In 2009, near the height of the financial crisis, mining company Dundee Precious Metals Inc. was faced with the prospect of falling metal prices—and $150 million of capital investments in Bulgaria.

Rick Howes, then chief operating officer, couldn’t undo the investments in the mine in Chelopech, which was slated to double production to two million tons of copper and gold ore a year. But he had to find a more efficient way to operate the facility. He used traditional mining technologies, emerging wireless systems and software to replace clunky communication systems.

For starters, Dundee installed an electrical ore-crushing system in the mine, reducing the use of diesel-guzzling trucks to transport ore. A conveyor system brings the crushed ore to a processing plant on the surface. This system also enabled Dundee to eliminate secondary crushers, whose metal balls required frequent replacement.

Next, Mr. Howes told the staff he wanted to get a better view of what was going on in the mine, which extended as much as 1,970 feet below the surface.

“Rick’s vision, from day one, was to take the lid off of the mine and view everything in real time,” recalled Mark Gelsomini, Dundee’s corporate director of information technology.

The Canada-based company developed a digital tracking system, outfitting miners and machinery with Internet-enabled sensors and developing parabolic antennas to counter a radio-wave scattering effect caused by quartz in the mine’s walls.

The use of Radio Frequency Identification sensors, Wi-Fi networks, fiber-optic cables and military-grade communications devices allowed for more efficient management of machines and people, according to Mr. Howes, who became Dundee’s CEO in 2013. He said the $10 million project, along with the new crushing and conveyor systems, helped lower production costs to $40 a ton, from $60.

The Chelopech mining operation’s fortunes are rising as industries find more use for sensors and other Internet-connected devices. Some 4.9 billion connected devices, including vehicles, vending machines and industrial equipment, will be in use in 2015, up 30% from 2014, market research firm Gartner Inc. says. It predicts that by 2020, 25 billion devices will be in use and costs of processing, sensing, and communications semiconductors will have fallen by 35%.

For now, however, mining companies such as Dundee are early adopters.

Deploying communications technology underground raises challenges. Many mines still use a hodgepodge of communications systems, including “leaky feeder” cable systems—coaxial cables that allow for wireless communication underground by emitting and receiving radio waves. Communication can be spotty and if, say, a $1 million loader were to break down several hundred yards underground, the problem might not be apparent until the crew returned to the surface.

Compared with operations such as AngloGold Ashanti Ltd. ’s Mpongeng gold mine in South Africa, which extends to more than 2 miles underground, Chelopech is “tiny, like digging a hole on the beach,” said Kristian Streenstrup, a Gartner Inc. analyst who tracks the use of technology in heavy industries. But the degree to which Dundee has customized the communication and tracking system has attracted interest from larger mining concerns.

Last year Anglo American PLC CEO Mark Cutifani visited Chelopech and he was impressed with what Dundee had accomplished. “This is where the innovations are, in the smaller mines,” he said. And in a separate tech-related development, Rio Tinto PLC and BHP Billiton Inc. are using autonomous hauling trucks that save humans from manning the vehicles while in the mine.

Dundee’s digital tracking network locates the approximate position of each wireless RFID tag, based on the signal strengths to the closest underground wireless access points. The software superimposes the locations on a 3-D map. The control room supervisor can intervene quickly when assigned tasks are deviating from expectations. Dundee IT director Mr. Gelsomini said the tags also help identify which miners need to be evacuated during blasting.

Sensors attached to mining machinery transmit data, such as engine and oil temperature, enabling mechanics to service them before they break down.

Dundee’s RFID-enabled operation is based on an underground Wi-Fi network. Dundee put down three fiber-optic lines totaling about 60 miles of cable for a 10-gigabit Ethernet network. A Dundee geology team determined that the cave walls contained quartz, which scattered the wireless signals from the 290 network boxes inside the mine. Mr. Gelsomini, a former IT operations manager at Genesis Microchip Inc., and his staff built the parabolic antennas to properly route the radio waves transmitted by the RFID tags.

Another challenge came with the “carkits,” Wi-Fi enabled underground communication devices designed to let vehicle operators communicate with the surface. Initial versions, made of aluminum, were ruined weekly by rough conditions. “We failed to realize how harsh the environment really is, and how technology reacts in these conditions. We went through them like candies,” Mr. Gelsomini said. Dundee shifted to hardened, military-grade plastic carkits.

From 2010 to 2013, the company doubled ore production from one million tons to more than two million tons, according to the company. In 2013, Chelopech ore production topped two million tons, a 12% increase from 2012, according to the company’s 2013 annual report. “At the same time, the cost per tonne of ore processed decreased 12%, from $45.77 to $40.08,” the company said in its annual report. In 2013, the Chelopech operation yielded 131,825 ounces of gold and 45.6 million pounds of silver, respectively, an increase of 9% and 7% over 2012, the report said.

The Journal Times

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