It's "Attack of the Robot Trucks" at BHP Billiton Ltd and Rio Tinto plc

Caterpillar is helping BHP Billiton connect giant computer-driven trucks so the miner can save money.

May 4, 2014 at 3:46PM

BHP Billiton (NYSE:BHP) recently celebrated the opening of a new iron ore mine in the Pilbara region of Australia. But that's not the exciting news. What's really interesting is that it used that announcement to inform the world that it's expanding its use of autonomous Caterpillar (NYSE:CAT) trucks.

A single line says to much
"We are also pleased to announce we are extending our Jimblebar autonomous truck trial to the neighbouring Wheelarra operations using six Caterpillar 793-F trucks in the second trial," according to Jimmy Wilson, BHP Billiton Iron Ore President. It's just one line out of the press release, but it speaks volumes.

For starters it's a real world example of how "things" are being connected using technology to make the business world run better. Fellow miner Rio Tinto (NYSE:RIO) has been using autonomous trucks, too, and expects the technology to increase truck utilization by as much as 15%. Clearly, BHP would be happy to see that kind of improvement, too.


(Source: RävenMuddward, via Wikimedia Commons)

Rio, however, isn't stopping at trucks. It's also building an autonomous train line that should be up and running in 2015. According to Rio Tinto, it will be the "first heavy haul network in the world to be fully automated." Obviously, the truck thing is working out well.

An opportunity for all
According to BHP Billiton's Wilson, "Our pursuit of productivity gains and operational excellence is delivering significant value at Western Australia Iron Ore." It's a trend across the entire company, actually. According to CEO Andrew Mackenzie, in the company's fiscal first half (years end June), "The commitment we made 18 months ago to deliver more tonnes and more barrels from our existing infrastructure at a lower unit cost is delivering tangible results."

How big a deal is that? The "sustainable increase in productivity supported a 9 per cent increase in the Group's Underlying EBIT margin to 38 per cent and a strong improvement in the Group's Underlying return on capital to 22 per cent." Those are real benefits that flow down to investors.

It also shows why, despite relatively weak performance in the mining sector of late, Caterpillar still sees opportunity in the industry segment. BHP and Rio aren't just replacing old, worn out machines. They are making a technology shift that's improving their results in a big way -- like BHP's near 10% margin improvement and Rio's 15% utilization uptick.

So, it's not just Rio and BHP that will benefit. Caterpillar will increasingly be able to roll this technology out to more and more miners. That's a good thing, too, since the mining group isn't performing well right now. In fact, at the end of the first quarter, Caterpillar announced that, "Resource Industries' sales are now expected to be down about 20 percent from 2013." And that's just continuing the preexisting trend.

Why isn't everyone on board now?
If there's so much benefit to doing away with human operators in vehicles, why isn't every miner jumping on this bandwagon right now? Connecting the world with computers may seem like second nature to anyone with a smartphone, but it's a whole lot more difficult to connect things like trucks that are bigger than most houses.


(Source: Dionisius Purba, via Wikimedia Commons)

No one's likely to die because a phone malfunctions or if it can't connect to a network. However, if a truck can't connect or starts acting wonky, there are big problems. That's why, despite the obvious early success, BHP is still just testing Caterpillar's autonomous trucks. The technology has the potential to revolutionize the mining industry, but only once it's fully vetted.

Moreover, it isn't cheap to buy new trucks, or trains in the case of Rio, with new technology imbedded inside. So right now this is both experimental and the province of the largest and strongest miners. That said, keep an eye on the Caterpillar truck experiment at BHP and the 2015 train launch at Rio. They are important steps toward industrywide adoption.

Are you ready to profit from this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information