Michael Sainsbury
June 23, 2016

Mining tech is a global brightspot

MiningTech

Mining tech is a global brightspot

Digging a hole: MiningTech is a sector where Australia has a huge competitive advantage, and active players

As the Australian economy faces the prospect of recession in the coming parliamentary term, pummeled by the flow-on effects of the commodities bust and the faltering Chinese economy, perhaps nowhere is on-going innovation more important than the mining sector.

Resources are still far and away the country's major export earner and contributor to Australia's terms of trade. Minerals, metals, coal products, oil and gas amount to more than 70 per cent of Australia’s exports.

Mining innovation is big business, of course, in a highly competitive industry where scale is the key. The miners who can keep their costs lower than that of their rivals can amass more cash and rely on less debt, positioning themselves to be able to out bid others for the best so-called tier one assets.

MiningTech is one of the unsung areas of true excellence that Australia has in the technology field, not just by the mining companies, but by a roll-call of mining service groups that have sprung up around them.

Even Telstra is now getting into the act. Telstra today announced the formation of Telstra Mining Services, a strategic investment in the mining industry.

The company also following the appointment of two global mining experts and the acquisition of mining communications technology services business from CBO Telecommunications.

The move cements Telstra’s commitment to providing deeper capabilities for customers in the mining, oil and gas industry.

As the collapse in global commodity price has laid waste to much of the global mining sector, cost cutting via cutting-edge innovation has helped BHP Billiton and Rio Tinto stay atop the world's mining league table, and lets Fortescue Metals Group keep its debt-laden head just above water.

Rio Tinto is nominally London-based as far as its financial structure goes, but has its operational base in Australia and has shares are also co-listed on the ASX.

It has taken innovation efforts a step further with the creation of a stand-alone Growth and Innovation division focused squarely on technology that will take it through the next phase of the resources cycle.

The division is part of a new company structure from July 2, which was announced this week by the company’s new chief executive Jean-Sebastian Jacques, who replaced Australian Sam Walsh.

To be fair to Mr Walsh, he led much of the innovation in the iron ore sector, a division he headed before being elevated to the top of the company.

It’s the latest step in Rio’s Mine of the Future program, begun in 2008 as the global financial crisis, that has seen it partner with technology companies across the globe, opening centres in India and the United Kingdom and Canada.

“The Mine of the Future” program is creating next-generation systems and technologies to drive Rio Tinto to become a global leader in fully integrated, automated mining,” Rio says.

“Innovation is the key to solving the increasing challenges posed by geology, legislation, economics and the need to keep our employees safe. We use it to identify, develop and implement smart step-change technologies that significantly improve how we work.”

The project has had two, simple, main aims: achieving massive productivity gains in large-scale surface mining and extracting more ore from complex orebodies.

Rio’s Growth and Innovation division will be based in Brisbane, a nice boost for Australia’s third main business centre, aided and abetted by some burgeoning businesses down the road on the Gold Coast.

It’s worth noting that the mining technology stream of the mammoth business delegation to China earlier this year, was the only one that had to be cancelled due to lack of interest.

That’s a shame. Australia should focus its innovation effort on sectors where it has proven to lead the world, and mining is very much one of them.

The Chinese have also been at the centre of technology improvements in the mining sector, particularly in coal, as they have sought to extract extra life and resources from mines. In comparison, Australia is relatively new at the game.

With little sign that the commodities slump has even bottomed and even fewer indications that there will be a return to better prices for several years to come, the sector is going to need all the help it can get.

As it stands, well managed big players like Rio and BHP, who spending countless hundreds of millions on research and development, have the edge in innovation.

But such companies also create there own quietly efficient eco-systems where small local companies with good ideas can flourish.

It’s about as far from the hue and cry of the startup and accelerator/incubator mania that has gripped the Australian technology sector since Malcolm Turnbull became PM as one can imagine.

But the successes in Australia’s mining sector and its relentless innovation drive are far bigger and far reaching globally than a handful of high-profile public listings.

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