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Mining and those three little words [opinion]

Innovation, innovation, innovation.

I swear people are constantly repeating this word so much in the mining industry that many of them must be starting to say it in their sleep.

The mining industry needs to innovate; innovation will save mining; innovative or die! (a little over the top, but some are getting to these hyperbolic levels).

Yet, these aren’t empty statements, because the simple fact is that the mining industry needs to not only adapt innovative technologies and equipment, but to adopt an innovation mindset.

While at QME, in Mackay, there were a number of talks about this need for a change in mindset, moving away from the notion that mining simply needs to tighten its belt, cut costs, and make a few incremental productivity changes; instead moving to a new mindset about becoming more flexible and agile in the way they approach business.

Quite literally as I write this there is an innovation summit in WA focused on this very matter.

In its recent Innovation in Mining report, Deloitte explained that the industry understood the innovation concept but it is failing to implement it effectively, and the current focus on driving down capex and opex through cost cutting measures, as well as chasing incremental efficiencies to lift productivity, are no longer enough.

“Innovation is not only key to protect the future of the mining sector,” Deloitte said, “but that of the entire mining system, from the country in which the resources are harnessed to the people in its workforce, government, and the broader mining community.”

Deloitte’s national mining leader, Nicki Ivory was a little more blunt: “To remain globally competitive, Australian miners must decide if they are willing to go beyond the basics and incorporate a structured approach to innovation.”

So not too far off the ‘innovative or die’ standpoint.

But where can the industry look if it’s facing this innovation problem?

Most believe outside the industry.

As EY’s Paul Mitchell comments on later in this magazine, “It’s no longer good enough to rely on conventional wisdom and expertise from within the mining sector, the net must be cast wider and outsiders’ experience sought out to deliver that next productivity and efficiency boost.”

For a long time industry heads have said mining could learn more about productivity and efficiency by studying the manufacturing industry.

Unsurprisingly, BHP chairman Jac Nasser – a former president of automotive manufacturer Ford – advocates mining study the manufacturing industry for efficiency and innovation measures.

“Although there are as many differences between the automotive and mining sectors as there are similarities, forward thinking mining can likely make unanticipated productivity gains by taking lessons from this example – including reforming industrial relations, co-opting suppliers into the cost equation in an effort to extract efficiency, and shifting from traditional command-and-control hierarchies into a world of matrix or networked structures where human ingenuity is not overly hampered by rigid processes,” Deloitte said.

Even Rio Tinto’s former head of technology and innovation Greg Lilleyman said, “There may well be technologies from manufacturing, food processing, oil and gas or aerospace which are ripe for application [in the mining industry].”

When and how the mining industry chooses to fully embrace innovation, innovative thinking, and learn from the experiences of other industries is up to it, but the fact remains the industry must innovate sooner rather than later, and now – when we are at the bottom of the cycle and the dial has shifted from more tonnages to smarter tonnages – must focus on building for a new era of mining.

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