For many years Australia’s mining industry has been a leading contributor to economic growth and wealth. 

Although the industry’s influence over the economy is not as strong as it was during the boom, it is still an integral part of what makes Australia strong.

Despite the impact the mining industry has had on the national economy, leading innovation researcher State of Play Founder Graeme Stanway said the Australian mining industry was not as integrated in the global mining services industry as its size suggested it should be.

“There are definite opportunities for this to happen, such as leveraging our environmental brand and expertise or building on our specialised mining software leadership, but we need to create a mindset of building a mining industry that will outlive our resources,” he said.

Contributing to Mr Stanway’s belief is the rapid growth of the Chinese and Indian markets. According to Mr Stanway, the economies of these countries are growing at three to four times that of the developed world.

He said the growth of the Indian and Chinese economies presented a huge opportunity for the Australian mining industry, but the industry’s mentality needed to change to capitalise.

“Traditionally, Australia has struggled to sell services to these countries because of cultural unfamiliarity and risk aversion,” Mr Stanway said.

“Most of Australia’s outbound investment goes to western economies, which leaves us at risk of being left behind as the Asian markets continue to progress.”

One of the ways Mr Stanway said Australia could capitalise on these markets was to integrate with them at a service provider level.

“Service businesses may need to change mindset from competing with, to supporting Asian businesses,” he said.

The importance of China to the global mining industry has been undisputed for well over a decade, although its nature has changed over that time. Initially, China was seen mostly as a source of demand before turning into one of massive foreign direct investment in mining projects across Africa, South America, Canada, Australia and South-East Asia.

“Going forward, it appears very likely the increasingly technology-focused Chinese (and Indian) services industries might be their most lasting impact on the global mining industry,” Mr Stanway said.

“We have been told by a mining CEO the Chinese have the ability to build a mine in one-third of the time and at half the cost of their Australian competitors, we need this integration to enhance our industry.”

Understanding is the key It is a truism that needs drive innovation, and the environmental expectations of Australia’s community have driven substantial innovation in creating a well-established capability in managing environmental impacts.

Another of the reasons for Australia’s innovation success is the prevalence of big open cut ore bodies in remote areas with environmentally aware communities.

“Australia’s mining industry – particularly the bulk, open pit sector – is tailored towards reducing operating costs due to the high cost base of that economy,” Mr Stanway said.

Although this has made Australia a world leader in a number of areas, such as remote operations and operating large-scale bulk value chains at low cost, it has struggled to adapt these innovations to other less developed markets around the world, according to Mr Stanway.

He said it was this lack of adaptation to, and understanding of, different market conditions that was holding Australia back from being an innovation powerhouse.

“Australia does not need to be good at everything to thrive in export markets, but it does need to understand where its advantages lie and collectively and energetically market Australia in these areas,” he said.

Once again it is the Indian and Chinese markets that are showing the way forward on this front, according to Mr Stanway. They were adapting their skillsets and innovative abilities to adjust to the environment they were working in, rather than just replicating a method that had previously been successful.

“Indian businesses are building a latent export capability in managing community impact innovatively, while Chinese businesses are experiencing success exporting capital-light engineering designs to capital-scarce regions,” he said.

“These markets are no longer just copying, they are innovating for their own needs.”

Where to from here?

The mindset of the Australian mining industry needs to change in order for us to catch up to other countries on global innovation, according to Mr Stanway.

“It will need to move beyond a commodity/seller mindset and culture to a more demand-led, responsive approach,” he said.

In making this transition, companies need to understand a number of different factors about their own businesses, including how they manage risk, their competitive positioning, investment time frames, partnerships and the challenge of remaining externally focused.

“This final point is important,” Mr Stanway said. “The ability to remain hardwired into long-term trends impacting customers is a key driver of business value. The more companies can achieve this, the more they will be ahead of the game.”

Much of this ability is connected to policy. Mr Stanway said policy could have a real impact in furthering industry aspirations.

“It has been a criticism of Australia’s approach to India, for example, that there is no coherent, collective competition strategy, while other countries have successfully been able to do so.”

Israel provides a well-known example of how domestic government policy can impact export outcomes through incentivising and funding the development of a globally significant start-up industry.

“Focused on defence and agriculture, their policy has had tremendous commercial success beyond Israel,” Mr Stanway said.

“If the Australian mining industry was to replicate a similar policy it would definitely have the potential to outlive its mineral resources in the same way Germany’s mining industry has done.”