Australian Approaches to Innovation and Transitioning to a Low - PowerPoint PPT Presentation

Australian Approaches to Innovation and Transitioning to a Low Carbon Economy Lessons for Quebec Andrew Pickford, Adjunct Research Fellow, University of Western Australia Mark Stickells, Director, Business Development and Innovation, University of Western Australia

Overview  Natural Resources and Innovation  Australia’s Energy System  Case study: Western Australia Energy  Case study: Global Mining Trends  Innovation drivers

Le réseau énergétique en Australie occidentale  Population  2.5-million  Density of around one person per square kilometre  Predominantly located in south west corner  Electricity  Islanded electricity system called the South West Interconnected System  Peak demand in 2013-14 of 3,702 megawatts.  Approximately 6,000 megawatts of installed power generation capacity  Gas: 3,400 megawatts  Coal: 2,000 megawatts  Wind: 500 megawatts

Mining in the 21st Century Image source - http://www.riotinto.com/documents/Mine_of_The_Future_Brochure.pdf

Innovation: State of Play Founded in 2012 Inaugural survey CEO Insights Cross-industry report 55+ responses across Australia Interview series with 15 CEOs and Interview series with CEOs across the Chairmen across the globe resources, agriculture, health, infrastructure, defence, and arts, culture & tourism industries to compare and contrast the state of innovation and identify share opportunities 2012 2014 2015 2016 2017 Industry wide survey Full ecosystem survey 330+ responses across the globe 800+ responses Launch in early 2017 ‘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.’ MINING CEO

We are at an incipient point We asked: Which of the following macro trends will have the biggest impact on mining over the next 15 years? ‘The Market, Moore’s Law and Mother Nature are the three biggest forces shaping the world today.’ Thomas Friedman 62% 59% 37% 26% 22% 21% 15% 14% 10% 6% Technological Environmental Technically Asian (inc. Global Transparency Geopolitical Ageing Income Urbanisation change and pressures aware India) economic integration and regulation tensions population inequality disruption generation development entering the workforce

Different regions have different needs We asked: Where in the value chain do you see the greatest value over the next 15 years? Exploration Environment Extraction Processing End-to-end optimisation Extraction

Society’s expectations are increasing We asked: Why is mining perceived negatively in society? 76% 46% 31% High profile accidents Community impact Environmental impact

Innovation is more critical than ever before Companies that claim innovation is critical to their company’s survival in the long term 37% 41% 62% 2013 2015 2017

Being a follower is not an option We asked : What is your company’s approach, and how successful have you been introducing new innovations into your business? ½ ½ Less ss than of minin ning c compa panie ies describe ibe them hemselv elves as leader ers, c compared t d to f follo lower ers

Ecosystem health drives innovation Actions and relationships that drive innovation in the ecosystem Government a and c community Most 1 2 3 important 57% 48% relationship Ser ervice ce I Industry Res esearch ch Miner ers Biggest driver of innovation Applied Larger service 8 Tier 1 research companies 4 Mining companies Governments Explorers 5 7 4 6 10 should facilitate should involve collaboration suppliers in their 5 innovation process Fundamental Smaller services platforms 9 Tier 2/3 research companies 3rd most 11 12 important 13 33% 24% relationship Funding 14 view CEOs as of services drivers of companies say that innovation in all employees drive mining companies innovation 2 nd most important relationship

Diversity could be the answer Greatest potential for technological disruption EXTRACTION 61% 39% NEW BUSINESS MODEL 40% 60%

Innovation Drivers

Thank you

The mining industry is marked by cyclicality Copper Iron ore Gold Crude oil WHAT NEXT? 8x 8x 7x 7x 6x 6x 5x 5x 4x 4x 3x 3x 2x 2x 1x 1x Period 1 Period 2 Period 3 Period 4 The rise of Japan The post-Japan reversion and plateau The rise of China The post-China plateau Note: Prices listed in chart are 2016 World Bank forecasts published on July 26 th 2016

Systemic design is required for sustained success We asked: How should investment in innovation achieve the best overall social, environmental and economic development outcomes? Companies should focus on 3 key areas of outside the fence investment for the highest return: Invest in local services and 37% infrastructure Focus on low footprint design 30%

The risk of technological disruption is real Areas most subject to disruption over the next 15 years 37% 26% 22% 21% 20% 16% 15% 15% 13% 12% 12% 12% 11% 11% 11% 10% 6% 5% 4% 4% 4% 4% 3% 3% 3% 0% 0% Sensing Artificial Robotics and Biological Advanced Manufacturing Energy Integrated and Communications and data intelligence, automation and chemical materials techniques technologies continuous technology and decision engineering processes connectedness support and analytics 2013 2017 2030

Business leaders shape this culture We asked: Which underlying technology areas receive the most innovation focus in your company? Communicate success stories All – it is core to our culture Demonstrated leadership Chief executive officer Public recognition Business unit heads Individual incentives Head of technology We don’t Head of operations Set stretch goals Frontline leaders (eg. Supervisors) Career promotions The board Create a burning platform Head of strategy Employee share schemes Head of information technology Company-wide bonuses 0% 10% 20% 30% 0% 10% 20% 30%

Key skills are required to foster acceptance We asked: When implementation programmes of new innovations fail, what is generally the reason? Change management 24% Project complexity 11% Budget 10% Impatience 9% “Many lead operators hate Unforeseen impacts 9% automation. They struggle Insufficient benefits 9% to imagine a world where they are not leading large Technology integration 8% groups of people” Technology maturity 8% Skills 6% Schedule 3% Partner relationships 2% 0% 5% 10% 15% 20% 25% 30%

A cultural shift to embrace innovation is required A shift in industry culture as well as new skills are required to leverage technological change Technological change and Resistance to change and One in five respondents disruption (robotics, skill availability are reported industry automation, and AI) are considered the greatest culture as the biggest expected to impact people challenge to impediment to innovation in mining over implementing technologies innovation in mining the next 15 years

2017 Mining Industry Survey Initial Insights Supported by: