- This was one of the main results of the study “Characterization of Chilean Mining Suppliers” prepared by Expande in collaboration with the corporate innovation consultancy, Brinca.
- This study aims to update the characterization of mining supply companies, within the framework of previous studies (2012, 2014, and 2016), focusing this time on innovation orientated technology-based companies.
Santiago, October 28, 2019 – The latest study of “Characterization of Chilean Mining Suppliers” prepared by Expande in collaboration with the corporate innovation consulting firm Brinca, showed that intelligent mining, occupational safety, and environmental impact are currently the challenges most addressed by suppliers in the mining industry.
This study aims to update the characterization of mining supplier companies within the framework of previous studies (2012, 2014, and 2016), focusing this time on technology-based and innovation-oriented companies.
The launch, which took place on Thursday, October 17, at Fundación Chile, counted with the participation of Javier Jara, Head of the Mining Development Division of the Ministry of Mining; Marcos Kulka, CEO at Fundación Chile; Andrés Pesce, VP of Business Development and Investment at Fundación Chile; Ricardo Morgado, Expande’s Director of Strategy and Development, and José Manuel Morales, Partner at Brinca, among other representatives of the mining industry.
Javier Jara, head of the Mining Development Division of the Ministry of Mining, said that “There are upstream and downstream challenges that we have to take-on and clearly suppliers dedicated to innovating and finding creative solutions that help operations be more efficient are most welcome. In this context, we as a Ministry want to be actively involved in creating and strengthening the innovation ecosystem”.
For his part, Marcos Kulka, Fundación Chile’s CEO, emphasized that, “This type of study is an important sign because it tells us that Chile, at least in its strategy, has to continue promoting natural resources. Industries such as mining, where we have a tremendously important role, allow us to be able to develop issues associated with technology, human capital, and sustainability. Even when one starts to see industries of the future like electromobility, copper becomes critical”.
The publication was based on a survey aimed at decision makers (innovation, development and operations managers, general managers, etc.) and representatives of 360 supplier companies, also reported that 75% of suppliers are currently focusing their efforts on improving industry productivity, while 55% are focusing on interoperability issues, and 45% on sustainable mining. To a lesser extent it found electromobility with 14%. Of the latter, 71% of the supplier companies indicate that they do not have the capacity to deal with it either currently or on a medium term.
Ricardo Morgado, Expande’s Strategy and Development Director, mentioned that, “The current challenges of mining are to improve the productivity and competitiveness of its processes through the incorporation of new technologies. However, such developments must be aligned with the current and future demand of the industry, a stage in which it is essential to promote and foster greater synergy among the actors of the ecosystem that will allow the incorporation of more transformational innovations. Today the key is, as the OECD said in its ‘Review of Policies for Productive Transformation in Chile’, to expand its knowledge base and increase productivity by making use of its natural assets in new and innovative ways”.
In this line, the Director assured that “Expande has been directing its efforts to indicate what is effectively the demand for solutions required by mining through various processes of open innovation (demo day, desafíos [challenges], matchmaking), with a high creation of value for suppliers and mining companies that are partners in the program”.
During the conference, representatives of the mining industry also addressed the importance and urgency of promoting and enhancing the development of technology-based goods and services in the mining sector, through a discussion panel that included the participation of María José Araneda, Superintendent of Supply Innovation at BHP; Sebastián Carmona, Corporate Innovation Manager at Codelco; Karl Jockel, Group Chief Procurement Officer at Antofagasta Minerals; José Manuel Morales, partner at Brinca; Andrés Pesce, VP of Business Development and Investment at Fundación Chile; and Ricardo Morgado, Expande’s Director of Strategy and Development.
At the meeting, José Manuel Morales pointed out that “Today the vast majority of suppliers have a greater commitment to innovation. Innovation is positioned as an important concept, companies want to innovate, but the issue resides in how and when we develop this skill, how we speed-up projects, products and services, and from there on, increase the impact of innovation”.
On his part, Sebastián Carmona, emphasized that “We, as mining companies, must know how to adapt, process and test new technologies to then install them in order to generate business. We have worked outside, but there has also been important in-house work in which we have matured and have been able to understand what the role of innovation is and how we can absorb it more efficiently”.
Main Results
Concentration of Suppliers in Operations
Of suppliers, 36% indicate that they condense their activities on the process of concentrating minerals, while 35% of them are in open pit-mining operations, 34% in the hydrometallurgical process and 30% in underground mining.
As a general trend, the study shows that there are a greater number of suppliers in upstream stages of the mining process, with a smaller presence in the smelting (17%) and electrolytic refining (15%) stages.
Innovation Efforts: Focus on Existing and Complementary Markets
The study found that mining suppliers are mostly oriented towards innovation in existing and/or complementary products and markets. 37% of the people interviewed indicated that their innovation efforts are focused on improving existing products for known markets (core business innovation), while 42% indicated that their innovation efforts reside in developing existing or complementary products for adjacent or commonly addressed markets (adjacent innovation). Only 21% of the supplier companies indicate that they develop new products for completely new markets.
This is due to the fact that innovations of a more transformational nature require a greater amount of time and various technical validations to be implemented, which, added to the intrinsic characteristics of the industry in relation to high risk and capital intensity, configure a more adverse scenario for its development.
High Percentage of Companies Carry out R&D Activities
Within the technical skills, there are a high percentage of supplier companies that work with R&D laboratories (44%). There are also a large percentage of companies with capacities for prototyping and piloting activities (35%). These are not necessarily internal but also consider external links that exist with entities specialized in these areas. Finally, an element that is not less important is that 27% of the pool declared that they do not have technical competencies to develop innovation.
High Alignment, but Low Innovation Results
The study generated a combined analysis of the strategic alignment for innovation, as well as of the skills and results of innovation. From this, it was concluded that there is a great strategic alignment around the importance and vision of innovation, however, there are still gaps around the technical capabilities(27% declare that they do not have the skills) and the results of innovation.
The Technological Solutions Marketed Are Focused on Sensorization and IoT
Regarding the technological solutions offered by mining suppliers today, those based on sensorization and IoT stand out (16%). This is followed by solutions based on information cloud computing trends (12%) and automation and robotics (12%).
Innovation Focused on Business, Process and Customer Experience
Suppliers indicate that the main focuses of innovation are in internal processes (48%), revenue seeking through business model (48%) and improving customer experience (35%).
The focus on innovation in the development of new products and product performance is comparatively lower (27% and 24%, respectively). This shows that the strategy of supplier companies is mostly associated to improving their internal processes in terms of efficiency and performance around the customer. They also consider a constant search for new sources of income by diversifying their current matrix of products they offer the market.
The Challenge of Smart Mining
Regarding the challenges, the supplier companies are commercializing solutions transversally based on sensorization and IoT technologies for smart mining (79%). To a lesser extent, these types of solutions are marketed for the challenges of environmental impact (46%), occupational safety (50%), energy efficiency (52%), reduced water consumption (40%) and tailings (23%).
In relation to the challenges of open pit-mining, suppliers are marketing technological solutions based on sensorization and IoT (47%), machine learning (56%) and cloud computing (41%). The commercialization of solutions based on information clouds (21%) and big data (28%) to address the challenges of community management also stands out.
Green Mining: Digital Transformation, Automation, Robotics, and Digital Twins
With respect to the crossover of technological solutions that are being developed based on the challenges of mining and that will be addressed in the medium term by the supplier companies, it has been found that, for those with a focus on green mining, solutions are being developed based on trends in digital transformation (27%), automation and robotics (23%), and digital twins (25%).
