Cost cutting and incremental improvements aren’t enough to lift mining, and the industry must embrace innovation or else, a Deloitte report says.
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.”
Nicki Ivory, Deloitte’s Australian national mining leader, explained that the industry has endured a difficult market marked by commodity price volatility, diminished Chinese demand tied to a slowdown in the country’s economic growth, capital and investment access issues, and ongoing environmental issues, according to The Australian.
“However to remain globally competitive, Australian miners must decide if they are willing to go beyond the basics and incorporate a structured approach to innovation,’’ Ivory said.
This research echoes statements made by METS sector lobby group Austmine.
“Most in the sector are agreed that for Australia to remain competitive in the years to come, the way we do things needs to change – dramatically,” Austmine CEO Christine Gibbs Stewart said.
“This is where innovation comes in. When we refer to innovation, we’re not simply referring to the next big invention, we are also encompassing incremental innovation, or a re-thinking of how we use equipment, technology or processes that we already have in place.
“This concept of re-thinking is key for innovation to succeed in the mining and METS sector. We must change how we think about innovation, about how we partner to achieve innovation and what innovation looks like.”
The Australian report added that while innovation is viewed overwhelmingly positively, most miners prefer to chase operational excellence and continuous improvement programs rather than make a huge leap technologically – as well as in mindset – and invest in transformative innovation.
“The tide for taking innovation seriously as a business imperative has come in,” Deloitte’s Africa Energy & Resources leader said in the African division of the report.
“While talk of this had drummed on for years, often constrained to the boardroom, now is when mining houses will succeed or falter based on whether innovation strategy is brought to life and whether it is integrated across departments.
“It is now critical for companies to push beyond what these reports term Core innovation.”