iron ore: a (not so) quiet revolution · labour (hours worked) ... • develop rules and norms for...

Iron Ore: a (not so) quiet revolution

MINERAL RESOURCES NATIONAL RESEARCH FLAGSHIP

Anna LittleboyResearch Director,Resources and Sustainability

Iron ore ‐ dig, ship and smelt

...or complex adaptive system?

Complex Adaptive Systems and iron ore

Investing in Australia’s mineral future | Nick Cutmore3 |

Action and reaction

• Productivity and a changing environment for iron ore

• The revolution in innovation (technology and process)

• Innovation, social change and social conflict

• Productivity and a changing environment for iron ore operations

4 |

A complex adaptive system (CAS) is defined as “a group of semi‐autonomous agents who interact in interdependent ways to produce system‐wide patterns, such that those patterns then influence behaviour of the agents.” (Dooley 1996)

– some things to consider

Productivity and a changing environment for iron ore

5 |

Megatrends.....

Collaborative Research | Jonathan Law|

Deloitte – Tracking the Trends

“Sun sets on the west's iron ore boom years”

• Illustration accompanying an article in the Sydney Morning Herald , April 18, 2015

8 |

Are we moving backwards?

9 |

Data from Boston Consulting Group 2015

Industry TrendsIndustry MFP growth by productivity cycle, per cent

1989-90 to 1993-94

1993-94 to 1998-99

1998-99 to 2003-04

2003-04 to 2007-08

2007-08 to 2011-12

Agriculture, forestry & fishing 3.1 4.0 3.6 -1.6 6.2

Mining 1.9 0.6 0.0 -4.0 -8.4

Manufacturing 0.8 0.6 1.4 -1.4 -0.2

Electricity, gas, water & waste services 2.7 1.9 -2.2 -4.8 -4.5

Construction 0.2 2.5 1.0 0.6 1.0

Wholesale trade -2.1 5.3 1.3 -0.1 1.1

Retail trade 1.9 2.0 1.4 0.3 1.7

Accommodation & food services -0.9 1.7 0.8 0.4 -0.6

Transport, postal & warehousing 2.0 2.0 1.7 0.7 -0.3

Information, media & telecommunications 5.6 2.8 -1.0 0.1 -0.6

Financial & insurance services 5.1 2.8 2.3 4.4 -0.2

Arts & recreation services -0.7 -1.7 1.0 -1.8 0.9

Market sector 1.2 2.5 1.2 0.0 -0.7

Productivity Commission 2013

The revolution in innovation

Measured productivity growth and innovation


Growth in volume of measured inputs

Growth in volume of output

Measured productivity growthless equals

Labour(hours worked)

Capital ServicesBuilt infrastructure

Measured inputs

Project Efficacy

Technical Progress

Mining Strategy

Resource Quality

Knowledge

Embodied Technology

Unmeasured inputs

“Goodwill”

Innovation along the full iron ore value chain

Rapid Resource CharacterisationPredictive Discovery Intelligent Mining and

sensing

Beneficiation, sintering, agglomeration Logistics and Supply Minimising wastes and

emissions

Mines, METS and Money, 2013 | Improving processing technologies | Jonathan Law |

The future of work?

Underpinned by ICT‐enabled systems integration

Wireless sensingAdvanced Resource Analysis

Remote Operations

Analytics Human / Machine Interaction

Manufacturing Philosophy


The future of the workplace?


Cost and risk reduction through process innovation

Environmental SensingRegulatory Review Legacy monitoring

Environmental Mitigation Tailings Management Cumulative Impacts


A sustainable future?

Innovation , social change and social conflict

Measured productivity growth and innovation







Measured inputs

Project Efficacy

Technical Progress

Mining Strategy

Resource Quality

Knowledge

Embodied Technology

Unmeasured inputs

Governance and “Goodwill”

License to operate

Iron ore impacts society – on all scales

LKAB and Kiruna township21 |

But these impacts are changing

Investing in Australia’s mineral future | Nick Cutmore22 | Courtesy Rio Tinto and Process and Control Engineerin

Data is more readily accessible

23 |

CSIRO. Insert presentation title, do not remove CSIRO from start of footer

2005 Dec2004

1998

2002

2006

Hyperspectral monitoring of dust on leaves

And people are connecting in new ways


Banro stakeholder mapCourtesy Witold Henisz

Brokered through media……new and old

Witold Henisz

Cases of significant mining – community conflict 2002‐13

Source: ICMM

‘Conflict causes delay…

29

30

‐500

‐400

‐300

‐200

‐100

0

100

200

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Projected Cash Flows

Original Estimate (NPV = $975m)

Actual Status Quo Modal Scenario (NPV = $190m)

Actual 20/80 Scenario (NPV = ‐$265m)

Stakeholder Conflict‐Cooperation Tracks DiscountAUSTRALIAN SOLOMONS GOLD LIMITED: GOLD RIDGE MUNDORO: MAOLING

GOLD RESERVES: BRISAS

NEVSUN: BISHA

.51

1.5

Sta

keho

lder

Co

nflic

t/C

oop

0.1

.2.3

.4.5

Ma

rket

Val

ue

01jan2007 01jan2008 01jan2009 01jan2010

Market Value / Valuation Stakeholder Conflict/Coop

-.5

0.5

11

.5S

take

hold

er C

onf

lict/

Co

op

0.1

.2.3

Ma

rket

Val

ue

01jan2004 01jan2006 01jan2008 01jan2010


.1.2

.3.4

.5.6

Sta

keho

lder

Co

nflic

t/C

oop

0.2

.4.6

Ma

rket

Val

ue

01jan2004 01jul2005 01jan2007 01jul2008 01jan2010


0.5

11

.5S

take

hold

er C

onf

lict/

Co

op

0.5

11

.52

Ma

rket

Val

ue

01jan2005 01jan2006 01jan2007 01jan2008 01jan2009 01jan2010


Witold Henisz

From “Spinning Gold: the financial returns to stakeholder engagement” Witold Henisz, SinzianaDorobantuLite Nartey, Wharton School of Business

Political/Social contribution to market

capitalisation ……. 45‐65% based on :Credibility of political institutions (i.e., hard for governments to renege on deals)Support from political and social stakeholders (i.e., external stakeholders act or speak about the mine cooperatively > conflictually)

Social license and value creation


Mining and social sustainability

Econews.com.au(Nick Moir, SMH) Minesandcommunities.org

“My company spends US$7 million per year on community programs. We still face work interruptions from the communities we help. Obviously the money does not buy us the goodwill we need, but I have no idea where we are missing the point.”

(Managing Director of an oil company, from Zandvliet and Anderson (2009, p. 5).)

Social licence to operate – a “real time” issueA study of 50 mine sites affected by social conflict reveals the reported and underlying causes of this conflict across the mining life cycle

Reported causes:1. Environmental impacts2. Lack of involvement in consent

seeking processes3. Community health and safety

Underlying causes:1. Distribution of benefits2. Cultural/normative differences

between company and community

3. Poor ongoing consultation processes with community

Franks et al., 2014

Stages in of maturity in risk communication(B Fischhoff, Twenty years of risk communication unplugged, Risk Analysis, Vol 15, No 2, 1995)

• All we have to do is to get the numbers right• All we have to do is to tell them the numbers• All we have to do is to explain what we mean by the numbers• All we have to do is to show them they have accepted similar risks in the past

• All we have to do is to show them its a good deal for them• All we have to do is to treat them real nice• All we have to do is to make them partners• All of the above


On balance, do people think mining is worth it?

Presentation title | Presenter name |

1

2

3

4

5

6

7

Australia Chile China

N = 5000

N = 1500

N = 5000

Iron Ore and a (not so) quiet revolution| Anna Littleboy38 |

The pathway to an operational social license(data collected over three years in SE Queensland. Conceptual validation at four other sites)

Environmental impacts

Contact Quality

Awareness of programs

Procedural fairness

Trust in company

Acceptance/ Approval

.03

.56

‐.10

.23

‐.08

.65

Contact Quantity

.12

‐.23

.50

Implications

• Partner early• Listen and respect• Treat social capital as you would any other form of capital• Develop rules and norms for doing so• Embed as core business• Environmental Governance critical


A changing environment for iron ore operations








Measured inputs

Project Efficacy

Technical Progress

Mining Strategy

Resource Quality

Knowledge

Embodied Technology

Unmeasured inputs

Governance and “Goodwill”

License to operate

Social Capital

Some final thoughts....• Innovation remains a pathway to increased productivity and a route for meeting future supply

• Innovation is alive and kicking in the iron ore sector

• Innovation will impact on an increasingly savvy society

• New relationships with society are required to protect shareholder value as an asset

• What about tackling it in the same way we tackle pre‐feasibility assessments


www.kinorg.com

Anna Littleboy

Queensland Centre for Advanced Technologies, Pullenvale, Brisbane, Queensland 4069

[email protected]

MINERAL RESOURCES FLAGSHIP

Thankyou


iron ore: a (not so) quiet revolution · labour (hours worked) ... • develop rules and norms for...

Documents