Click here for “Innovation Start of Play” report: http://www.pdac.ca/docs/default-source/public-affairs—geosciences/innovation-state-of-play.pdf?sfvrsn=0
Innovation is critical to success and growth at a time when the mining industry is at a crossroads, according to Innovation State of Play, a study conducted by the Prospectors & Developers Association of Canada (PDAC) and Monitor Deloitte.
The study found that 81 per cent of innovation in mining falls in the offering types of innovation – how to find, extract and process more efficiently and effectively—but for innovation to thrive, mining companies need to create a viable business offering that looks beyond R&D.
Configuration innovations such as profit models, networks, structures, processes and “back of the house” activities and experience innovations that refer to services, channels, brand, and customer engagement and how an offering is delivered to customers should also be a focus.
Not surprisingly, the top innovating companies on the S&P 500 outperform the index. The more types of innovation pursued, the stronger the company’s share price performance. Integrating more types of innovation delivered stronger financial returns.
PDAC and Monitor Deloitte’s inaugural report involved interviewing and surveying 19 mining companies, including juniors, majors and service companies between December 2014 and March 2015. The study examined current perspectives on innovation in an age of rising costs, multiplying risks, increasing environmental concerns, escalating activism and shrinking margins.
The study found that innovation tends to be sporadic. Juniors may face scarce resources, but a culture of open innovation using external resources may lead to solutions to complex problems.
Majors put an increasing emphasis on outside partnerships for low-risk, cost-effective solutions. The service and supply industry serves as a catalyst of innovation by developing technology for the entire industry.
Rod Thomas, PDAC president said, “Innovation is critical to the survival and sustainability of our industry—it’s no longer a luxury. Junior and senior mining companies are currently facing more financial, technical and operational challenges than ever before.
“Innovation is integral to value creation and adequate returns on investment. In short, it’s essential to sustaining mining’s contributions to the Canadian economy.”
For majors and juniors alike, to achieve more meaningful innovation with an integrated portfolio view that breaks down barriers capabilities, a tailored approach to defining and advancing innovation generation, organizational units that house the competencies, training, tools and resources to fund innovation, and metrics and incentives to evaluate and reward performance are required.
Andrew Swart, Partner, Monitor Deloitte said, “Building collaboration amongst majors, juniors, service companies is a central tenant to driving innovation across the industry while managing risk.
“This will require the development of a wider ecosystem for collaboration and funding for innovation to be successful, driven by industry groups and enabled by government.”
A systemic environment with a government innovation policy in place that outlines national goals and priorities, supported by incentive structures with funding, can help move a concept out of the idea stage, to R&D and commercialization.
This turn towards innovation is good news for the relocation industry, as the mining sector is a pivotal one in the Canadian economy. With an injection of innovation, the sector will be opening new doors and providing more jobs for employees.