* Commodity prices down as much as 80 pct from peaks
* Miners up spending on technology despite falling capex
budgets
* Cost cuts mean miners that might have failed may pull
through
By Sonali Paul and Nicole Mordant
MELBOURNE/VANCOUVER, Feb 16 (Reuters) - New technology is
helping miners cut costs to survive the worst downturn in
commodity prices in nearly two decades, which is good news for
companies that might otherwise have gone to the wall, not so
good for an industry drowning in overcapacity.
Commodity prices from coal to zinc are down in some case as
much as 80 percent from record highs a few years ago, caused in
part by slowing economic growth in China - for years the world's
biggest user of raw materials - which shows little signs of
abating.
Global resource-based companies have adapted to the fall in
revenue by adopting new technologies enabling, for example,
real-time tracking of operations, which helps reduce down time,
saves fuel, improves safety and boosts production.
Despite the collapse in prices, Australian mining companies
have suffered only a 20 percent fall in profits in the most
recent financial year relative to 2012, according to government
data.
That means mines that would have been doomed in past
downturns are proving far more resilient, prolonging oversupply
and keeping downward pressure on prices.
"You're getting more output for a lower price. It's just one
issue that's making production a bit stickier than you would
expect," said Ric Ronge, a portfolio manager of Pengana Global
Resources Fund.
At a new gold mine in northern Canada, huge fans switch on
to suck dust and diesel fumes out of shafts 650 metres
underground when equipment or workers approach the area, and
switch off when they leave, not wasting energy spinning all day
long.
'Ventilation on demand' is saving Goldcorp G.TO as much as
$2.5 million a year at the Eleonore mine, and has cut energy
costs more than 20 percent at a Glencore GLEN.L copper mine in
Canada, thanks to software tying together data from tracking
tags on the workers and sensors on ore loaders.
"They're seeing it as: 'If I don't do this, I'm not going to
be around, because it's helping lower my costs,'" said Doug
Bellin, senior manager at Cisco Systems CSCO.O , which helped
set up systems for Goldcorp.
The trend is running against the industry's broader drive to
cut capital expenditure.
"There's a growing interest towards more automation," said
Petri Virrankoski, manager of load and haul in Australia for
Sandvik Mining, the Swedish maker of mining equipment. "But
obviously in these times money is tight, so I wouldn't say it's
easy to sell anything nowadays."
Sandvik SAND.ST has successfully tested automated trucks
and loaders at a mine in Finland.
GOLD RESILIENCE
Gold miners in particular have stepped up technology
investment within a falling capex budget, as the gold price in
producers' currencies, such as Australian or Canadian dollars,
has held up much better than other commodities.
"I'd say half our clients are gold, which is quite lucky,
because gold's still doing quite well," said Charlie Forrest,
vice president of sales for Quebec-based Newtrax, a private
company that makes battery-operated wireless nodes that convey
data from underground operations to the surface.
Newtrax has doubled its sales in each of the past two years,
and Forrest says it is on track to do so again in 2016, with
strong demand for its products in underground hard rock mines.
One client, Glencore's Kidd copper and zinc mine, says
Newtrax's nodes are relatively inexpensive and easy enough for
mine staff, rather than electricians, to install and maintain.
"At this operation, deploying a Wi-Fi system on a similar
scale would (otherwise) be a two-month undertaking that would
inevitably result in production disruptions and high
installation costs," said Zachary Mayer, Kidd's manager of mine
technical services.
Northern Star Resources NST.AX , Australia's no.3 gold
miner, has boosted its reserves by exploring deep underground
near existing mines using 2-D and 3-D technology from HiSeis, a
company spun out of Curtin University in Western Australia.
Seismic campaigns cost up to A$1 million ($704,000) each,
but they pay off in helping the company identify exactly where
to position drills, which has improved its exploration success
rates, said Northern Star's chief operating officer, Stuart
Tonkin.
That has helped the company cut exploration spending by 30
percent this year to A$35 million.
Dundee Precious Metals DPM.TO , another gold miner, started
using wireless technology and software platforms in 2012 to
track operations in real time at its Chelopech mine in Bulgaria,
where it has halved production costs from a peak in 2008.
That technology alone has accounted for about 15 percent of
the savings Dundee achieved, Chief Executive Rick Howes said.
"It is the gift that keeps on giving. We are not realising
the whole potential yet," said Howes.
($1 = 1.4211 Australian dollars)
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Graphic on price performance of metals http://tmsnrt.rs/1Q8QEZe
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