Australian Approaches to Innovation and Transitioning to a Low Carbon Economy Lessons for Quebec Andrew Pickford, Adjunct Research Fellow, University of Western Australia Mark Stickells, Director, Business Development and Innovation, University of Western Australia
Overview Natural Resources and Innovation Australia s Energy System Case study: Western Australia Energy Case study: Global Mining Trends Innovation drivers
Le réseau énergétique en Australie occidentale Population 2.5-million Density of around one person per square kilometre Predominantly located in south west corner Electricity Islanded electricity system called the South West Interconnected System Peak demand in 2013-14 of 3,702 megawatts. Approximately 6,000 megawatts of installed power generation capacity Gas: 3,400 megawatts Coal: 2,000 megawatts Wind: 500 megawatts
Mining in the 21st Century Image source - http://www.riotinto.com/documents/mine_of_the_future_brochure.pdf
Innovation: State of Play Founded in 2012 Inaugural survey 55+ responses across Australia CEO Insights Interview series with 15 CEOs and Chairmen across the globe Cross-industry report Interview series with CEOs across the resources, agriculture, health, infrastructure, defence, and arts, culture & tourism industries to compare and contrast the state of innovation and identify share opportunities 2012 2014 2015 2016 2017 Industry wide survey 330+ responses across the globe Full ecosystem survey 800+ responses Launch in early 2017 What this survey really does is drive an arrow through the major mining innovation issues. I hope people pay a great deal of attention to it. MINING CEO
We are at an incipient point We asked: Which of the following macro trends will have the biggest impact on mining over the next 15 years? The Market, Moore s Law and Mother Nature are the three biggest forces shaping the world today. Thomas Friedman 62% 59% 37% 26% 22% 21% 15% 14% 10% 6% Technological change and disruption Environmental pressures Technically aware generation entering the workforce Asian (inc. India) economic development Global integration Transparency and regulation Geopolitical tensions Ageing population Income inequality Urbanisation
Different regions have different needs We asked: Where in the value chain do you see the greatest value over the next 15 years? Exploration Extraction Environment Processing Extraction End-to-end optimisation
Society s expectations are increasing We asked: Why is mining perceived negatively in society? 76% 31% 46% High profile accidents Community impact Environmental impact
Innovation is more critical than ever before Companies that claim innovation is critical to their company s survival in the long term 37% 41% 62% 2013 2015 2017
Being a follower is not an option e asked: What is your company s approach, and how successful have you been introducing new innovations into your business? Less than ½ of mining companies describe themselves as leaders, compared to followers
Ecosystem health drives innovation Actions and relationships that drive innovation in the ecosystem Government and community 1 2 Most 3 important Service Industry relationship Research Applied research 4 4 5 Fundamental research Biggest driver of innovation 5 Larger service companies 6 Smaller services companies 7 Explorers 8 9 Miners Tier 1 10 Tier 2/3 48% Governments should facilitate collaboration platforms 57% Mining companies should involve suppliers in their innovation process 3rd most 11 12 important 13 relationship Funding 14 2 nd most important relationship 24% view CEOs as drivers of innovation in mining companies 33% of services companies say that all employees drive innovation
EXTRACTION Diversity could be the answer Greatest potential for technological disruption 61% 39% NEW BUSINESS MODEL 40% 60%
Innovation Drivers
Thank you
The mining industry is marked by cyclicality Crude oil Copper Iron ore Gold 8x 7x 6x 5x 4x 3x 2x 1x WHAT NEXT? 8x 7x 6x 5x 4x 3x 2x 1x Period 1 The rise of Japan Period 2 The post-japan reversion and plateau Period 3 The rise of China Period 4 The post-china plateau Note: Prices listed in chart are 2016 World Bank forecasts published on July 26 th 2016
Systemic design is required for sustained success We asked: How should investment in innovation achieve the best overall social, environmental and economic development outcomes? Companies should focus on 3 key areas of outside the fence investment for the highest return: 37% 30% Invest in local services and infrastructure Focus on low footprint design
The risk of technological disruption is real Areas most subject to disruption over the next 15 years 37% 26% 20% 22% 21% 16% 13% 11% 15% 11% 12% 12% 11% 15% 12% 10% 4% 3% 4% 3% 0% 4% 5% 0% 6% 3% 4% Sensing and data Artificial intelligence, decision support and analytics Robotics and automation Biological and chemical engineering Advanced materials Manufacturing techniques 2013 2017 2030 Energy technologies Integrated and continuous processes Communications technology and connectedness
Business leaders shape this culture We asked: Which underlying technology areas receive the most innovation focus in your company? All it is core to our culture Chief executive officer Business unit heads Head of technology Head of operations Frontline leaders (eg. Supervisors) The board Head of strategy Head of information technology Communicate success stories Demonstrated leadership Public recognition Individual incentives We don t Set stretch goals Career promotions Create a burning platform Employee share schemes Company-wide bonuses 0% 10% 20% 30% 0% 10% 20% 30%
Key skills are required to foster acceptance We asked: When implementation programmes of new innovations fail, what is generally the reason? Change management 24% Project complexity Budget Impatience Unforeseen impacts Insufficient benefits Technology integration Technology maturity Skills 11% 10% 9% 9% 9% 8% 8% 6% Many lead operators hate automation. They struggle to imagine a world where they are not leading large groups of people Schedule Partner relationships 3% 2% 0% 5% 10% 15% 20% 25% 30%
A cultural shift to embrace innovation is A shift in industry culture as well as new skills are required to leverage technological change Technological change and disruption (robotics, automation, and AI) are expected to impact innovation in mining over the next 15 years Resistance to change and skill availability are considered the greatest people challenge to implementing technologies One in five respondents reported industry culture as the biggest impediment to innovation in mining
2017 Mining Industry Survey Initial Insights Supported by: