(Bloomberg) — Modern miners are phenomenally good at making money from turning base rock into gold.
The average deposit contains just 1.01 grams of the precious metal for every metric ton of ore, according to a 2013 report by Natural Resource Holdings. To put that in perspective, you’d need to crush and process a Statue of Liberty’s worth of ore at that grade to extract just two teaspoons of gold — worth about $8,800 at current spot prices.
For decades, miners have seen those grades fall, and fall, and fall, leading to yet-to-be-realized fears the world is facing peak gold. Back in the late 1960s, mined gold came in at more than 10 grams a ton on average, according to MinEx Consulting. Nowadays, Barrick, the world’s biggest gold miner, sees the 1.32 grams/ton grade in its reserves as something to boast about — and not without justification.
One response to this progressively toughening environment is to invest in technology to make existing mines more productive. That’s what Barrick plans with its announcement Monday that it’ll invest $100 million in a partnership with Cisco Systems to digitally reinvent its business.
The aim is to apply lessons learned in the auto industry — another high-volume, low-margin business — to make Barrick’s mines more profitable. Data analytics, predictions of weather patterns, market prices and geology could help decide which parts of a pit to dig at any one time, the thinking goes.
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