The mining industry has a long history of technical innovation. Over the past 100 years, major step changes have resulted from new methods for extracting minerals and metals, and many companies and operations have sought continuous improvement and incremental technical changes to enhance performance. In recent years, however, the development of new technologies has been inhibited by a dramatic surge in demand, followed by significant increases in costs and, consequently, declining margins. While commercial pressures have become preeminent, the need for change has never been greater. A combination of declining quality (grade) in many existing operations, increasing energy and cost intensity (per unit of product), and environmental-sustainability imperatives (e.g. energy, water and tailings management) demands new thinking and new technologies.
The mining industry is known for conservative thinking and reluctance to change – the desire to be “first to be second” is a common refrain when it comes to implementing new technology. And yet this is not entirely true. Creative financial deals, new ways to focus on safety and, in some cases, new approaches to community engagement, health and wellness are fine examples of innovation. Furthermore, considerable risks are taken with exploration in remote and challenging places, and some of the best acquisitions are made when market conditions appear negative. The industry is willing to be adventurous and has the ability, albeit not always evident, to protect against downside risks.
It is time for the industry to combine its more tenacious acumen with effective risk mitigation to seek and implement new technologies and approaches to improve performance and reduce impact. Four aspects of the problem need careful consideration if we are to move forward.
Collaboration: Many companies had proprietary research groups in the past, but only a few of the largest companies currently maintain internal research centres. These groups tend to provide excellent service to operations, but efforts to develop new technologies with real innovation are challenging. In many cases, programmes to develop new technologies become focused more on the solution than the problem. Well-managed multi-company collaboration offers an alternative or addition to the internal centre. A significant example is COSIA, a multi-million dollar effort among all the major Canadian oil-sands miners to solve their enormous challenges with tailings. This problem is truly pre-competitive and, while cynics may argue that the companies had no choice, the collaboration has gone above and beyond any minimalistic regulated effort.
Funding: Funding technical innovation is challenging. As with other discretionary expenditures, research and development and resulting innovation are among the first things to suffer during down cycles. Technical programmes become focused on short-term fixes and cost-cutting exercises. Collaboration provides one way to leverage expenditure for high-cost, high-risk programmes, but successful innovation requires a portfolio of opportunities. The portfolio approach is widely recognized and used by successful exploration groups but rarely applied to technology and innovation. The search for new breakthrough technologies for the mining industry requires new ways to fund innovation and new investors who are willing to fund portfolios in the search for radical change and big wins. Mining companies should support this, but they also need ways to engage progressively with technology providers to implement innovative approaches while maintaining realistic exit strategies.
Testing and scale-up: The mining industry is capital intensive and therefore reluctant to try unproven technologies in new projects, and challenged to retrofit them into existing operations. De-risking the scale-up of new technologies is a recognized prerequisite, but this presents major challenges. Small- to medium-scale test facilities run through government or industry-government collaboration are required to remove this impediment. Alternatively, use of a small existing mine may provide the best way to test technology with limited capital investment and exposure. Mid-tier companies may have more flexibility and desire to differentiate themselves through new technology, although support from a creative industry consortium would reduce the risk and enhance the effort.
Change management: The successful implementation of new technology typically requires significant change in jobs, employees and culture. The required change management is rarely addressed. There is also scope to change relationships with communities and other stakeholders by implementing technologies that provide both external and internal benefits. This is where innovation can truly raise the bar. To do this, however, change must be managed effectively across the value chain and through the communities with the most to gain from a successful operation.
Author: John Thompson, Wold Family Professor in Environmental Balance for Human Sustainability, Cornell University, USA
Image: A bucket wheel reclaimer collects ore at the BHP Billiton iron ore loading facility in Port Hedland, about 1,600 km (960 miles) north of Perth, May 26, 2008. REUTERS/Tim Wimborne