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Technology in mining is important; people are more important

August 17, 2020

In recent years, there has been a drive to digitize and automate in the mining industry. Mining, according to this construct, is behind the times with few recent innovations of significance. And as deposits become ever harder to find, the industry must embrace twenty-first century technology with great haste or risk irrelevance or ruination. To this I say: not so fast. Automation, digitization, and other forms of technology are important, to be sure. However, a singular focus on technology without also recognizing that there has to be a focus on people overlooks an important part of what makes a mining enterprise successful. The disruptive solutions of the future will come from the people that are working for you. They will not come from technology, although technology may be a part of it. At our Jacobina mine in Brazil, for example, changing the mining methodology allowed us, for the same amount of development cost, to do more development, which led to higher production and lower overall costs. That was not a technological solution, it was a mining solution that was advanced with the engagement of the mine’s workforce. These are the people who work in our operations, particularly some of the younger people. They may not have had a lot of experience but they had a high-quality skillset, and we gave them the opportunity to develop that experience.

A 3-D model of the geology at the El Peñón mine. The operation is using artificial intelligence technology to identify new exploration targets. The complex model pictured above helped the site’s exploration team identify targets along the black fault lines that could lead to new discoveries.

Clearly, there is some benefit to technology, but it must be in the context of where we work and in the context of the skillsets of the people we have. The worst thing that a mining company can do is implement a technological solution for something in a place where it does not have the required support for any improvements, upgrades, or the normal maintenance and care required for that technology. At Yamana, we take a measured approach. We believe that introducing new technologies without fully understanding whether they will solve the problem they are designed to address, or do so in a cost-efficient manner, is a recipe for failure.

One area where we have seen some excellent interplay between technology and people is on the geology side of our business. Our El Peñón mine in Chile, with a history that dates back to 1999 and a significant exploration program where we have done more than 50 to 60 kilometres of tunnelling and development in some years, is a good example. There is a lot of knowledge and skill there, but what we discovered is that if we rely solely on our people, talented as they are, successfully pinpointing where we should be exploring next at that operation could take years. Instead, integrating high-quality artificial intelligence, and training our geological staff to implement this technology, gives us opportunities that we can leverage in a matter of months. That’s an excellent disruption because it is allowing us to better explore where there are ore bodies and mineralization, which allows us to increase reserves and resources and, ultimately, mine life. We are now introducing this technology at our Cerro Moro mine in Argentina.

We are also looking at several initiatives to more aggressively leverage cloud computing, which will allow us to generate insights and analyze performance trends to become more efficient and productive. Delivering computing services over the Internet (‘the cloud’) will reduce our fixed costs and increase flexibility. We will, for instance, be able to quickly increase or decrease the use of various computing services ‒ servers, databases, networking, software, analytics ‒ on an as-needed basis without incurring traditional costs associated with this type of usage.

Another example is technological applications that allow for better analytics for near real-time planning or that improve communications. Again, these applications do not displace people as much as they make work more productive and efficient. These are mostly incremental applications that could meaningfully improve a mining operation although they rely on people working at a mine. The objective is to increase production and improve costs although without displacing human beings, effectively making the pie bigger.

We try not to apply substantial, upfront technology investments; we like to test things first. With autonomous equipment at our mines, for example, we want to make sure that it works efficiently and that it can be monitored and managed effectively at each operation. We’re not yet at the point of concluding that we can manage remotely though we may get there. In the meantime, we want to make sure that our people are well-trained, and where there’s a dislocation of people we want to ensure that we re-train our workforce for those skillsets that the Company will require. Because, ultimately, it is our people who are going to carry us into the future.

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Yamana discloses certain non-GAAP measures including Cash costs per ounce of gold, Cash costs per ounce of silver, Co-product cash costs per ounce of gold, Co-product cash costs per ounce of silver, Co-product cash costs per pound of copper, All-in sustaining costs per ounce of gold, All-in sustaining costs per ounce of silver, All-in sustaining co-product costs per ounce of gold, and All-in sustaining co-product costs per ounce of silver to supplement its Consolidated Financial Statements, which are presented in accordance with IFRS. The term IFRS and generally accepted accounting principles (“GAAP”) are used interchangeably. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

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