increase mining production volume would yield a significant increase in value, which in turn would increase Australia’s GDP. This study found that four major minerals account for 98.9% of Australia’s export capacity: coal, iron ore, bauxite and copper ore.

Our findings suggest that in 2013, if 3% of Australian mines had started the process of fully automating their mines, over the next 20 years, on average, every year mining revenues would increase by nearly AUD$436 million for coal, AUD$724 million for iron ore, AUD$291 million for bauxite and AUD$105 million for copper. Due to a different distribution of mines between the states, the main beneficiaries of automated coal mines would be NSW and Queensland, while WA would be the main beneficiary for automated iron ore and bauxite mines. The net present value of automating production in Australia for all four minerals over 20 years of deployment of the technology by around half of the total mines is estimated to be more than AUD$31 billion, while iron ore accounts for 47%, coal 28%, bauxite 19% and copper ore 7%. Coal mines are expected to yield a very high return on investment. In NSW coal production is expected to increase by additional 4,354 thousand tonnes in year 2032, while Queensland mines will increase their coal production by 5,844 thousand tonnes in that year. Similarly, iron ore mines in WA would increase their production by additional 11.8 megatons in 3032. This significant production increase has a very high impact on total mines revenue in the specified States above.

Keywords: Innovation, R&D, Impact, Research and Development, Mines, Automation

JEL Classification: O14, O33, O38

Suggested Citation

H. Rubin, Tzameret, Economic Impact Analysis of Automated Mines in Australia (February 1, 2015). Available at SSRN: or

Tzameret H. Rubin (Contact Author)

Loughborough University ( email )

Epinal Way, Loughborough
LE11 3TU
Great Britain


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