BHP Group Ltd (ASX: BHP) is investing millions into an artificial technology business which could help it become even better at finding and processing resources.
BHP is one of the largest resource businesses in the world. But it continues to look for ways to become even more efficient and profitable. That’s why it is taking a greater interest in a business called Platlogic.
BHP invests in Plotlogic
The ASX mining share and venture capital company Innovation Endeavours (associated with former Google boss Eric Schmidt) have invested $25 million into Plotlogic, according to reporting by the Australian Financial Review.
This capital injection will be used to help grow Plotlogic’s international expansion, as well as bringing the newest scanning products to commercialisation. It has a revenue pipeline over the next year worth $93 million, so it is close to that hurdle of $100 million of revenue.
Plotlogic CEO Andrew Job founded the company in 2018 while completing his PhD at the University of Queensland.
Plotlogic uses advanced imaging and AI to ‘characterise’ ore in real-time. OreSense, the first commercial product, “combines LiDAR and hyperspectral imaging technology with advanced machine learning algorithms to deliver highly accurate ore characterisation.”
OreSense technology has been extensively developed and tested, with partnerships in place with BHP and other major mining companies. The AFR reported that it has clients including BHP, Anglo-American, South32 Ltd (ASX: S32), and Glencore.
Why the interest in Plotlogic?
BHP has already utilised Plotlogic to extend the Yandi iron ore mine’s life by at least another five years. Previously, it had told investors that this mine would come to the end of its life in 2021. Asian steelmakers reportedly favour the mine because of its low levels of impurities.
Job explained that drilling holes based on geological estimates can be costly and risky. It was described as “hit-or-miss” and that it can also create extensive environmental damage.
The AFR quoted Job explaining the benefits:
Geologists and miners are always looking for ways to strip out person risk on a site, as well as strip out long time-consuming processes.
Using sensors to scan an area and inspect a face without having to manually mark it up gives them so much extra time and saves them so many land management costs.
Talking about the Yandi mine, Job said to the AFR:
That project worked out great for us because it gave us a chance to develop our technology alongside BHP.
Knowing what they need means we can replicate the basics across different mine sites, and concentrate on the customisable part.
But BHP has also been looking for a better way to sort through leftover ore, which is deemed lower-quality. Reportedly, the Plotlogic technology made that process much easier.
Is the BHP share price a buy?
The brokers at Macquarie think so, rating the miner as a buy with a price target of $61. That implies a potential upside of around 25%.
The reason for the optimism is the stronger prices for its commodities, including iron and coal. BHP shareholders can also benefit from the stronger oil price, helping increase the value that BHP shareholders can receive from the Woodside Petroleum Limited (ASX: WPL) shares they will get from BHP’s petroleum divestment.
The post Why is BHP investing in this little-known AI company? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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