South African Innovation Network: Innovate to remain relevant in the resources industry. Ernst Venter -

Transcription

1 21 May 2014 South African Innovation Network: Innovate to remain relevant in the resources industry. Ernst Venter - Executive Head: Growth, Technology, Projects, Services and Ferrous

2 Trend - Sustainability 2 Climate Change More from less Going, going... Gone? Sustainability is the single biggest business opportunity of 21 st century it will be the next source of competitive advantage. ~ Lee Scott Wal-Mart CEO Source: Promethium Carbon 2006

3 Trend - Urbanisation 3 3

4 Trend - Shift in economic power China + India = 6% 20% 45% US = 28% 27% 26% EU = 34% 25% 15% Japan = 12% 7% 4% 4 Chindia - Almost half the global economy by 2050

5 Trend - Smart and nano technology 5 5

6 Case study: Carbon nanotubes 6 1/6 th weight of steel 100 times stronger than steel 1.5 times thermal conductivity of diamonds Single and Multi-walled tubes

7 Trend - Connectivity BILLION CONNECTED DEVICES BY Connected devices for every household by Connected devices for every user by billion internet users by devices with unique digital IDs (Internet of things) per square kilometre by 2020.

8 Trend - Innovating to Zero 8 8

9 Trend - Increased life expectancy 9 9

10 Global resources trends 10 Mega Regions Mega consumption of steel, copper, iron ore & coal Competition for skills Fully automated and integrated mines Mega Cities Infrastructure Intelligent machinery and equipment Urbanisation New Business Models Mega Corridors Demand for electricity, housing, roads & water Massive infrastructure budgets by government Social license to operate Intelligent logistics and transportation systems Remote Controlled Operations Massive production of automobiles, appliances lndustrialisation Modern transportation solutions Sustainability Technology Increased coal consumption Integrated economie s Reduce geopolitica l risk Mega-energy projects Commodity Energy and water efficient technologies Beneficiation Environment, health & safety issues Human Capital Impacts Energy Diversified energy mix-renewable & nuclear Geography Diversification Niche markets & stable income streams Coal to Liquids & Power Plants Market char & coke 10

11 The result - envisaged commodity life cycles Steel (iron ore, coking coal, manganese) Base metals (Al, Cu, Zn, Ni, Pb, Sn) Steam coal Industrial minerals (TiO 2, zircon) Light metals (Al, Ti, Mg) Base metals (Cu) Uranium, Thorium Rare Earths and Metals (incl PGMs) Nano-materials Industrial minerals Carbon Composite materials Organically produced materials Memory materials Molecular engineering Sci-fi materials and energy* * An acknowledged source for foresight thinking Gradual and overlapping evolution

12 Exxaro s vision of the future 12 12

13 Characteristics of the future resources extraction industry Increasing Shareholder expectations (Profits) 2. Extreme escalation in operating costs 3. Rapid Technological Innovation i.e. IT/Com s.. 4. Increased pressure on Social and Regulatory Compliance. 5. Un-balanced relationship between government, community and mining. 6. Current core processes are sub-optimized (exploration, geology, mining processing and logistics) 7. High levels of waste and discard materials from production. 8. High Impact on Environment and insufficient Rehabilitation 9. Fossil Fuel based Economy / Carbon Emissions 10. Energy Supply / Cost constraints 11. Limited focus on downstream beneficiation 12. Current workforce ill-equipped for the future (High levels of semi-skilled employees and shortage of highly skilled employees) 13. Communities dependant on Mining Activities 10 Strategic Thrusts Smart Exploration New Mining Technologies New Processing Technologies Asset Management/Logistics Clean Coal Technologies Innovation to Zero Harm Social Responsibility Sustainable Energy Automation Integrate/Redefine Value Chain Sustainable License to Operate (LTO): Creating inclusive wealth-all Stakeholders Balanced and sustainable partnership between government, community and resources industry Small footprint / limited environmental impact Self-sustaining economically viable community > Beyond a Life of Mine (LOM) 2. Smart Exploration: Accurate, predictable, instant, information and models % resource extraction 4. Zero Waste 5. Zero Harm - safety/health 6. Energy, carbon and water neutral 7. Workforce equipped to support the 2030 business 8. Hybrid/renewable/alternative energy solutions 9. Capitalise on trend of advanced / light Materials /Metals 10.Integrated, optimised and redefined value chain

14 Innovate to remain relevant Tweaking existing processes cannot deliver the massive shifts mining companies need in today s capital-constrained environment. To build true competitive advantage, companies must look beyond incremental performance improvement to determine how they can revise their systems to embrace the broad theme of innovation. ~ Jürgen Beier, Mining Leader, Canada We, as an industry, are woefully underspending on innovation and businessimprovement programmes given the state of extraction challenges. On a revenue to revenue basis, the mining industry spends 80 per cent less on technology and innovation compared to the petroleum sector. Exxaro will be required to enhance its internal innovation and project execution capabilities in the coming years in order to meet shareholder expectations ~ Sipho Nkosi ~ Mark Cutifani, Anglo American (WRC)

15 Exxaro innovation model External influences, innovation capability and infrastructure are factors influencing innovation A process must be followed to ensure systematic approach Leadership is the Innovation engine Fuzzy Front End: Effective Methods, Tools,and Techniques Peter A.Koen. Copyright Exxaro

16 Drivers of innovation culture Meet people's needs Teach innovation Nurture passion Make the work matter Provide the time Value renewal Creativity Connectivity 16 Adopted from Tony Schwartz : "The Productivity Paradox: How Sony Pictures Gets More Out of People by Demanding Less," June, 2010 HBR

17 Strive for a balanced portfolio... Level of Innovation 17 Expected Business Impact

18 Future resources industry characteristics Sustainable License to Operate: Creating inclusive wealth-all Stakeholders Balanced and sustainable partnership between government, community and resources industry Small footprint / limited environmental impact Self-sustaining economically viable community > Beyond a Life of Mine (LOM) 2. Smart Exploration: Accurate, predictable, instant, information and models % resource extraction 4. Zero Waste 5. Zero Harm - safety/health 6. Energy, carbon and water neutral 7. Workforce equipped to support the 2030 business 8. Hybrid/renewable/alternative energy solutions 9. Capitalise on trend of advanced / light Materials /Metals 10. Integrated, optimised and redefined value chain

19 THANK YOU