How Materials Stocks Are Reaping the Benefits of the Artificial Intelligence (AI) Explosion
Written by Brian Paradza, CFA at The Motley Fool Canada
The distinction between an artificial intelligence (AI) stock and a non-AI company is increasingly blurred. Non-tech industries are rushing to adopt AI to revolutionize their business processes, discover new product lines, and increase operational efficiencies to boost their earnings margins. Several materials sector stocks are already reaping the benefits of an AI explosion. Barrick Gold (TSX: ABX), Lundin Mining (TSX:LUN), and Teck Resources (TSX:TECK.B) stocks are key examples of early adopters of AI in materials business lines. Here’s how AI is working to support their stock market valuations.
Barrick Gold stock: Riding on artificial intelligence to find a deep-Earth treasure
Gold mining giant Barrick Gold is a $41 billion technology company that happens to operate a gold mining business. Barrick Gold has been investing heavily in data science and automating its mining operations globally as far back as 2017. AI-driven gold exploration technology is an increasingly valuable tool for mine life expansion and resource discovery today, and striking new gold could be much easier with AI.
In a recent investor presentation in May, investors in Barrick Gold stock saw the miner release a new geological remodel of its Turquoise Ridge asset in Nevada. The latest model showed an “open-ended high-grade upside,” management claimed.
Fleet Space Technologies, a mineral exploration technology vendor to Barrick Gold, recently added machine-learning capabilities to its offering. Integrating machine learning algorithms with geological data and resource estimation improves targeting precision, reduces exploration costs, and increases the likelihood of new gold or copper discoveries for miners like Barrick Gold.
Mining houses, including Barrick Gold stock, are increasingly utilizing AI in predictive maintenance of their plant equipment, in running autonomous mining vehicle fleets and drill rigs, and for predicting potential hazards (and saving employees’ lives). Since remote mining operations are increasingly feasible and energy consumption optimization has improved, Barrick Gold stock’s operating costs per unit of production could marginally improve over time.
Teck Resources stock: A materials sector stock pivoting on artificial intelligence
Teck Resources is pivoting from a metallurgical coal miner to a growing copper mining stock. The materials sector stock is adopting the latest mining technologies, including artificial intelligence (especially machine learning), to build an agile copper mining operation.
The miner highlights its current use of predictive analytics. Leveraging data, machine learning, and digital applications across its mining equipment, Teck Resources claims it increased truck productivity, optimized the quality of mining material going into its processing plants, and saved $450 million. Its process improvements through automation and machine learning models led to $300 million in benefits.
AI adoption at Teck Resources should decrease production downtimes, optimize operational costs, and improve employee health and safety over time.
Further AI investments during its transition to a predominantly copper mining house should help Teck Resources stock compete more favourably against incumbent copper mining giants globally, quicken the learning curve, lower its cost profile, and close the copper mining experience gap as the company invests in growing its global copper production footprint. In short, AI could help support Teck Resources’ stock price.
Lundin Mining Corp: A materials stock with embedded AI
Lundin Mining is a $12.8 billion precious minerals mining stock innovating its business as it pivots on artificial intelligence. The gold, copper, zinc, and nickel producer recently adopted a new AI-powered enterprise resource planning and management platform from global software giant SAP SE, branded RISE with SAP.
Working with the global enterprise software vendor, Lundin Mining is automating and streamlining its processes across several acquired subsidiaries. Adopting an AI-enhanced cloud-native SAP S/4HANA enterprise management system gave the mining house real-time visibility into its global operations, reduced administrative tasks, improved management foresight, reduced strategy risk, and improved operating efficiency.
Lundin Mining expects a 5% reduction in maintenance, repair, and operations inventory costs, and a 10% reduction in legacy software (ERP system) costs. The rollout of SAP’s AI-powered enterprise information system could enhance the mining house’s operating agility and potentially improve margins over time.
Lundin Mining stock’s SmartMine operational intelligence platform and Intelligent Mine 4.0 digitization plan were deployed in 2022 to modernize the miner’s operations.
LUN stock is up 57% year to date as gold and commodity prices firmed to lift the TSX materials stocks so far this year.
The post How Materials Stocks Are Reaping the Benefits of the Artificial Intelligence (AI) Explosion appeared first on The Motley Fool Canada.
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Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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