RACE21 to digital transformation

Greg will cover the critical importance of focusing on value delivery and the impact the program is having across the company—from health and safety to sustainability, production and efficiency. He’ll also discuss the cultural shifts taking place across Teck as the program changes how the company operates, why an empowered workforce is at the heart of the program’s success, and what’s next.

Overview

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(Bright music)

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<v ->Hello, I’m Greg Brouwer,</v>

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Vice President of Transformation at Teck.

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One of Canada’s leading mining companies.

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It’s my pleasure to speak to you

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about Teck’s digital transformation journey today.

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It’s a story

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that reflects the theme of this year’s

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(speaks faintly) conference,

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Together Towards Tomorrow.

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And I’m sure it will resonate with many of you

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as we move towards a period of incredible change

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in the digital space.

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A period that challenges our preconceived notions

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of how we work,

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a period that empowers our people

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to do things differently and better.

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It definitely resonates with me.

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I’m fairly new to my current position.

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Having made the transition from an operator role

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just a few years ago.

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And while I have always understood

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the value of innovation and technology,

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I have really come to appreciate the incredible opportunity

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that now lies before us.

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I believe my journey of being open to growth

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is what has allowed a company like Teck

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to continue to evolve and succeed

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for over 100 years.

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For decades,

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our employees have come up with advanced solutions

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that have improved our business and industry.

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They pioneered many of the techniques and technologies

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that are now standard in the global mining industry.

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These include airborne, magnetic surveys,

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and differential froth flotation.

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Even the walkie talkie was invented by an employee

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at our trail operations.

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So, we understand that innovation requires us to take a leap

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because the risk of not innovating is falling behind.

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I’m here to tell you that the opportunity

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that exists in the mining industry

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for digital transformation is enormous.

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And this opportunity is tangible, it leads to cost savings,

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higher efficiency, better performance, improved safety,

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and much more.

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In this presentation,

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I will focus on the transformation underway at Teck

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through our RACE21 program.

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I’ll provide some general background on innovation,

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including the major drivers that are ushering in change,

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as well as the opportunities in the mining space.

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I’ll also talk about how we view digital innovation at Teck,

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discussing what it means to us, and how we assess its value.

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And I will dive into our RACE21 program, how it started,

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what it is achieved to date, and where we see it going.

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This is a journey that has positively impacted

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every aspect of our business,

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from production to sustainability

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and the health and safety of our people.

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To start, I’d like to provide some context

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on the enormous opportunity

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available to the mining industry.

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When it comes to innovation.

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Our industry has always been keen adopters of technology

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and of constantly finding better and more efficient ways

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of doing things.

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This has been driven in part by the capital intensive nature

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of mining,

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which demands constant improvement to keep in business.

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It also has been more recently

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by the increasing importance of environmental,

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social, and governance or ESG factors,

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which greatly influence every aspect of our business.

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However, we hardly have a monopoly on innovation.

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In fact, when we look at other industries,

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it’s clear that we have a sizable opportunity

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to close the innovation gap.

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These other industries

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include pharmaceuticals and biotechnology,

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software and computer services, technology hardware,

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automobiles, healthcare equipment, and more.

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And that’s where things get interesting.

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Innovation has always been key to our success

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and now it’s emerging stronger than ever

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due to a range of pressures.

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The global mining industry

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is embarking on a significant period of investment

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in innovation.

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As we work to support the transition

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to a low carbon economy,

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we are developing a broad range

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of techniques and technologies to improve how we mine.

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And while mining has continued

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to see the impacts of these changes,

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which allow us to mine more difficult to reach deposits,

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there are also profound changes happening all around us

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from a digital perspective.

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In short, there are pressures coming at us from all angles

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through changes to global mining landscape

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and through a general paradigm

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shift in the way we live and work

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based on a foundation of rapidly evolving technology.

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There are four main drivers behind this technological shift.

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The first, is massively increased computing power.

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I’m not talking about the incredible increase in power

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that we see in our daily,

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rather in our mobile phones and personal computers.

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Although this is very impressive to say the least,

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but more broadly, we now have access to cloud computing,

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which offers essentially unlimited computing power

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to solve complex business problems.

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Second,

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we’re seeing a ubiquitous distribution

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and availability of sensors and data.

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In order to develop insights and to optimize,

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you first have to have information or data

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about what’s going on.

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You can have all the computing power you want,

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but unless you can stick data

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and enough information in there,

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you don’t have much to work with.

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Third, if you want to optimize through digital

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having data that’s stored in some remote location

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is not helpful either.

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You’ve got to be able to get that data to the cloud.

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And that’s where connectivity comes in.

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Globally, the level of connectivity through Wi-Fi, LTE,

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and more recently 5g

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has been going through an exponential increase

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in recent years.

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And finally, this is all now attainable at a very low cost.

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Sensors are now inexpensive in our industry

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and broadly available.

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We have sensors installed on most of our operating assets.

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For instance, a typical haul truck

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will have well over 300 individual sensors

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that generate data in real time.

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When you put all of this together,

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connectivity to these low cost sensors

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that allow you to get data into the cloud,

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you have the basis for profound digital changes

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that we’re now seeing.

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As you are well aware,

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digital innovation

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is essentially about using new technologies

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to solve existing business problems.

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It seeks to improve efficiency through innovative products,

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services, and solutions.

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And it seeks to empower employees.

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This is a key aspect I will touch on a head.

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Behind digital innovation,

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our best practices, concepts, and technologies

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we all know well,

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these include the principles of agile development,

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advanced analytics, big data, and machine learning.

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A strong grasp of these fundamentals allows companies

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like Teck, to navigate the incredible volume of data

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we produce,

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uncovering insights that can improve our business.

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And the truth is we have been producing big data

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for a very long time.

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Just not really knowing what to do with it.

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Teck currently has more than 46 terabytes of data

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or close to 1 trillion data points

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available in the Google Cloud Platform

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and Microsoft Azure.

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And every hour,

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we’re now streaming roughly 4.8 gigabytes of new data,

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or around 70 million new data points.

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This data comes from the thousands of sensors we have,

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providing key information on the various aspects

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of our operations.

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Through advanced analytics,

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we use machine learning and data

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to ultimately develop insights

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into how we can optimize whatever it is we’re looking at.

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In essence, digital transformation

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allows us to understand data

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in ways that we have never been able to before.

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So, the big question is what real tangible benefits

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can be derived from this data?

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Or put from a business perspective,

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what is the value of digital transformation?

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The answer is a resounding yes,

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we look to the McKinsey Global Institute

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to help understand what kind of opportunity

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we were looking at.

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And what they identified

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is that if you look across the mining supply chain,

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in the areas of advanced analytics,

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digitization, and automation,

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there was an estimated potential annual income increase

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in the range of 11 to 16%.

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And if you look at the size of our industry today,

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what that translates to is potential value

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in the range of 375 billion us dollars per year.

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To be clear that’s available to our industry

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every single year.

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Well, what does this mean for Teck?

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As one of the top 20 largest mining companies in the world,

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this means we can capture a considerable amount

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of that annual value.

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And this is why we started getting pretty excited

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a few years ago,

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when we first started

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contemplating a digital transformation.

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We could see that there was value potentially available

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through our entire business system.

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For instance, in strategic sourcing,

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giving transparency on the supplier cost space,

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enabling more effective negotiations.

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In safety and sustainability using technology,

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such as drones, robotics, and sensors,

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to improve monitoring and minimize exposures

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to hazardous conditions.

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In maintenance, using sensors on trucks

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to enable predictive maintenance,

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which reduces costs and increases availability.

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And in mine operations using advanced analytics

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to improve routing and reduce idle times.

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In finance, automating workflows,

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which creates labor savings.

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And in HR, using automation

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to execute manual and repetitive processes,

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also saving resources.

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What we’ve learned so far

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is that when you bring advanced analytics and digital talent

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to complex mining problems,

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it doesn’t really matter where they are in the supply chain.

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You should expect

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that you’re going to be able to create value.

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And this brings me to RACE21,

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Tecks, digital transformation initiative.

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I have always had the view

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that if you want to do great things in a company,

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you need two things, a bold goal, and not quite enough time.

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This is why when we launched the program in 2019,

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we put 2021 as the end of the first phase.

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And we will be launching the second phase later this year

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to reflect our ongoing journey.

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RACE stands for renew, automate, connect and empower.

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Renew recognizes that

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although we had a strong starting point,

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we needed to make some investments

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in our underlying digital infrastructure.

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This way we can support the amount of advanced analytics

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and data collection needed,

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as well as the development of new technologies

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that we are ultimately going to drive from.

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Renew has covered a range of investments for us,

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including wireless site infrastructure,

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purchasing and installing new sensors, cybersecurity,

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and making sure

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we have the right data platforms established.

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We have invested substantially in these areas

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in the last two and a half years

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because this investment

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is the basis for everything else we have done.

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It is truly the foundation for our digital transformation.

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So far, we’ve upgraded more than 350 heavy vehicle computers

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that will enable advanced analytics,

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and install 200,000 new sensors in our processing points

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that enable us to monitor production

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and improve efficiencies.

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Automate recognizes that our industry and company

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will transition to a more highly automated future state.

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In the mining industry,

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automation has been around for a couple of decades.

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We started automating our large haulage trucks

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some years ago,

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but for us automate is meant to capture

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a couple of more key things.

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It’s about not just embracing the technologies

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that have been around for awhile,

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but also having a vision that over the next decade,

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there will be significant changes

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to the level of autonomy accessible to us.

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We’ve made great progress,

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expanding the use of automation at Teck.

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We are currently operating 45 autonomous haulage trucks

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at two sites and project to be at 70 by year end,

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including at our new QB2 mine,

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which is currently under construction in Chile.

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And it’s not just going to be limited to haul trucks,

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we are already seeing increased levels of autonomy on drills

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and shovels, and in our mines more broadly.

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In our concentrators,

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we’ve always leveraged advanced process control,

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but when you layer on some of the other things

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I will talk about ahead around advanced analytics,

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we really have a vision that our plants and concentrators

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will be very much self-driven.

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Connect represents the data aspect I talked about.

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We already had extensive sensor infrastructure installed,

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but then through renew,

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we made investments that not only upgraded our sensors,

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but also our wireless connectivity.

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Ultimately, what we were able to do

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is bring all of this data together

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from all these disparate systems and sensors

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and put it in real time in the cloud.

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And to put it into context,

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we have well in excess of 800 individual data pipelines

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that have now been established

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between between Tecks assets in the field

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and both the Google Cloud Platform and Microsoft Azure.

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We’re streaming data in real time across those 800 pipelines

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and have been now for the last few years.

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So, connect captures the idea

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that once you have all this data in the cloud,

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you can unleash your army of digital talent and optimize.

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It’s the umbrella under which all the optimization

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is currently happening in our team.

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Currently, we are connecting our data systems

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to enable broad application

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of advanced analytics and artificial intelligence.

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For instance,

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we’re using artificial intelligence

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to anticipate mobile equipment breakdowns

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before they even happen,

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improving safety and productivity while reducing costs.

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We use blast movement monitoring through sensor balls,

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loaded into drill holes.

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These balls track the movement of material during the blast.

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And this allows us to know where the ore is afterwards,[

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improving recovery,

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reducing energy use and improving production.

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We have successfully trialed

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full-scale bucket mounted sensor technology,

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at one of our mines.

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This technology helps us to use less energy,

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create fewer emissions, improve productivity.

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In fact, smart shovels, as we’ve coined them,

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have the potential to create hundreds of millions of dollars

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in value in the future.

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And we are also improving throughput and recoveries

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in our processing plants through advanced analytics.

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I’m pleased to say, these efforts are delivering real value.

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For example, at our Highland Valley Copper mine in BC

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advanced analytics tools in the plant

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together with drill to mill optimization,

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and blasting improvements, has resulted in approximately

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an improvement of 7% throughput.

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The final word empower, is the most important.

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This is because a digital transformation is at its core,

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a transformation of people and how we work.

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What we’re wanting to do

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is provide the right knowledge and insights to our people

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so they can do their jobs better than they have before.

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And we acknowledged we can’t underestimate the changes

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that need to happen

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when we start bringing digital tools

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into a conventional mining company like Teck

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and more broadly, industry like mining.

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So, the empower umbrella

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was established to push us to re-imagine

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what the future of mining is going to look like,

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and what that means for our people.

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We’ve had to ask key questions on this journey,

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for instance,

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what are the implications from a people perspective

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in terms of the skills needed for re-skilling?

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What is the talent that we’re going to attract

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and retain in the future?

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And how are people’s jobs going to change over time?

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If we go one layer deeper into empower,

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we’re giving a lot of thought into our operating model.

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This is because envisioning a future state

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that is much more highly automated and connected

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with real-time insights

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provides an opportunity to rethink

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the very nature of how we work today.

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We are already seeing a significant cultural change

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with our frontline supervisors and operators

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in areas across the company

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where we have provided insights on how to optimize

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that we never had before.

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And as we start putting this together at scale,

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it allows us to be thoughtful

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about how we need to evolve over time,

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to take advantage of these tools as the fundamental design

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of the organization.

[00:16:07.940]
That’s something we’re talking about right now.

[00:16:10.330]
And we’re giving a lot of thought to,

[00:16:11.560]
because what we ultimately recognize

[00:16:13.410]
is the more we provide these insights to our people,

[00:16:16.170]
the more it allows us to make fully integrated decisions.

[00:16:19.980]
So, we’re giving a lot of thought

[00:16:21.040]
to integrate a remote operation centers

[00:16:22.860]
and how they can play into the future operating model

[00:16:24.447]
of the company.

[00:16:26.220]
For instance, we are currently building

[00:16:28.080]
our new integrated operations center or IOC

[00:16:30.900]
in Santiago, Chile.

[00:16:33.070]
From the IOC,

[00:16:34.200]
our teams will fully operate the production chain

[00:16:36.730]
for our QB2 to copper project,

[00:16:38.480]
when it goes into production later in 2022.

[00:16:41.830]
the IOC will obtain real time operational data

[00:16:44.850]
and is directly connected with the mine site

[00:16:46.640]
located at 1700 kilometers away.

[00:16:49.470]
It’s one of the most advanced in the world

[00:16:51.400]
taking the best approaches we have seen

[00:16:53.150]
from other centers a step further.

[00:16:56.160]
The facility has been designed

[00:16:57.590]
so that multidisciplinary teams,

[00:16:59.530]
including integrated planning, value chain optimization,

[00:17:02.160]
and process control,

[00:17:03.640]
will have real-time visibility and tools

[00:17:05.660]
to remotely manage operations at QB2.

[00:17:08.650]
Essentially, it will centralize resources and data

[00:17:11.050]
for decision-making and optimizing performance.

[00:17:15.530]
So that’s what RACE is, in its current form.

[00:17:18.060]
And I’m happy to say that we’re now almost three years in

[00:17:21.670]
and we are on a different path.

[00:17:23.550]
And a lot of other organizations

[00:17:25.030]
that have attempted to do what we’re doing.

[00:17:27.550]
Why?

[00:17:28.383]
Because there’s something we put considerable thought into

[00:17:31.020]
before we started.

[00:17:33.360]
From the very first day,

[00:17:34.830]
we established a philosophy for our transformation

[00:17:38.420]
that we have since called the Path to Value.

[00:17:41.320]
We recognize that digital transformations

[00:17:43.560]
don’t always deliver.

[00:17:44.930]
By some estimates, upwards of 70% of transformations

[00:17:48.000]
will fail,

[00:17:48.970]
because the transformation

[00:17:50.080]
can unfortunately become more about the technology

[00:17:52.760]
and less about the value impact on the organization.

[00:17:56.270]
So, we were laser-focused on the value we could create

[00:17:59.140]
from the first day of RACE21.

[00:18:01.400]
We were very rigorous in how we deploy technologies,

[00:18:04.140]
how we tracked improvements,

[00:18:05.360]
and how we supported the value being created.

[00:18:08.460]
And as I noted in my previous examples,

[00:18:10.310]
we are now seeing considerable success

[00:18:12.100]
across our operations.

[00:18:13.950]
We are driving material value at Teck

[00:18:16.070]
because of our focus on value creation,

[00:18:19.090]
and our focus on people.

[00:18:20.600]
We learned early on that having champions for RACE21

[00:18:23.330]
was key to ensuring its success,

[00:18:25.310]
to emphasize the importance of RACE21

[00:18:27.430]
and its reliance on empowering our employees,

[00:18:29.770]
we established a value delivery group.

[00:18:32.370]
Now this is a group that doesn’t typically exist

[00:18:34.220]
in a digital transformation,

[00:18:35.820]
yet it’s one of the most important groups we now have.

[00:18:39.420]
These are the people who have the responsibility

[00:18:41.770]
to be the translators

[00:18:42.840]
between the digital groups and the operations.

[00:18:45.950]
They create the link between our broader employees

[00:18:48.600]
and our technology drivers

[00:18:50.310]
looking at and reporting out on the value being created.

[00:18:55.140]
Now that we are nearing the three-year mark,

[00:18:57.220]
I can confidently say that RACE21 is going incredibly well.

[00:19:00.740]
When we started the program,

[00:19:02.050]
we focused on the low-hanging value fruit.

[00:19:04.380]
A majority of the value we created

[00:19:06.750]
came from the advanced analytics space,

[00:19:08.820]
specifically in several areas.

[00:19:11.170]
These areas include the mines,

[00:19:12.470]
looking at how we can be as efficient

[00:19:14.310]
and effective as possible moving rock,

[00:19:16.370]
including optimizing our haulage.

[00:19:18.590]
We have a whole suite of applications that we’ve developed

[00:19:20.870]
to support our dispatchers

[00:19:22.090]
and support our equipment and operations,

[00:19:24.680]
and supervisors that give them real time insights.

[00:19:27.890]
We also knew we would derive a lot of value

[00:19:30.640]
by applying RACE21 to our wash plants and concentrators.

[00:19:34.250]
And we saw a significant opportunity in our supply chain.

[00:19:37.760]
We have seen a substantive amount of value created

[00:19:40.360]
when looking at optimizing,

[00:19:42.060]
getting our products to market,

[00:19:44.560]
but RACE covers many other aspects

[00:19:46.300]
around automation, process control and more.

[00:19:48.810]
Over time, we have recognized the value digital can bring

[00:19:52.160]
to other areas like water and tailings, health and safety.

[00:19:56.420]
We also see the value it can play

[00:19:58.070]
to support our ambitious goals to be carbon neutral by 2050,

[00:20:01.960]
as we help the world transition to a low carbon economy.

[00:20:05.440]
Presently, there is not a mine or a smelter

[00:20:07.930]
or a pocket of our company

[00:20:09.540]
where a RACE initiative has not been embraced

[00:20:11.490]
by management teams.

[00:20:13.290]
We have around a hundred different initiatives

[00:20:15.280]
underway right now,

[00:20:16.580]
and I can confidently say RACE is here to stay.

[00:20:21.770]
So what’s next?

[00:20:23.010]
As I said earlier, RACE21 doesn’t end in 2021,

[00:20:26.130]
we’re already thinking

[00:20:26.963]
about what the next four years looks like.

[00:20:29.180]
In some ways it’s going to be an extension

[00:20:31.410]
of some of the things that we’ve done in the past,

[00:20:33.890]
but we’re now at a phase where we’re really asking ourselves

[00:20:36.610]
what the more transformative opportunities

[00:20:39.340]
could be that we can pursue

[00:20:40.850]
given that we have this very strong digital base now.

[00:20:44.540]
We’re thinking a lot about our operating model

[00:20:47.610]
and how the company is going to change over time.

[00:20:50.670]
We’re seeing a much higher level of support for automation.

[00:20:54.140]
We’re also seeing an increased ability

[00:20:55.630]
to make integrated decisions

[00:20:57.040]
to a far greater extent than before

[00:20:59.280]
given the advanced analytics solutions we have developed.

[00:21:02.570]
It’s a very exciting time for Teck

[00:21:04.600]
because we can see that the implications

[00:21:06.710]
of bringing together our digital transformation

[00:21:08.760]
are profound.

[00:21:10.730]
When we started this journey,

[00:21:12.120]
there were a lot of people on our team

[00:21:13.510]
who didn’t know what a digital transformation was,

[00:21:16.210]
or who would be involved in making it happen.

[00:21:19.780]
There was a fair bit of healthy skepticism and reluctance,

[00:21:23.110]
but from the very beginning, thanks to close collaboration,

[00:21:25.860]
we worked as one team.

[00:21:27.650]
And over the last couple of years,

[00:21:29.090]
we have seen a remarkable shift in perspectives

[00:21:31.080]
to the point where

[00:21:32.180]
we honestly can’t keep up with the requests

[00:21:34.210]
that are coming in for support through RACE.

[00:21:36.920]
The culture of our company is changing,

[00:21:38.980]
as we build out our digital team.

[00:21:41.510]
Our jobs are changing,

[00:21:42.660]
reflecting the talents of data scientists,

[00:21:44.720]
software developers, and other digital professionals.

[00:21:48.130]
This reinforces the point that any modern day mining company

[00:21:51.640]
needs to strongly consider

[00:21:53.020]
having the appropriate level of talent in this space.

[00:21:55.940]
The value at stake is simply too substantive

[00:21:59.400]
to not look at

[00:22:00.233]
having this level of talent internally for us.

[00:22:03.870]
As I mentioned,

[00:22:05.030]
we even have an entire digital deployment group

[00:22:07.700]
whose sole function is to assist

[00:22:09.260]
with launching these new technologies.

[00:22:11.320]
This was a key learning.

[00:22:12.450]
It became very clear to us early on,

[00:22:14.720]
that unless we work to change behaviors,

[00:22:16.550]
we won’t get the results we want.

[00:22:19.470]
Overall, we’re very excited about the future.

[00:22:22.500]
Our vision to undergo a digital transformation

[00:22:25.600]
has effectively changed the way Tecks sees itself,

[00:22:28.550]
and it has created real results we can all be proud of.

[00:22:32.240]
When I reflect on the last three years

[00:22:34.400]
at what I’m most proud of,

[00:22:35.830]
it’s in the health and safety space,

[00:22:38.010]
because when we started RACE,

[00:22:39.240]
we knew that we would find opportunities

[00:22:40.820]
to optimize concentrators in our mines

[00:22:43.210]
as well as other mining processes.

[00:22:45.460]
But what I didn’t envision

[00:22:46.510]
was that there would be an ability

[00:22:48.740]
to have a material impact on improving the risk profile

[00:22:51.580]
in some of our most challenging health and safety areas.

[00:22:54.970]
Through RACE21,

[00:22:56.040]
we recognized that we could use big data and analytics

[00:22:58.650]
to understand the behaviors of our heavy haulage

[00:23:01.490]
and light vehicle operators.

[00:23:03.260]
We were then able to demonstrate situations

[00:23:05.100]
that had higher risks than others

[00:23:06.940]
that we weren’t previously aware of.

[00:23:08.990]
We’re now using analytics and data

[00:23:10.930]
to make significant changes in how we design,

[00:23:13.250]
and how we operate our hauls.

[00:23:15.160]
And these changes are having a significant impact

[00:23:17.390]
on that risk in our industry.

[00:23:19.980]
Is an incredibly rewarding feeling

[00:23:21.690]
to know that our digital transformation

[00:23:23.230]
is having an important impact in the real world.

[00:23:26.790]
I’m grateful to be a part of this huge change

[00:23:29.470]
taking shape across our industry.

[00:23:31.490]
And if our initial progress is any indication

[00:23:34.060]
of what we can achieve,

[00:23:35.320]
I think the future is very bright for Teck

[00:23:37.370]
for the mining industry,

[00:23:38.720]
and for those who embrace digital transformation.

[00:23:42.130]
Thank you.

[00:23:43.025]
(gentle music)