Bringing next level operations to mining with data and AI
Data engineers, metallurgists, and mining engineers from Freeport collaborated with McKinsey’s data scientists and experts to improve operations at a single aging mine in Bagdad, Arizona. The goal was to create a digital solution that could improve every aspect of operations, prove its value, and be easily scalable to all Freeport’s mines. This was the start of agile and analytics journey for Freeport.
“Modern mining is a complex and technical undertaking. Technologies such as cloud, centralized data warehouse, wireless mesh networks, and IoT sensing, allowed us to bring the data closer to the field and learn from past experiences.” —Bertrand Odinet, Chief Information Officer and Chief Innovation Officer
McKinsey helped Freeport create a digital roadmap using AI, advanced analytics, and agile work methods to increase productivity at every step of Freeport’s processes. The new approach favored minimum viable products that could be continuously improved, rather than the traditional goal of “perfecting” a solution before it was deployed. To entrench this capability, McKinsey brought in agile coaches to train teams to operate faster and better.
“We put in the recommended AI engine and saw 10% improvement in production. And we thought if we do the implementation at all seven of our sites right, it's almost like having a brand-new plant without having to go through permitting process and disturbing a new area. It's in the billions of dollars that we're offsetting by going through the transformation.”
—Cory Stevens, President, Mining Services
Freeport had a big leg up for its AI transformation because it had built a central cloud-based data architecture. A key component was a data warehouse to store the data collected from sensors installed on the company’s trucks, shovels and stationary machines, allowing Freeport to capture second-by-second performance readings. It used that data to train an AI model custom-designed and built by McKinsey to find operational improvements that could increase output at lower cost. Instead of running the plant at a single setting all day, Freeport could now adjust settings every hour to maximize production from a given type of ore, quickly boosting production by 5-10%. The amount of additional copper production Freeport is projected to unlock over five years is equivalent to one new processing facility without the eight to ten year wait to bring a new facility online. Once the AI models were built in a modular way, Freeport was able to easily adapt and scale throughout its mines in the Americas.
increase in pounds
in annual copper production across mines
(up to $500M)
EBITDA improvement by scaling AI
The cost of a new processing facility that could be avoided.
This playbook, which McKinsey has been developing and using with clients for the past six years, lays out exactly what it takes to build the capabilities to continually create great customer experiences, lower costs, and build value.