Where Robots Already Reign

Matthew Carr By Matthew Carr, Emerging Trends Strategist, The Oxford Club

Market Trends

I gave a presentation last week about robotics, automation and driverless vehicles at The Oxford Club’s Private Wealth Seminar on Mackinac Island in Michigan.

It was an interesting backdrop for the presentation. No cars have been allowed on the island for 100 years.

People walk, ride bicycles or travel by horse and carriage.

It’s an odd sight to see. But the future of our roads is expected to look even odder.

It’s just a matter of time before autonomous and driverless vehicles take over American highways.

In 2010, Alphabet (Nasdaq: GOOGL), Google’s parent company, announced its first fully autonomous car.

Since then, there’s been nearly nonstop coverage of this piece of technology. It’s a topic we cover regularly here at Energy & Resources Digest.

That’s because robotics, automation and autonomous vehicles – all core technologies of the “Fourth Industrial Revolution” – are going to have the most profound impact on the energy and resources sectors over the next several years.

These technologies will affect not only the demand for fuels and raw materials, but also drilling for oil and natural gas, as well as a broad spectrum of mining operations.

The Robot World Already at Work

The global population of industrial robots is going to explode… we’re talking three times their current levels by 2025.

Over the next decade, robotics and automation are expected to unlock an additional $56 billion in value for the mining industry. Plus, this technology is expected to save more than 250 lives and prevent more than 10,000 injuries.

Here’s the deal though… The mining industry began experimenting with autonomous vehicles almost a decade ago… during the last financial collapse.

Since 2008, Rio Tinto (NYSE: RIO) has been using driverless and autonomous vehicles at its mines in Australia. And they aren’t cars or trucks.

They are massive machines, weighing hundreds of thousands of pounds. And they’re rolling nonstop every day.

At Rio’s Yandicoogina, Hope Downs 4 and Nammuldi mines in Pilbara, Western Australia, there are no drivers on-site. Instead, 73 driverless vehicles at the three sites are controlled by drivers 750 miles away in Perth, moving about 20% of the company’s material at the three iron ore mines.

This is the future of mining.

Rio Tinto isn’t the only Australian miner relying on this technology…

  • Fortescue Metals Group (ASX: FMG) has 54 autonomous trucks.
  • Anglo American (OTC: NGLOY) is using autonomous drills in South Africa.
  • The largest mining company in the world, BHP Billiton (NYSE: BHP), is investing in autonomous fleets. It’s also deploying autonomous drills.
  • And Suncor Energy (NYSE: SU), Canada’s largest oil company, is testing autonomous trucks in Alberta’s oil sands.

Self-driving technology in mines can increase productivity between 15% and 20%. At the same time, it reduces fuel and maintenance costs.

This is part of the reason Fortescue and Rio Tinto are the two lowest-cost iron ore producers in the world.

An Industry Revived Through Automation

From their peak in 2012 – when gold and metals prices were soaring – quarterly sales of mining equipment have collapsed 80%.

But new technologies are helping revitalize sales. Over the next 10 to 15 years, development of new machines is expected to surge as mining companies turn to technology to protect their profits.

And the companies I’m highlighting today are leading the charge…

Japan’s Komatsu (OTC: KMTUY) is the world’s second-largest mining equipment manufacturer behind Caterpillar (NYSE: CAT). Back in 2008, Komatsu began working with Rio Tinto on autonomous and driverless mining equipment.

In that time, dump trucks equipped with its Autonomous Haulage System have hauled more than 1 billion tons at mines in Australia and Chile.

Caterpillar’s autonomous trucks have moved more than 240 million tons of ore for Fortescue in Australia. And Fortescue’s autonomous fleet has seen a 20% improvement in productivity over its regular fleet.

Robots and automatons thrive at performing repetitive tasks. If a job requires a worker to do the same thing over and over and over, it’s quite easy to automate.

Hauling ore at a mine is both monotonous and dangerous.

Trucks drive the loop again and again. These are the easiest jobs for autonomous vehicles to take over… and it’s why we’ll see autonomous vehicles start to take off in mining and the oil and gas industries.

The fact is, they’re already there. And soon enough, they’re going to be joined by an ever-increasing population of robots.

The spoils will go to the miners and drillers employing these automatons… as well as the companies manufacturing them.

Good investing,

Matthew

P.S. I mentioned The Oxford Club’s Private Wealth Seminar on Mackinac Island that I attended last week… It really was a fantastic trip.

If you didn’t know, the Club hosts events like this one all the time. In fact, there’s another amazing event in January that I’m going to be attending… I wanted to extend a cordial invitation your way.

It’s called the Wealth, Wine and Wander Retreat, and it’s happening January 18-22, 2018, at Rancho Santana in Nicaragua.

Joining me will be The Oxford Club’s CEO and Publisher Julia Guth, as well as Options Strategist Karim Rahemtulla and Macro Strategist Eric Fry.

We’ll be discussing our favorite wealth-building trends and getting to know Oxford Club Members, all while being pampered at the beautiful Rancho Santana, considered one of the finest resorts in the world by Travel + Leisure magazine.

You have to see this place to believe it… Click here for more information.