Mines of tomorrow

The mining industry must fully embrace innovation in order to build the mines of tomorrow and increase the growth and productivity. This was the conclusion drawn from a recent Innovation in Mining: Australia 2016 Report (the Report) released by Deloitte in association with Diggers and Dealers and the Association of Mining and Exploration Companies (AMEC).

The Report identified that the industry largely understood the benefits of innovation but were failing to implement the concept effectively. Instead, the industry was focused on pursuing operational excellence, achieving continuous improvement in mining operations and reducing costs. However, as the Report concludes, these measures alone are not enough.

Innovation hurdles

Factors such as risks to cash flow, short-term bottom-line improvements, lack of proactive decision-making were regarded as significant hurdles to innovation in the long term. “For many mining companies, the intense focus on maximising production volume during the boom years has resulted in inefficiencies becoming deeply embedded in their businesses,” the Report stated. Additionally, the Report identified that “there is a clear need to repair relationships and embrace strategic alliances with suppliers, universities, industry bodies, collaborative research centres (CRCs) and the likes of the Commonwealth Scientific and Industrial Research Organisation (CSIRO).”

The Report confirms the need to secure and continue initiatives such as the Research and Development Tax Incentive, Exploration Development Incentive and the co-funded drilling programs across Australia as they are crucial to the future of the mineral exploration and mining sector. Fortuitously, the Report supports the Federal Government’s Science and Innovation Strategy in that it encourages the working of innovative practices to increase Australia’s growth, productivity and global competiveness.

Looking outside of mining

The Report further mentions that mining companies must adopt truly transformational innovation to ensure global competitiveness, wherein transformational innovation relates to inventions or breakthroughs that are new to the industry. While mining companies have historically focused on acquiring patent rights in traditional mining technologies, such as dredging and soil shifting, gearing and machinery¹, there is now a need for the mining industry to adopt new technologies used by other industries. For example, mining companies could look to innovate in the clean technology and renewable space. Other technology areas include advanced simulation and 3D technology, as well as big data for process optimisation and enhanced decision-making².

Mining companies can therefore lead innovation by developing their own technical expertise and intellectual property (IP) rights, not just in traditional mining technologies but also new technologies such as clean technology. Although the development of expertise in new technologies will require mining companies to diversify their R&D focus, securing IP rights, namely patents, which stem from this investment, can provide mining companies with a competitive advantage.

Protecting innovation

While protecting innovation provides mining companies with a competitive advantage, companies also need to take care when innovating to avoid the risk of patent infringement. Thus, an understanding of the patent landscape is just as important as protecting IP.

A simple patent search can highlight potential issues well before a business commits to a specific operating process or technology. Furthermore, adopting patent searches into business practice is important for good IP awareness, technology tracking and learning what new inventions a competitor has developed.

Additionally, a patent can provide a business with the ability to generate additional income through the licensing out of their patent rights to other organisations. This well established practice is widely used by software, pharmaceutical and biotechnology companies. These companies, through effective IP management strategies, are able to generate returns on the investment they have made in their R&D activities which are considerably higher than the initial investment in seeking protection offered by the patents.

Needless to say, the mining sector had been through an intense period characterised by price volatility, a slowdown in Chinese growth, difficulty in accessing capital, competition for capital from the renewables sector and the need to address environmental concerns. In light of these challenges mining companies must embrace innovation for the future success and sustainability of the mining industry.