Northern Sky Research

The Mining Market: More Data = More Players

Jun 29th, 2014 by Brad Grady   More from this Analyst | Profile

More attention continues to be given to the mining industry, and for good reason.  With demand surging for smartphones, tablets, LCD screens, solar panels, and other electronics not only from markets such as the United States or Europe – but a growing middle class throughout China, India, and elsewhere.  As the demand for industrial metals continues to increase, mining companies are under on-going pressures to not only find and develop new resources, but improve the margins on current projects and maximize total mine yields.

As NSR projects in its Energy Markets via Satellite, 4th Edition report, the mining demand for satellite capacity will grow at double-digit annual rates over the next ten years.  The result will be over 30 TPEs of FSS capacity demand and almost 1.4 Gbps of HTS demand by 2023. Mining juniors and majors alike are looking to leverage applications such as SAP and video conferencing to create a real-time picture of mining operation to make real-time decisions.  

Activities such as monitoring fuel consumption at remote mining operations in the Canadian Arctic and matching mineral output quality to drilling operations are all at the forefront of improving mining operations.  Simultaneously, personnel-centric applications such as internet access, location-based monitoring, and other health, safety, and recreation continue to expand as well.  When combined, there is a clear need for expanding remote communications infrastructure.  

This could be the problem for incumbent mining communications service providers – more requirements for data mean more service providers are looking to get into the market.  Most recently, BT Global Services announced a six-year, $37 Million dollar contract to provide connectivity across 70 De Beers group sites.  The contract (which averages a little more than $7,000 a month per site) will leverage both terrestrial and satellite services to connect both mining and distribution locations.  Specifically mentioned, the network will provide HD video conferencing, support De Beers ‘applications (such as SAP MII deployments at the Snap Lake and Victor Mines), and enable QoS support for business vs. recreation applications.  Yet, perhaps the best quote from the announcement by BT is, “… to deliver the best performance at the most competitive cost.”

Although a press release, one does have to wonder – Can terrestrial providers leverage their much larger size to capture more of this business?  An obvious answer is yes.  With access to their own terrestrial MPLS networks, they can provide better pricing to some degree (and their larger size allows them to run on tighter margins to ‘win the business’), but providing remote satellite-based enterprise-class communications still requires a unique set of skills and resources.  Which leaves the question for the satellite service providers – how can satellite service providers compete?

Perhaps, Level 3 has the answer.  Quoted in their recent announcement for providing communication services to First Quantum Minerals Limited is that Level 3 plans to leverage, “extensive partner networks in region.” Partnerships with major telecommunications providers will likely be a key way for satellite service providers to continue to grow their service revenues.  As connecting remote mining locations to datacenters remains a key part of any mining network infrastructure, there is a clear role for satellite services providers.  These partnerships with larger telecommunications providers could be a pathway to enable even more service providers to enter into the market.  Satellite service providers can leverage their existing investments in infrastructure and satellite capacity, while the terrestrial providers can leverage their investments in terrestrial infrastructure.

Bottom Line

The mining industry presents a clear opportunity for bandwidth demand and has clear needs for satellite services.  However, with more and more announcements by terrestrial telecommunications providers entering the market, and interest within the satellite industry, expect to see more players entering the mining communications market.