JOHANNESBURG (miningweekly.com) – To remain globally competitive, Australian miners have to go beyond the basics and incorporate a structured approach to innovation across their operations, as the local mining sector is running out of ways to cut costs and improve efficiency, a new study by Deloitte has warned.

Titled ‘Innovation in Mining: Australia 2016’, the study suggests that mining companies must embrace innovation or risk causing lasting damage to the industry.

“The mining sector has been through an intense period characterised by commodity price volatility, a slowdown in Chinese growth, difficulty in accessing capital, competition for capital from the renewables sector, and the need to address serious environmental concerns,” Deloitte national mining leader Nicki Ivory said on Monday.

The study features the findings of a survey and a series of interviews with mining majors, juniors and services companies around a number of areas, including assessing current innovation efforts, the role of innovation in mining and identifying where innovation in different areas can unearth greater business value.

Deloitte consulting mining leader David Cormack added that to move from core innovation, or optimising existing products for existing customers, to successfully developing more transformational innovation involving breakthroughs and inventions, mining companies would have to push beyond the current focus on product innovation and expand their view of where and how they could innovate.

“To drive higher levels of productivity and growth, mining companies must mobilise their innovation efforts beyond the technical research and development groups and into the wider organisation.”

The view towards innovation in the mining industry was overwhelmingly positive and companies were unanimous in their belief innovation was key to future success and growth. However, most still favoured pursuing operational excellence, continuous improvement and cost-reduction over investing in truly transformative innovation.

“Some companies are reluctant to take on additional risk associated with innovation, especially if it could impact cash flow or their licence to operate. A minor operational delay caused by piloting a new process or technology innovation could prove crippling, perpetuating the ‘it’s good to be second’ view when it comes to doing things differently,” Cormack noted.

In addition, the mining sector’s brutal cost-cutting measures implemented during the downturn and fears of jeopardising the security of intellectual property remained a challenge. For many mining companies this had left collaboration, both internally and externally, sporadic at best.

Cormack added that it could be “tempting” to think of innovation solely in terms of products and technologies. “It is now widely accepted that exponential technologies – big data, the Internet of Things, three-dimensional printing, wearables – will disrupt how most sectors operate.

“Nonetheless, dealing with this disruption, along with increasing environmental and community concerns, will require a broader, more structured approach to innovation whether . . . seeking to develop a new technology, process or business model, or to find new applications for existing ones,” he said.