C O P Y R I G H T © 2 0 1 7 – A L L R I G H T S R E S E R V E D V C I P T Y LT D

W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

INNOVAT ION : STATE OF PLAY MIN ING INDUSTRY SURVEY 2017

S U P P O R T E D B Y

SUMMARY INSIGHTSThe 3rd biennial survey of more than 800 global mining leaders reveals the impact of a rapidly changing international marketplace and its effect on innovation.

Global mining leaders share their views on innovation

Our 2017 survey of innovation across the global mining industry is the third major survey of its kind undertaken by VCI in conjunction with platform partners The University of Western Australia and METS Ignited.

The survey, conducted between August and December 2016, received more than 800 responses from industry executives, across 60 countries.

While the 2016 survey sought to build on data gathered in the 2013 and 2015 surveys, its main objective was to assess the impact of the changing global mining market and its effect on innovation.

The 2017 survey also takes more in-depth look at key industry drivers including social pressures, collaboration across the ecosystem and digitisation.

VCI worked closely with the Chamber of Mines South Africa and Chamber of Mines India on this year’s survey. They provided input to the survey and helped in its distribution.

VCI would like to thank the many mining and associated services companies that took part in the survey. Research such as this is an important part of the development of the sector and will contribute to a robust future.

321 companies

800+ respondents

69% executives

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

INDUSTRY WIDE SURVEY330+ responses across the globe

CEO INSIGHTSInterview series with 15 CEOs and Chairmen across the globe

FULL ECOSYSTEM SURVEY 800+ responses Launch in mid 2017

2013

2015

2016

2017

INAUGURAL SURVEY55+ responses across Australia

Innovation : State of PlayESTABLISHED IN 2012

CROSS-INDUSTRY REPORTInterview series with CEOs across the resources, agriculture, health, infrastructure, defence, arts, culture and tourism industries to compare and contrast the state of innovation and identify share opportunities

“ ‘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.’

M I N I N G C E O

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

2018

The mining industry is marked by cyclicality

8x

7x

6x

5x

4x

3x

2x

1x

8x

7x

6x

5x

4x

3x

2x

1x1960 1970 1980 1990 2000 2010 2020 2030

Note: Prices listed in chart are 2016 World Bank forecasts published on July 26th 2016

P E R I O D 1

Rise of Japan

P E R I O D 2

Post-Japan reversion and plateau

P E R I O D 3

Rise of China

P E R I O D 4

Post-China plateau

Crude oil Copper Iron ore Gold

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

We are at a pivot pointWE ASKED:

Which of the following macro trends will have the biggest impact on mining over the next 15 years?

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

62 59

37

2622 21

15 1410

6

BY % OF RESPONDENTS

“ ‘The Market, Moore’s Law and Mother Nature are the three biggest

forces shaping the world today.’

T H O M A S F R I E D M A N

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

The risk of technological disruption is realAreas most subject to disruption over the next 15 years.

Sensing & data

Artificial intelligence, decision support and analytics

Robotics and automation

Biological and chemical engineering

Advanced materials

Manufacturing techniques

Energy technologies

Integrated and continuous processes

Communications technology and connectedness

4

1613

3

11

20

26

14

22

11

4 30

4 5

0

63 4

12 12

37

21

11

1512

10

BY % OF RESPONDENTS

2013 2015 2030

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

EXTRACTION

PROCESSING

EXTRACTION

ENVIRONMENT

EXPLORATION

END-TO-END OPTIMISATION

Different regions have different needsWE ASKED:

Where in the value chain do you see the greatest value over the next 15 years?

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

Society’s expectations are increasingWE ASKED:

Why is mining perceived negatively in society?

HIGH PROFILE ACCIDENTS COMMUNITY IMPACT ENVIRONMENTAL IMPACT

31 %

46 %

76 %

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

Systemic design is required for sustained successWE ASKED:

How should investment in innovation achieve the best overall social, environmental and economic outcomes?

37 % INVEST IN LOCAL SERVICES AND INFRASTRUCTURE

Companies should focus on 2 key areas of outside the fence investment for the highest return

30 % FOCUS ON LOW FOOTPRINT DESIGN

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

Innovation is more critical than ever before

Companies that claim innovation is critical to their company’s survival in the long term.

41 % 62 %37 %

2013 2015 2017

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

Being a follower is not an optionWE ASKED:

What is your company’s approach, and how successful have you been introducing new innovations into your business?

Fast followerConservative follower Lead industry

12 % 43 %6 %

HIGHLY SUCCESSFUL

SUCCESSFUL

NOT VERY SUCCESSFUL

39 %

31 % 39 %17 % 13 %

27 % 20 %50 % 3 %

Lead across industries

Less than a half of mining companies describe themselves as leaders, compared to followers.

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

Ecosystem health drives innovation

Actions and relationships that drive innovation in the ecosystem.

Smaller services companies

GOVERNMENT AND COMMUNITY

RESEARCH SERVICE INDUSTRY MINERS

Applied research

Fundamental research

Larger service companies

Tier 2/3

Tier 1

Expl

orer

s

BIGGEST DRIVER OF INNOVATION

MOST IMPORTANT

RELATIONSHIP

2ND MOST IMPORTANT

RELATIONSHIP

FUNDING

3RD MOST IMPORTANT

RELATIONSHIP

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

Ecosystem health drives innovation

Actions and relationships that drive innovation in the ecosystem.

Believe that Governments should facilitate collaboration platforms

Believe that mining companies should involve suppliers in their innovation process

View CEOs as drivers of innovation in mining companies

Of services companies say that all employees drive innovation

57 % 24 %48 % 33 %

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

A cultural shift to embrace innovation is requiredA shift in industry culture as well as new skills are required to leverage

technological change.

Technological change and disruption (robotics, automation, AI) are expected to impact innovation over the next 15 years

Resistance to change and skill availability are considered the greatest people challenge to implementing new technologies

One in five respondents reported industry culture as the biggest impediment to innovation in mining

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

Business leaders shape this cultureWE ASKED:

Who is the driving force of innovation in your company; and how do you incentivize your workforce to innovate?

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

0% 10% 20% 30%

Communicate success stories

Demonstrated leadership

Public recognition

Individual incentives

We don’t

Set stretch goals

Career promotions

Create a burning platform

Employee share schemes

0% 10% 20% 30%

Company-wide bonuses

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

Key skills are required to foster acceptanceWE ASKED:

When implementation programs of new innovations fail, what is generally the reason?

Change management

Project complexity

Budget

Impatience

Unforeseen impacts

Insufficient benefits

Technology integration

Technology maturity

Skills

0% 5% 10% 15% 20% 25% 30%

Schedule

Partner relationships

24%

11%

10%

9%

9%

9%

8

8%

6%

2%

3%

“ ‘Many lead operators hate

automation. They struggle to imagine a world where they are

not leading large groups of people’

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

Diversity could be the answerWE ASKED:

Which parts of the mining industry are most subject to potential disruption over the next 15 years?

EXTRACTION

NEW BUSINESS MODEL

61% MALE 39% FEMALE

40% MALE 60% FEMALE

R E S P O N D E R S

R E S P O N D E R S

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

Benchmark companies against peers in the industry.

BENCHMARK

Series of round tables throughout the year exploring key themes from the survey report.

INDUSTRY ROUND TABLES

Interviews with select participants on leading themes from the survey report

DRILL DOWN INTERVIEWS

Present results at selected events throughout the year

PRESENT AT CONFERENCES

What’s next?INNOVATION: STATE OF PLAY IN 2017

Mining Innovation: State of Play 2017 report will be released for sale in Q2

RELEASE REPORT

I N N O V AT I O N : S TAT E O F P L A Y ™ W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

C O P Y R I G H T © 2 0 1 7 – A L L R I G H T S R E S E R V E D V C I P T Y LT D

W W W . I N N O V AT I O N S TAT E O F P L A Y. C O M

Contact us for more information

S U P P O R T E D B Y

Graeme Stanway graeme@innovationstateofplay.com

Corinna Griebelcorinna@innovationstateofplay.com

Paul Mahoneypaul@innovationstateofplay.com

Peter Nichollspeter@innovationstateofplay.com

Mark Stickellsmark.stickells@uwa.edu.au

Sarah Boucauts.boucaut@metsignited.org

AUTHORS

CONTRIBUTORS