Live from IMARC: Gavin Yeates Presents on Innovation
The afternoon of Day One of IMARC kicked off in the technology stream with Gavin Yeates. Now an Independent Consultant, Gavin has an impressive career across the mining sector, most recently with BHP Billiton as their Vice President of Mine Optimisation. Gavin delivered a fantastic presentation on the topic of a "long term perspective on innovation in mining".
Gavin opened by noting the mining industry has had a long history of innovation. The major driver has been increasing productivity, in particular increasing throughputs and recoveries and driving costs down. The result of this innovation has been a decline in real prices, not just of commodities, but also of manufactured goods and downstream products, which in turn has assisted in raising living standards.
Gavin went on to issue a warning, reinforcing the message from several presentations earlier on in the day; the mining industry has to innovate to be competitive at the current commodity prices, because they will only go one way over the long term - down. Besides the general trend over the last few decades (excepting the boom of 2009-2013) of declining commodity prices, there are also structural trends working against miners. These include the average declines in grade, deposits that are much more metallurgically complex and deposits that are located in much more remote, or politically or environmentally sensitive terrains.
The mining industry missed a step-change opportunity in technology during the last boom. Gavin pointed out that whilst we might be using bigger gear than 50 years ago, it's still the same inherent technology. We still use drill and blast, haulage and processing.
Mining's rate of innovation is incredibly slow when compared to many other industries. We see the effort to innovate being put in by suppliers and researchers, and many come up with great ideas, but the miners are slow to take them on, and then again to scale them up. Often innovations struggle to get support at the stage of full scale implementation. Short term KPIs and inherent conservatism cause obstacles.
Plenty of other industries have taken up the innovation challenge, which has enabled them to transform and rapidly adapt themselves, such as the car industry.
So, what do we need to do to speed up the rate? Gavin had five specific things he felt needed to occur or change as an industry collectively in order to achieve this outcome:
1. The entrenched belief that mining is different and other sectors' innovations can't be applied. This is a cultural and attitudinal barrier and deeply built into the industry. It causes mining to be inward-looking, conservative and risk averse.
2. The cyclical nature of mining industry must not be a barrier. We need to sustain innovation through both boom and bust periods. During the last boom opportunities were missed because miners didn't want to interrupt the flow of production. However, then in the downturn, technology is one of the first departments where investment is swiftly cut. Innovation investment should be continued throughout the cycle.
3. Most strategic of the five points was Gavin's reference to the complete absence of a sponsored technology roadmap. Other industries have benefitted from a roadmap, which should be aligned, agreed and jointly developed. Miners struggle with the concept of giving away competitive advantage, but the entire sector will benefit from the development of this.
4. Fair allocation of rent for IP. Disagreement between researchers, suppliers and investors between the allocation of rent cost for IP has regularly cost innovation opportunities. The value of IP is much greater when it is used, rather than when it is left on the shelf.
5. A clear approach to readying technology for implementation. There is a lack of understanding of the proponents for applying innovations up to a large scale on a mining operation. Gavin said he has too often heard the view that new technologies can be implemented and immediately switched on.
Gavin closed by urging everyone in the room to pull together as an industry and be aligned and incentivised to achieve the outcomes we need: "We are at a defining moment in the industry, where the business imperative to increase productivity has never been higher. We have a huge range of exciting technologies and innovations that when implemented together can drive step change." He noted that too often we are distracted by peripheral good ideas, when as a sector we must keep our eye on the main game and drive towards the big levers of productivity. The leadership in mining companies need to have a can do mindset. To achieve a faster speed of innovation adoption, we must collaborate more than we did in the past, so risk can be shared and minimised. "In the middle of the boom collaboration was hardest; it's now that we should actively work together and remove blockages for innovation."