{ the development of mining equipment, technology and service suppliers [mets] in australia don...
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The Development of Mining Equipment, Technology and Service Suppliers [METS] in Australia
Don Scott-Kemmis, October, 2014
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EntrepreneurshipNew Venture
Formation
Risk Capital Knowledge BaseResearch, Transfer
Exemplars, MentorsNetworks, Angel investors
Market Entry to MTSE Sector
Firm Growth
UpgradingNew products & services Internationalisation
Prior experience
Role of the customer
Demand, customers[primary & intermediate]
Talent –knowledge & skill resources
Knowledge BaseResearch, Transfer
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Education &Training Organisations
Coordination & Collaboration
Customers
Challenge, Competition & Technological Opportunity
Research & TechnologyOrganisations
Complementary suppliers
Investment in R&D & Knowledge acquisitionSpecialisation,
Capability Upgrading & Innovation
Collaboration & Acquisition
Collaboration & Problem Solving with customers
Competitors
Rivalry, competition & collaboration
Internal Knowledge Development
Labour Market Hiring
Sectoral, regional & cluster organisations
Coordination & promotion of research & education initiatives
Networks
Cluster Dynamics: Drivers & Shapers of Specialisation & Capability Development
Hiring & coordination
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Major role in economic and industrial development in many countries: United States, Canada, Sweden, Finland, Norway, South Africa, Australia. These histories suggest:
A strong foundation of capability is important in capturing the opportunities
New challenges/ discontinuities often present major opportunities Relationships with the mining firms, Tier 1 suppliers, and ‘owners
of the problem’ are important Opportunities for entry are often better in the production than in
the investment phase Entry is only the starting point for evolution and capability
upgrading Wider knowledge resources and infrastructure vital for upgrading In most cases an active industrial development strategy was
necessary to address barriers to entry and to promote upgrading.
Resource-Based Industry Development
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Largest exporter: coal, iron ore, bauxite, lead, zirconium, titanium
Second largest exporter: gold zinc & uranium
Third largest exporter: silver, nickel, aluminium
More recently major gas exports
Mining accounts for 8% of GDP, but indirectly for probably 20%.
Exports about $140b in 2011 – approx 50% of exports
Investment approx $86b in 2012
Exploration approx $6b in 2011
R&D by mining companies approx. $4.2 b in 2011.
Currently cooling quickly
Economic resources increasing over time not depleting.
Australia – a major minerals producer
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Low visibility of the Mining Supplier (METS) sector;
Mining seen as extractive, old, low tech
Not metropolitan – most very remote
Diverse minerals and locations– no geographical focus
Supplier (METS) sector diverse and not a statistical sector and hence low visibility.
Recent rise very fast after a long quiet phase
But….
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Size – at least 250 significant firms (40% <10 employees)
Turnover – A$71b in 2012
Employment – Over 250,000
Rapid growth – increased 500% over 15 years to 2012
Diverse
Exports – about 20% of sales in 2012
Offshore expansion – 27% of firms had offshore offices
METS Sector in Australia
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INTERNATIONAL MINING EQUIPMENT SUPPLIERS IN AUSTRALIA
Exploration
Mapping, Geological & Geotech Surveys,
Borehole Drilling
Hatch
Bulk Material Handling
Conveyors, Crushers,Winches, Vehicles,Weighing & Measuring
Sandvik – Tamrock
Detroit Diesel
Hitachi
Terex
Surface Mining
Drilling, Electrical &Hydraulic Eqp’t, Shovel buckets
Sandvik – Tamrock
Caterpillar
P&H Minepro
Atlas Copco
Hitachi
Liebherr
DBT
Komatsu
Bucyrus
Underground Mining Blasting, Drilling,
Electrical &HydraulicEquip’t, Communications
Caterpillar
Sandvik - Tamrock
Atlas Copco
Hitachi
Joy Mining Machinery
DBT
Komatsu
Michelin
Health and Safety
Ventilation, Dust control, Waste Mngm’t, Safety Eqp’t
3M Mining
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Changing role of the major mining companies – greater outsourcing released staff and grew a constellation of suppliers;
Local ‘unique’ challenges eg regolith
Long history of development of the knowledge infrastructure / strong knowledge base: education, organisational development (associations, AMIRA & tech organisations), research (univ, CSIRO, specialist, CRCS)
Increasing knowledge intensity – cost pressure, safety, environment
Technological discontinuity
Assets (knowledge, networks, relationships) development & reuse
Australian METS Development -Critical Factors
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Services (eg maintenance) specialist equipment or components
Problem solving new software, equipment or service
Tier 3 project management Tier 2 Tier 1 Entrepreneurial spin-off professional service
provider Research organisations specialist supplier (few
cases)
Overall Systems integration innovation on a wide frontier Local national international
other user markets?
Paths of Evolution for METS
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Vital for METS firms:
Most collaboration is with the mining companies or higher tier suppliers
For innovation/research activity:
Major mining companies prefer to collaborate with platform mechanisms eg AMIRA or CRCs
METS most likely to collaborate with universities
Some METS can see universities and CSIRO as competitors
Collaboration
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Australian ‘Minerals Innovation Complex’
Mining Companies
Mining Equipment &
Services Suppliers
CSIRODivisions &
Mineral Down Under Flagship
Mining Technology Innovation Centre
Universities
GeoScience Australia
CRCsUniversi
ty Centres
ACARPAMIRA
International
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Level of Challenge for Local Content and Supplier Development
1 (Low
)
2 3 4 5 (high)
Capability gaps
Product or service specialisation & complexity
Criticality
Single supply opportunity (lack of repetition)
Supplier development potential declines from 1 to 5Time and cost for supplier development rises from 1 to 5
Supplier Development Opportunities – Scope & Effort
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Supplier Attractiveness
ReputationProven Product/ Service
Solves a Significant Problem
Commitment to support
Proximity
Fit with existing Technology/systems
Familiarity withkey people 1
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Finance and human resources for firm growth
Spatial dispersion- mining areas distant from major centres and from each other
Core technology and major project management largely imported
Research METS links not strong
Development of new learning processes- limitations of problem solving and experience-based learning
Cluster Development Constraints in Australia
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EnablersLinking MechanismsIntermediaries, Information resources, procurement policiesCapability DevelopmentFormation, learning & growth capabilityStrengthening the ContextCluster development
PullEntry in production phaseAddress all barriers to firm development: skills, capital etc
PushEngage competent resources firms in knowledge transferLicence to operateExplicit but flexible strategiesAddress barriers to entry
Drivers of Supplier Development
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Risk – that the use of local suppliers, in response to political pressure, will lead to higher costs and project delays, reducing returns to investors;
Compliance – meeting regulatory requirements may avoid sanctions and delays with approvals etc.;
Reputation – with the host government as a firm able to develop strategies to effectively build local capability and potentially be a preferred investor;
Cost reduction – greater development and use of local suppliers may lead to cost savings on imported equipment, parts and services;
Social licence to operate – use of suppliers based in local communities can provide benefits from resource projects to those communities, hence providing some compensation for the costs of such projects.
Maintenance and problem solving – capable local suppliers can reduce downtime and deal with production and development problems quickly.
Procurement strategies resource - project developers
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Demand – particularly whether that demand is specialised, unusual or ‘leading’, in that it anticipates patterns of demand that will be more widespread in the future;
Input factors – The availability of high quality inputs of eg capital, labour, natural resources, infrastructure, knowledge;
Complementary and supporting industries and organisations – which provide goods and services (including research and education) to different stages of the value chain;
Competition and rivalry in the core sector – which drives competition and the ongoing search for sources of improved performance
Eg Porter
Frameworks for Cluster Development
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Four key processes which reinforce each other:
New Entrants - the entry or formation of more, and a more diverse range of, organisations (suppliers, customers, intermediaries, sectoral organisations, research and education organisations etc.)
Interaction - increasing interaction (user-producer, competition, collaboration) among these organisations
Specialisation- increasing specialisation and capability upgrading within organisations (and through complementarity and cooperation at the level of groups), and
Institutional innovation - the development of institutions, policies and shared priorities.
The role of “cluster” development
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Increasing
Demand[economic
growth, urbanisation,
industrialisation]
Increase Output[access to economic
resources] Mine & refine
efficiently
Win license to operate
Find- high
quality resources
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Win license to operate
Mine & refine
efficiently
Find high quality
resources
Mineral Resources*deeper *lower grade*more remote *more complexHuman Resources*ageing workforce*skill shortages*hazardous workplaces
Environmental Resources*water scarcity *energy costs*fragile ecosystems *more wasteSocial & Corporate Resources*accountability *community devel’t *sovereign risk *scrutiny
High Level Objectives
High Level Challenges
Increasing:* Costs* Technical complexity* Social & polit. complexity * Risk * Capital requirement
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Mineral Resources*deeper *lower grade*more remote *more complex
Human Resources*ageing workforce *skill shortages*hazardous workplaces
Environmental Resources
*water scarcity *energy costs*fragile ecosystems *more waste
Social & Corp. Resources
*accountability *community develop’t *sovereign risk *scrutiny
FindDiscover Tier 1 depositsExplore deeper depositsImprove resource assessmentSecure rights
MineLower mining costs- labour, capital & energy efficiencyMine in more remote locationsLower mining impacts – water, emissions, safety, local community benefits
RefineMore efficient extractionProcess complex oresLower impact separation – energy, water, waste
SustainAttract talent & capitalMaintain reputationSustain ‘licence to operate’Respond to greater regulation
ChallengesPerformance Objectives
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FindDiscover Tier 1 depositsExplore deeper depositsImprove resource assessmentSecure rights
MineLower mining costs- labour, capital & energy efficiencyMine in more remote locationsLower mining impacts – water, emissions, safety, community benefits
RefineMore efficient extractionProcess complex oresLower impact– energy, water, waste
SustainAttract talent & capitalMaintain reputationSustain ‘licence to operate’Respond to greater regulation
Sensing & InterpretingSatellite remote sensingRapid & mobile field geochemical analysis On-line analysisContinuous slope and wall stability detection
Decision Support ToolsData integration & 3D modellingWhole of mine planning & scheduling software
Smart MachinesAutomation & remote controlRobust low maintenance equipment
FragmentationBlock caving & low energy miningSmart blasting design & formulation
ExtractionSmaller in-mine primary recoveryDry processing & on-line automatic sortingIn-situ leaching
SustainabilityWhole of life social & env’l assessment & planningLower energy & water using techniques
Innovation TrajectoriesPerformance Objectives
Mining Innovation Roadmap
Increased demand
Mining developmen
t opportunity
Challenges
New Performan
ce Objectives
New Innovation Trajectorie
s
Enabling Innovation
Deepening and Distributed Knowledge BaseGeology, Geo-Chemistry, Mining Engineering, Fluid Dynamics,
Mechatronics, Signal Processing, Civil Engineering, Mechanical EngineeringSoftware engineering, Microelectronics, Communications Technology,
Simulation, Artificial Intelligence, Plant and Animal Ecology 26
Step Change Innovation in Mining: the case for institutional innovation
Corporate Innovation
• Miners / Suppliers
• Strategic differentiation
• Appropriation of IP
Collaboration
• Complexity
• Cost & risk
• Avoid dependence on one supplier
• Shared knowledge platform
• Equity in cost & benefit
Coordination
Global/NationalStandards
Organisations Funding
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Core Mining & Processing Equipment
Core Engineering Design
& Project Management (EPCM)
Contract Operations
Consulting Services
General Equipment
& Components
Specialised Technology
Information Technology Equipment and Related
Services
Other Services
General Support Services
Drivers of Opportunity, Innovation and Capability Development
Mining co’s outsourcing exploration
Mining co’S outsourcing
EDPM
Mining co’s outsourcing mining operations
Mining co’s outsourcing specialist analysis
Demands for improved control & safety
Rising knowledge intensity of
mining
Local innovations & adaptations to
imported equipment
Local innovations to meet new needs
Local innovations to meet new needs
Local innovations and adaptations to
replace, improve, extend imported
equipment
Innovation in management systems
to underpin productivity
Increasing scope and capability
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