Drilling
Significant growth due to increasing exploration
The current Brazilian mining landscape offers many opportunities for drilling companies. As exploration increases in response to changing mineral demand, the demand for drilling services has boomed.
For Geocontrole, a company offering geotechnical investigations, drilling and laboratory services, the market has been phenomenal recently. The company experienced 25% growth of revenue in 2022 compared to 2021, and expects a 15% growth in revenue in 2023. Nelson Beiró, general manager of Geocontrole, stated: “High interest in critical mineral mining has had a positive impact on Geocontrole’s business and we are seeing increased demand for our services.”
DrillGeo has also experienced the same, particularly in the exploration area: “Demand for mineral exploration and research has increased significantly in the last ten years. Demand in 2022 was stable, and the expectation is that 2023 will show a growth trend that will continue for the next five years,” noted Francisco Neto Sampaio, director.
In some part, this increase in demand has been driven by the green energy transition. As Brazil’s diversity of mineral wealth has become more in demand, drilling services have benefited. Beiró stated: “There has been more activity in the mineral exploration space over the past few years, especially considering the green energy transition. The main players in the market are either looking to increase capacity or expanding their asset portfolio with critical mineral resources.”
"Drilling rod manipulation is a high-risk endeavor, and the mining industry has suffered a multitude of accidents in that area. Today, we observe a strong need for options to reduce the risk levels of the activity."
Ronald Ambler, CEO, INNRA
Indeed, it is a time of immense opportunity for Brazil, with the green energy transition driving demand for drilling activities. Neto Sampaio added: “With the advancement of decarbonization of the economy and the replacement of fossil fuels such with renewable energy sources like wind and solar energy, mining activities are expected to grow significantly, as the equipment used in these industries and components of electric cars consume many materials, such as copper, lithium, and nickel, which increases the demand for these and other minerals.”
In addition to favorable market conditions, drillers operating in Brazil benefit from the climatic conditions. Unlike in Chile and other jurisdictions where operations can be subject to the extreme heat and cold of deserts or other hostile environmental situations, the climate in Brazil is relatively friendly for drilling. Neto Sampaio explained: “There is, despite the diversity of terrain, a favorable and stable climate. We do not have issues with earthquakes, blizzards, or hurricanes. Although the rainy and tropical climate can be a hindrance, the climate is nonetheless more predictable for operations."
The Brazilian exploration segment is not without challenges that impact players in the drilling and blasting area. Daniel Bortowski, director of Core Case, a producer of cases for the storage of drilling core samples, argued that the inability to properly identify meaningful targets and speculation has been a major challenge that has weakened the junior segment. Some juniors in past years tried to achieve quick results without putting in the time and expense to truly understand their resources. He stated: "Juniors focused primarily on raising capital on the stock markets without seriously addressing geological analysis or engineering of potential deposits, so poor projects were quickly sold. This situation prevented a real opening of the industry.”
Speculation remains a problem in the Brazilian mining industry. There is money flowing in, but it is often improperly directed. Bortowski said: “The government needs to create incentives not only to attract investment and capital but also to promote the development of new mines.”
Efficient drilling is critical to reducing costs and accelerating the development of exploration programs, and automation is widely believed to be the solution. The use of automation in drilling has visible benefits: The first is safety, as it reduces the exposure of the drilling operators. Second, it reduces the human error rate, increasing precision and efficiency while reducing costs. Third, better, more precise drilling results in lower energy consumption. Automation is also a great response to the shortage of drilling operators, which has been a severe problem in the industry for years.
Geocontrole, for example, has a new drilling rig which can eliminate 99% of the man-to machine ratio. It will be deployed at one of Vale’s operations, demonstrating the interest from major mines in transitioning to automated drilling. Nelson Beiró, Geocontrole's general manager, said: “We have showcased this automated drill rig to the market and are currently finishing the preparations to implement the rig in the field. This is the first geotechnical drill rig in the world that is equipped with automated systems that allow for easier and safer operations.”
"Our demand for mineral exploration and research has increased significantly in the last ten years. Demand from 2017 to 2021 was very strong, 2022 was stable, and the expectation is that 2023 will show a growth trend that will continue for the next five years."
Francisco Neto Sampaio, Director, DrillGeo
Advances in data science have enabled the development and introduction of these types of rigs. Geocontrole’s rig provides a continuous evaluation of activities and metrics from the machine’s telemetry systems. Rigs like these not only make mining safer, but also more inclusive, as the reduction in physical demands of drilling operations allows for a more diverse team of operators.
The move towards automation is representative of a transformation in the larger culture of the country’s mining industry. “Today, Brazil is in the same position Chile was five years ago; amid a transition to a more intense focus on safety,” said Ronald Ambler, CEO of INNRA. “Chile is further ahead on this journey, but Brazil is catching up rapidly and is already close to the same level in demand for advanced, safety-oriented technology.”
DrillGeo is also active in the field of automation. "Complete automation is more challenging for drilling companies than other parts of the mining industry, but continuing to move in this direction is a major priority,” said Neto Sampaio. “We have been investing heavily in automated handling systems to reduce the presence of people in the process, working towards remote operations at a distance.”
In August of 2023, the ministry of mines and energy announced a plan to invest 307 million reais (US$63) million in mineral exploration through the PAC investment program. Out of the investments intended for exploration, the ministry intends to spend 281 million reais by 2026. The future for exploration is sustained investment on private and public levels.
Image courtesy of Geocontrole