The innovation imperative is vital to growth in Canadian mining, PDAC and Monitor Deloitte report finds
Collaboration and a disciplined approach are critical and necessary for innovation in mining to thrive
Toronto, July 24, 2015 – Innovation is critical to success and growth at a time when the mining industry is at a crossroads, according to Innovation in Mining: Canada 2015, 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 ore 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.
“Innovation is critical to the survival and sustainability of our industry—it’s no longer a luxury,” said Rod Thomas, PDAC President. “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.
“Building collaboration amongst majors, juniors, service companies is a central tenant to driving innovation across the industry while managing risk,” said Andrew Swart, Partner, Monitor Deloitte. “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.
The Innovation in Mining: Canada 2015 report is available at: Innovation in Mining: Canada 2015
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The Prospectors & Developers Association of Canada (PDAC) is the national voice of Canada’s mineral exploration and development industry. With a membership of over 8,000, the PDAC’s mission is to promote a responsible, vibrant and sustainable Canadian mineral exploration and development sector. The PDAC encourages leading practices in technical, environmental, safety and social performance in Canada and internationally. PDAC is known worldwide for its annual PDAC Convention, regarded as the premier event for mineral industry professionals. The PDAC Convention has attracted over 25,000 people from 125 countries in recent years and will next be held March 6-9, 2016, in Toronto. Please visit www.pdac.ca.