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02.12.2016

Three Ways Miners Can Innovate in Risk-Averse Market Conditions

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Related topics: Best Practices · Mining
"Unfortunately, primarily due to risk aversion (of cost and technology) there is an old adage in the mining sector that 'miners like to be first to be second,'" says EY's Business Risks Facing Metals and Mining 2016 report which focuses on ten industry conditions that could create risks or opportunities for mining companies going into the new year. Amongst the risks highlighted by EY, innovation, or rather mining's natural aversion to innovation, makes the No. 10 spot.

"It is clear that compared with most other sectors, there is a deficit of transformational innovation in the [mining] sector," EY reported.
"The first automated truck was seen 20 years ago and yet there is not a complete fleet in existence at a mine."
The closest thing we have seen to having a fully automated fleet is Rio Tinto's Mine of the Future that touts a network of 69 unmanned haul trucks. Rio's competitors are working to catch up, but in 20 years should not the sector as a whole be farther down the innovation cycle with a technology that is clearly beneficial?

EY's point? Those that innovate will survive. Those that don't? Well, you get the idea.

So, where is the innovation? Driven by seemingly unending demand of the super-cycle's upswing and peak, mining companies were scaling with one focus: output. Little consideration was placed on productivity or innovation, only meeting demand as quickly as possible. However, with today's market now swinging the other direction, miners find themselves in opposite conditions with boards and investors highly averse to any spending outside of necessary operations.

Even amidst these conditions, EY suggests miners are still in a position for investment in innovation: "Just as 'necessity is the mother of invention,' so is super-correction the catalyst for fresh innovation in the sector." As short-term cost cutting methods have been depleted, the report goes on to recommend innovation as a major key to surviving the bottom of the cycle and positioning companies to take off when the anticipated upswing takes place.

As can be seen from the opening quote, though, mining companies that are interested in innovating face an uphill battle, both culturally and through current market conditions. Our aim today is to provide three ways mining companies can avoid the pain of incorporating innovation into their operations:


the Cover of the 2015-2016 EY business risks in mining and metals report