Australian mining houses are at risk of falling behind global players when it comes to digitisation and technology, according to the world’s largest international mining report, released on 20 June by global consulting firm VCI in partnership with the University of Western Australia (UWA) and METS Ignited.
VCI’s State of Play report surveyed over 800 leaders from 321 companies in the global mining industry and uncovered that while the majority (66%) of Australian mining executives say their companies are prepared for digitisation, only 26% are focussing on innovation plans that extend beyond just three years. Despite nearly all (98%) Australian mining company leaders indicating innovation is ‘important’ or ‘critical’ to their long-term business strategy, when it came to their company’s focus on a long-term strategy, Australia ranked last in the globe – trailing other major mining regions including South Africa (63%), India (38%) and North America (32%). Surprisingly, since the survey began in 2013, the timeframe for long-term innovation focus in Australian companies has actually dropped by more than half from 2013 (59%) to 2017 (26%).
So, why is an industry that contributes nearly $100bn to the Australian economy each year lagging the rest of the world when it comes to planning for the digital age and tech disruption? According to the findings it’s not a result that’s been fuelled by a lack of understanding. In fact, when asked which global trend will have the greatest impact on the industry in the next 15 years, Australia’s mining executives ranked ‘technological change and digital disruption’ higher than any other region (25%), followed closely by ‘environmental pressures’ (22%) and a ‘technically aware generation entering the workforce’ (12%).
State of Play founder Graeme Stanway says that, though Australian mining leaders have an overall understanding of the impact digitisation will have on their business, for many the ability to define a long-term plan has remained elusive.
“To a degree Australia’s local industry is gridlocked when it comes to the mechanics of preparing for digitisation and tech disruption,” said Stanway. “While there’s an intuitive understanding amongst mining leaders that the time to prepare for the digital revolution is now, companies aren’t always equipped to wade through the plethora of tech options, such as AI or data analytics. These technologies are a significant departure from what the industry is used to and more often than not result in a project-byproject approach that stifles change at scale or pace.”
Stanway said while the report highlighted a gap that needs to be addressed, it also revealed more positive findings in relation to Australia’s short-term level of innovation compared to the rest of the world’s mining centres.
“Although we’re lacking in long lead planning, when it comes to the success of current innovation programs, Australia is leading the charge against all other regions, with the majority (68%) of Australian companies indicating they are ‘meeting’ or ‘exceeding’ expectations when it comes to performance of innovation programs.”
METS Ignited CEO Ric Gros said this can be partly attributed to Australia’s mining, equipment, technology and service industry (METS) that is taking advantage of the global shift to digitisation and technology.
“The overarching way for Australia’s mining ecosystem to expand its competitiveness is to recognise, and build on, the role of its METS companies as leading edge solution providers,” said Gros. “Digital disruption is forcing major companies to utilise the specialist skills of smaller service providers.”
Australia’s largest iron ore miner, Rio Tinto is a leading example of long-term innovation performance, deriving enormous value from its automation and remote operation programmes.
“In some ways, Australia is still grappling with its attitude towards technology,” said Rio Tinto Iron Ore’s CEO, Chris Salisbury. “Whenever I travel through Asia, for example, there is always a lot of interest in our longer-term technology plans. Much more so than in Australia. As a nation and an industry, I believe we need to be more outward-looking and longer-term in our perspective. There is a responsibility on all of us – whether we are in business or government or wherever – to tell our innovation stories and describe the journey that is happening, including what this translates to for our community and what it means for broader society.
“In our business, innovation and technology are not standalone items, they are embedded in all of our thinking and our planning. We have a clear and focused strategy, with the deployment of technology and innovation central to it. One of the challenges in this regard is the rate of change of technology and the continual assessment of how business value may be added as a result. At all times, innovation needs to be linked back to the strategy.
“One of the biggest issues we are facing now is making use of the considerable data we collect – from all sorts of data points across the operational supply chain, for example from an individual haul truck, to the mining system as a whole. How is this best interpreted and used? Do we have the right data analytics skills in-house and, if not, how do we develop them?”
Mark Stickells, Director of Business Development and Innovation at UWA, stressed the need for collaboration, particularly when it comes to research and the need for social and environmental innovation.
“When looking to the next decade and beyond the crucial role of research in the mining industry cannot be underplayed,” he said. “Mining companies may in the future be considered more than just producers of commodities and rather as service providers for the monetisation of the community’s national resources both directly and in-terms of sustainable economic development. In this scenario, core value is in the privileged access to tier one resources – a failure to comprehend this leaves companies ripe for disruption.
“The industry needs to work with government and the country’s best and brightest minds to ensure Australia’s largest export doesn’t fall behind the rest of the globe.”