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21 January 2021
Technological innovation continues to disrupt the status quo in established industries. While new technologies offer many opportunities within the mining industry, the corresponding risks and potential disputes are not far off. This article focuses on these opportunities, risks and disputes that might arise from changes in the mining industry and emerging avenues for avoiding and resolving such disputes.
New technology can increase the efficiency and productivity of mining operations. The industrial Internet of Things automatically connects machines and people using intelligent sensors and radio frequency identification devices to create an extensive network of interactions which can enable computers to interact with mining operations without human intervention. This has the potential to improve visibility and traceability throughout the life cycle of a mine and to automate maintenance and operation. New computing technology enables information collected from this network, which would have previously been too large and complex to deal with in traditional ways, to be processed in real time, allowing for informed, data-based decisions to be made efficiently and accurately. Efficiency and productivity are also advanced by predicative maintenance and 3D and 4D printing, which allow for replacement parts to be printed and ready on site exactly when needed, minimising maintenance shutdowns.
As mining is one of the most energy and water-intensive industries, green technologies not only contribute to lowering the environmental impact of mines but can also reduce operating costs. Mining companies have started to replace diesel-powered trucks with e-vehicles. Through autonomous systems and machine learning, equipment can adapt to the grade and hardness of materials which allow for the optimisation of energy use in mining processes such as crushing.
Biological techniques have also begun to reduce the environmental impact of mines and increase revenue. New technologies are being developed to replace the use of cyanide for treating tailing, with a new mixture safe for human consumption that can be used multiple times. Research on the ability of micro-organisms to eat the copper present in tailings which can later be extracted from the bacteria to be reprocessed before sale is being developed so that minerals present in residual waste can be recovered and used to help fund waste treatment expenses.
As the demand for certain metals (eg, lithium and cobalt) which are vital to new technologies increases, the mining industry is turning to new technologies to mine what could not be mined practically or profitably before. Big Data and digital twinning have reduced the cost of exploration, while robots and drones bring mining to new depths and smaller spaces unsuitable for human workers. Machine learning allows for the optimisation of mining operations and the mining of metals and minerals which would have previously been too expensive.
Workers' safety has always been a concern in the mining industry. Advancements in virtual reality and robotics have been able to protect workers by creating the ability to test dangerous operations in virtual environments or by removing workers altogether. Virtual reality blast walls project onto a canvas and allow workers to test blast holes and practise detonating explosives to observe how rocks react. Some equipment (eg, smart helmets) can enhance vision, indicate danger zones and even record when drivers are fatigued and must take a break.
Along with increased safety comes a reduction in associated liability risks. As industry names such as Komatsu, Cat and Hitachi are bringing forward automated haulage systems, the prevalence of autonomous trucks has reduced accidents in mines, making jobs safer for workers and profits higher in the absence of injury payouts and lost productivity.
One of the largest effects that technology will have on the mining sector is on the workforce. With automation and robots taking away jobs, predominantly male and lower-skilled workers will be the most significantly affected. However, not all employment effects will be negative. Technology has introduced new fields outside the core competencies (eg, biochemistry, bio engineering and computer science) into the mining industry. With advancement comes more opportunities for educated and skilled workers and for the existing workforce to be trained to take on new opportunities.
Any business innovation that is discovered while creating opportunities also creates new areas for disputes. Legal and regulatory risk in the mining industry is already a complex matrix, complicated by the fact that industry players are often global, operating in multiple legal jurisdictions.
New technologies inherently come with significant risk (some known but many 'known-unknowns') and often novel regulatory and legal issues. In addition, new players in the sector have emerged as technology companies begin to invest in mining operations. For example, automotive companies such as Tesla have begun strategically investing in mining to ensure access to the metals required for production. This brings risk with the opportunities as the sector expands beyond familiar counterparties and new players introduce uncertainty stemming from different approaches to doing business. Technological innovation also requires new arrangements between host governments and mining companies, particularly where upfront investments are still high but do not necessarily guarantee significantly higher profits. Disputes with local communities and host states may also arise where technology disrupts the benefits of industry for locals, including by reducing the need for infrastructure and the workforce. A balance between positive and negative effects on local communities must still be found and new disputes require expedient and innovative solutions.
These issues are complicated by the fact that there is no single, universal legal system. Global companies implementing cutting-edge technologies across multiple jurisdictions find themselves facing a plethora of different and often conflicting legal and regulatory systems. Frequently, laws that apply to new technologies and any arising disputes were developed in a world and time that could not even contemplate the existence of such technologies. Take autonomous vehicles as an example: as they become the status quo, regulatory and legal frameworks for vehicles premised on human control could be found inept to deal with related issues. Similarly, liability for coding errors is more complicated in situations with no human involvement. With emerging technologies in a global industry there are often fundamental questions of jurisdiction and governing law, raising key questions of which courts have jurisdiction to hear disputes and which laws should apply.
As disputes arise, multiple legislatures and courts will grapple with these issues and laws will evolve to address challenges created by fast-emerging new business realities. Given the pace of legislative change, much of this evolution will occur as a result of litigation. In many instances, mining companies may be unwilling to be the first to tackle these issues in public courts, particularly where precedents may be set.
International arbitration has always played a significant role in resolving disputes in the mining sector. Its core tenets include:
Arbitration is equally well suited for dealing with disputes arising out of innovative technologies. As a flexible process which may be designed by and adapted to the parties and specific circumstances, arbitration is best placed to cope with the speed and uncertainty of rapid change. Arbitration allows the appointment of specialist arbitrators who understand the particular issues within the industry or the technology in question. Many tribunals include an appointed non-legal arbitrator who is an expert in a particular field. They can also be supported by expert evidence. Arbitration can also offer efficiencies that the courts cannot, although such efficiencies – as with everything in the arbitral process – are largely within the parties' control. Finally, arbitration allows for the global enforcement of awards, a particularly important element given that many ventures involving technological innovation are cross-border or transnational.
With emerging technologies offering incredible opportunities, parties must ensure that they consider the potential for new areas of risk as well as the opportunities. Parties must ensure that they incorporate appropriate contractual protections but also effective and enforceable mechanisms for enforcing their contracts and resolving disputes. A robust and broad arbitration agreement remains one important part of risk mitigation.
For further information on this topic please contact Matthew Buckle at Norton Rose Fulbright by telephone (+44 20 7283 6000) or email (email@example.com). The Norton Rose Fulbright website can be accessed at www.nortonrosefulbright.com.
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