Accelerating Innovation in the Australian Mining Industry

Transcription

1 Accelerating Innovation in the Australian Mining Industry Funded by: Elizabeth Lewis-Gray Chair, METS Growth Centre August 2015

2 Agenda Innovation system some factors to consider METS Industry size and impact METS Growth Centre Innovation models - an opportunity to accelerate 2

3 Assessment of UK Wider Condition for Innovation Source: NESTA, the innovation index 2009

4 7 th in World IP infrastructure and systems Source: UP Unlimited Potential, Global Intellectual Property Centre 2015

5 Global IP Strength Source: UP Unlimited Potential Global Intellectual Property Centre 2015

6 Timeline of Innovation Source: Inside America's Bold Plan to Revive Manufacturing, June 2015

7 Mining cycle is down Time to invest in innovation Mining boom, hyperinflation has converted to costs down and closures Next play in innovation Innovation cycles are slow - Can we make it faster? Companies and countries that do so will have a strategic advantage eg Gold Fields and Anglo American Strategic Relationships with suppliers - a key platform for fast and effective innovation Now is the time for Australia to make a leap forward

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9 Who Is Impacting The Mining Industry The Most? Source: Innovation State of Play 2014 Report, UWA, Minerals Institute

10 Consultation Feedback Competitiveness Issues Extensive consultations across Australia have identified a number of factors limiting the productivity and competitiveness of the sector including difficulties experienced due to a largely monopolistic demand side (with few buyers) and imperfect market competition on the supply side and information asymmetry: Restrictive procurement processes by major miners Reluctance by miners to trial or adopt new innovations that disrupt current operations Difficulty in accessing senior level decision makers and understanding current needs (problem identification) and long term technology roadmaps of miners Cost of engaging with large miners too high for SME s Cyclical nature of industry limits sustainable growth and development of scale Lack of management and skills capability in areas such as finance, sales, marketing and global strategy Limited access to finance both early stage and patient capital Non harmonisation of state based (and company based) regulations imposes costs on supplier and miners impeding productivity

11 Barriers to Innovation Base: Total Sample (n=350) Q38. What are your major barriers to realising a commercial return from your innovations, new products or services?

12 METS Industry Overview Gross Revenue (fy 12) State Gross Revenue WA $23.18 b 26 NSW/ACT $22.79 b 25 QLD $21.22 b 24 VIC/TAS $16.73 b 19 SA/NT $1.62 b 2 Unaccounted $4.39 b 4 Total $89.9 b 100 % Source: Austmine Survey 2013

13 METS Companies National Footprint Source: Austmine Survey 2013

14 METS Development Investing in the future Source: Austmine Survey

15 METS by Company Size 23% Large companies. 77% SME Source: Austmine Survey 2013

16 METS Companies Ownership by Revenue Base: Total Sample (n=350) Q2 Is your company Australian owned? Source: Austmine Survey 2015 Significantly higher than average at the 95% confidence interval Significantly lower than average at the 95% confidence interval

17 Some of Australia s Largest METS Company 2013 Total Income Global 2014 Total Income Global 2014 Mining division income Total no. Employees Global 2014 Country A$24.4B A$24B A$4B Contract mining only 52,000 AUS A$9.1B A$7.7B A$2B 3,500 Downer mining AUS A$6.8B A$6.8B A$5.7B 14,000 AUS A$2.6B A$2.3B A$1.67B Engineering construction div 5,521 AUS A$1.1B A$826.3M A$723M 4,578 AUS

18 Scandinavian Sectoral Leaders Company 2013 Total Income Global 2014 Total Income Global 2014 Mining division income Total no. Employees Global 2014 Country A$14.3B $13.3B A$4B 44,545 Sweden A$13.8B A$14B A$3.9B 40,241 Sweden Country Population (2014 estimate) 9.5 million 9.5 million A$5.7B A$5.1B A$3.7B 15,644 Norway 5 million A$5.4 bn A$3.9B A$1.8 bn 14,765 Denmark A$2.8 bn A$1.9B A$921M 4,571 Finland 5.6 million 5.4 million

19 Larger Companies Innovate More Systematically NDP frequency by turnover Total Under $5m $5m-$20m $20m- $100m $100m+ Unspecifie d n= N=350 N=127 N=97 N=54 N=43 N=29* Continuously 45% 43% 45% 44% 51% 45% Every few years 37% 31% 41% 48% 30% 38% Rarely 16% 24% 10% 6% 14% 17% Never 2% 2% 3% 2% 5% 0% Base: Total Sample (n=350) Q39. How frequently does your company bring out new products or services? * Caution low base size, results indicative only Significantly higher than average at the 95% confidence interval Significantly lower than average at the 95% confidence interval

20 Operations and Offices Offshore Ownership Australian 84% 80% 20% are foreign owned Foreign 16% 20% Total 100% 100% Ownership by Country USA 32% 26% Germany 9% 10% France 7% 7% Switzerland 4% 6% Canada 3% 4% Finland 1% 6% Sweden 4% 4% 80% of companies are Australian owned United Kingdom 15% 9% Japan 4% 3% Norway 0% 3% South Africa 4% 3% Singapore 1% 3% Other 16% 16% Total 100% 100% Source: Austmine Survey 2015

21 METS International Footprint Significant explorer $15bn METS Exports Estimate Source: Austmine Survey 2013

22 Exporters Base: Total Sample (n=350) Q23. Does your company export equipment, products, services or technology to other countries? Significantly higher than average at the 95% confidence interval Significantly lower than average at the 95% confidence interval Source: Austmine Survey 2015

23 Years METS Companies Established By State 73% Source: Austmine Survey 2013

24 METS Growth Centre Elizabeth Lewis-Gray Chair METS Growth Centre August 2015

25 Five Growth Sectors Food & Agri. Mining equip. Oil, gas & energy Medical tech. Advanced mfg GVA ($b) GVA growth 0.9% 6.3% 7.3% 2.0% 1.1% Employment ( 000) Employment growth 1.4% 4.8% 9.5% 0.4% 0.4% Labour productivity (GVA / hr worked) Labour productivity Growth % 1.5% 1.9% 2.0% 2.2% Export ($b) Firm count 181, ,287 2,111 19,203 6,709

26 Strategic Objectives Each Growth Centre will set a long-term strategy for their sector and deliver activities, addressing four themes: De-reregulation to improve cost effectiveness Improve collaboration and stronger commercialisation outcomes Improve engagement with international markets and access global supply chains Improve management and workforce skills of key growth sectors

27 Industry Growth Centres Overview

28 METS GC Vision Strengthen the sustainable competitive advantage of the Australian METS industry nationally and globally

29 Strengths and Weaknesses In Australia s METS innovation system Strengths Strong domestic mining economy Lots of start ups, great ideas, entrepreneurial skills, SMEs, micro multi-nationals Strong global R&D infrastructure, technical skills World class clusters software, automation, exploration, processing, social licence A reasonable customer base of mid-tier mining companies Most major global METS and miners have operations in Australia Weaknesses Long innovation cycle Lack of early stage and patient capital Poor history of collaboration Lack of scale: few truly global Australian METS MNCs operating as key players in global supply chains Restrictive procurement practises by major miners, monopsony market (buyers monopoly) Declining exploration, junior and mid-tier and Australian HQ miners IP ownership

30 Key METS GC Strategic Themes 1. Clear and shared industry vision 2. Promote and accelerate new innovation and collaboration processes 1. Document and promote new innovation models 2. Engage miners and METS at c-suite levels to share and solve problems 3. Systemise collaboration using alternative engagement platforms 3. Brand Australian METS, nationally and globally 1. Develop brand and raise awareness 2. Improve and ensure skills for future 3. Grow scale and clusters to access global supply chains 4. Identify and promote Australia s world class clusters 5. Enable growth through improved access to capital 4. Improve competitiveness through deregulation

31 Different Innovation Methodologies For Different Challenges Source: VCI

32 New Innovation Models Can Australia deliver an accelerated innovation cycle in METS? Traditional research and commercialisation process -university research spin off commercialisation CRC s eg CRC Mining, CRC Ore, CRC DET Accelerators eg Blue Chilli, Innovis, Poloniser Incubators Corporate lab eg Woodside Internal Innovation Supplier collaboration eg VCI, AngloGold Open Innovation eg Anglo American Protected innovation eg Rio Tinto Ideation, Problem Solving and Funding Hackathon - eg Unearthed Research/solution funding by end users eg Mining companies fund capital in business rather than own/control IP Collaborative research eg CSIRO, UWA, Curtin, National Science Precinct Crowd funding Open Innovation Platforms eg online problem solving, competition platforms NFP CEEC, AAMIG, Austmine

33 Perth cluster Engineers per 1000 employed in cities over 1M people Source: State of Mind UWA Energy Minerals Institute WA

34 The Australian METS Sector

35 Thank you