COLUMN-Technology may lower commodity prices, widen nation gaps – by Clyde Russell (Reuters U.K. – June 23, 2015)

http://uk.reuters.com/

LAUNCESTON, Australia, June 23 (Reuters) – The image of miners as mainly burly blokes in hard hats and high-vis vests is likely to change in the next decade to one of computer geeks controlling automated machines while sitting thousands of kilometres away from the pit.

That’s certainly the scenario outlined in a major report called “Australia’s future workforce?”, released last week by the Committee for Economic Development of Australia (CEDA), a think-tank encompassing businesses, community groups and academic institutions.

More than five million jobs, or about 40 percent of Australia’s current workforce, have a “moderate to high” likelihood of disappearing in the next 10 to 15 years, CEDA said in the report.

What is relevant for commodities in this scenario is that mining and agriculture are among the sectors likely to be affected the most because of technological advancements.

The report notes that technological changes, while disruptive, often lead to higher incomes and increased employment opportunities as more wealth is created and productivity boosted.

Much of CEDA’s report is about how Australia can meet the challenges of technological change by ensuring that best practices are developed and implemented in areas as such as education and training and industrial policy.

But the impact of such a dramatic change in the way commodities are produced in such a short time frame will have ramifications for commodity markets across the globe, and not just in Australia.

Already this can be seen in how major iron ore miners Rio Tinto and BHP Billiton are changing the way they operate their massive mines in Western Australia state.

Rio Tinto has seen a 13 percent decrease in load and haul costs, an 8 percent cut in drilling costs and up to a 15 percent reduction in mining fleet purchases at its iron ore mines in Western Australia, Michael Gollschewski, managing director for Rio Tinto’s Pilbara Mines, wrote in the CEDA report.

Rio Tinto has deployed driverless trucks, which are controlled by operators in Perth, some 1,500 km (900 miles) from the mine, and has also automated drilling, loading and other functions.

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