ARTICLE IN PRESS

Resources Policy 31 (2006) 137145

www.elsevier.com/locate/resourpol

Innovation in the minerals industry: Australia in a global context

Garrett Upstill, Peter Hall
School of Business, The University of New South Wales (ADFA Campus), Canberra, Australia
Received 21 January 2006; received in revised form 9 December 2006; accepted 22 December 2006

Abstract

The pattern of innovation in the global minerals industry is changing as the industry becomes increasingly globalised. In this paper, we
look at the structure of innovation in the industry and the drivers of change. We rst consider the broad international trends and then
examine these more closely with special reference to the Australian industry. Issues addressed include the apparent decline in corporate
research and development spending, changing patterns in research collaboration and outsourcing, and the uptake of information and
communication technologies in the industry. We also look at the potential implications of these trends for step-change technological
developments and at the role of technological innovation in the future development of the industry.
r 2007 Elsevier Ltd. All rights reserved.

Keywords: Innovation; Research and development; Technology; Global minerals industry; Productivity

Introduction and communication technology (ICT), and at a mooted

The pattern of technological innovation in the minerals
industry is changing as the industry becomes increasingly
globalised. The lowering of regulatory barriers and the
growth of trade and international investment have led to
major changes in the industry as mergers and takeovers
reduce the number of big players and change traditional
market structures. Many companies, both large and small,
now operate in new locations and new markets across the
globe.
In this paper, we look at innovation in this changing
environment. We analyse the conventional idea of minerals
as a low-tech, low-innovation industry, and discuss the way
technological innovation contributes to process improve-
ment and improved productivity in the industry. We then
offer an overview of the main innovation-related trends in
the industry, including a reported reduction in corporate
research and development (R&D) funding, before examin-
ing these trends more closely in the context of the
Australian minerals industry. In particular we look at
trends in R&D expenditures, at the shift toward more
collaborative innovation, at the uptake of new information
Corresponding author. Tel.: +61 2 6288 8825; fax: +61 2 6268 8450.
E-mail address: g.upstill@adfa.edu.au (G. Upstill).
downturn in large, step-change innovation projects.
The minerals industry and innovation
The minerals industry
The minerals industry may usefully be dened to
embrace exploration for, and extraction and primary
processing of, minerals, including processing up to the
rst pouring of the rened metals (Minerals Council of
Australia, 2004). In a denition that we use in this paper,
the industry then includes:
 explorationlocating an ore body, deposit delineation,
and prospect evaluation;
 extractionremoving it from the ground, by a variety of
methods (e.g. underground, open cut, alluvial);
 processingisolation of the ore and preparation for
metal production.
The denitition excludes the activities of the fabricated
metal products and oil, gas and steel industries. Larger
minerals companies frequently have vertically integrated
operations across the industry value chain, with smaller
companies often restricted to just parts of the chain.

0301-4207/$ - see front matter r 2007 Elsevier Ltd. All rights reserved.
doi:10.1016/j.resourpol.2006.12.002
 ARTICLE IN PRESS
138 G. Upstill, P. Hall / Resources Policy 31 (2006) 137145
The minerals industry is often considered, misleadingly,
as a low-tech and, by inference, a low-innovation industry.
This is because the conventional indicator used to decide
whether an industry is high, medium or low tech in the
innovation literature is R&D intensity, that is industry
expenditure on R&D expressed as a proportion of industry
turnover. By this measure the industry falls in the low-tech
category: the research intensities for the Basic Metals and
Other Metallic Mineral Products industries in 1997 were
0.7% and 0.9%, respectively (OECD, 1999), well below
those of other industries such as pharmaceuticals and
information processing.
But this approach can lead to misdiagnosis and a failure
to appreciate the role of technology and innovation in the
industry. The simple research-intensity approach fails to
consider non-R&D expenditures, for example, on design
activities, engineering development and experimentation,
or exploration of markets for new products (Smith, 2004).
In addition, it understates or ignores mineral exploration
activities, which involve extensive use of high-tech equip-
ment and often innovative approaches: in 2006 exploration
expenditures for commercial non-ferrous metals were
estimated at US$7.5 billion (Metals Economics Group,
2006). Moreover, simple R&D measures ignore the R&D
which is embodied in capital goods and intermediate
inputs, that is the contribution of new technology from
other industries to the mineral industry. One way this may
be captured is to use an alternative indicator, namely the
ratio of acquired R&D intensity (R&D embodied in capital
and intermediate goods) to simple R&D intensity. The
Basic Metals and Other Metallic Mineral Products sectors
rank highest of all industry sectors by this measure, with
ratios of 2.85 and 2.89 (OECD, 1999; Smith, 2004).
It is also easy to overlook the innovativeness of mature
industries where technologies and market conditions
change relatively slowly (von Tunzelmann and Acha,
2004). For Pavitt (1984), who recognised that innovation
processes vary according to industry, the minerals industry
is best understood as a scale-intensive industry engaged in
innovation, with its own characteristics. In any case, every
industry offers scope for innovation, whether new or
mature. As Porter (1999) notes all industries today are
high tech, all industries use information technology, new
materials, new kinds of technology to dramatically improve
the way they do things. There are no low-technology
industries; there are only low-technology companies:
companies that have not yet woken up to the potential of
technology to transform what they do.
Technological innovation
Technological innovation contributes at each stage of
the value-adding chain within the minerals industry,
namely mineral exploration, extraction, and processing,
as well as to broader environment issues related to the
industry.
Mineral exploration has become more difcult over the
years and requires increasingly sophisticated technology.
Most of the easily discovered outcropping surface deposits
have been found and techniques are now needed that are
tailored to different geological terrains and that can look
under deep cover. Australia, for example, is a deeply
weathered continent with the bedrock often covered by a
heavy layer of weathered inhomogeneous rubble, or
regolith. Increasingly exploration depends on highly
sensitive equipment and novel techniques drawing on
disciplines such as geophysics and geochemistry.
The extraction process depends on the mining equipment
and techniques employed including, for example, drilling,
blasting, cutting, excavating, loading and hauling, as well
as mining logistics, equipment monitoring and diagnostics.
Efciency enhancement in each of these benets from
technological innovation, as do remote control and
automation techniques, which remove people from mine
sites and improve safety.
In mineral/metal processing, the technology imperative
is to improve the efciency and reliability of processes
employed to recover metals from the ore. Given the high
throughput involved, incremental improvements can make
a big differencefor example, in conveyor belt technology,
or comminution/grinding, or furnace design and perfor-
mance (computational uid dynamic modelling). Processes
also need to be optimised to respond to the signature of
individual mineral deposits. Incremental improvement is
characteristic of scale-intensive industries: given the
potential economic advantages of increased scale combined
with the complexity of y production systems the risks of
failure associated with radical but untested changes are
potentially very costly. Process and product technologies
therefore develop incrementally on the basis of earlier
operating experience and improvements in components,
machinery and subsystems (Tidd et al., 2001, p. 113).
Non-incremental mineral and metal process improve-
ments, on the other hand, require newly designed plants
and operations, which are expensive and of high risk.
Signicant practical and nancial risks are involved in
scaling-up processes from laboratory to pilot plant size and
then to full-size plants, and in ruggedising large-scale
processes to be efcient and reliable. The risks are evident
in the number of projects abandoned before commercial
operation. In Australia, recent examples include the A$2
billion, hot briquetted iron project in the Pilbara, Western
Australia and the Australian Magnesium Corporation
smelter in Gladstone, Queensland. Moreover, these step-
change projects often take a long time to enter
commercial operation. For example, HiSmelt, a novel
one-stage process to produce molten pig iron commis-
sioned by RioTinto in Western Australia in 2005, has been
under development since the 1980s. In a review of HiSmelt
and other direct-smelting techniques, Dry and colleagues
note the path from initial concept euphoria to real world
commercial performance is long and difcult, far more
so than one might logically expect. They draw three
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G. Upstill, P. Hall / Resources Policy 31 (2006) 137145
lessons: (i) the time-scale for developing this type of
technology is more like 20 years than 35 years; (ii) for
successful development there is no way of avoiding a large
expensive pilot plant phase; and (iii) if the underlying
motivation is not strategic and strong enough to counter-
balance the risk and costs of the exercise, dont do it (Dry
et al., 2002).
Finally, the environment is also a focus for technological
innovation. Environmental concerns arise, for example, in
relation to mine or plant operations or the rehabilitation of
damaged areas. Mine-site management and process
changes to reduce waste, dust, noise, water and air
pollution, or damage to ora and fauna are also the focus
of research and innovation. More recently concern about
greenhouse gas emissions has driven technology develop-
ment in the coal industry.
Innovation drivers
In a scale-intensive industry like minerals, there is limited
scope for product differentiation and the main driver for
innovation is productivity improvement through increased
process efciency across the value chain.
The long-term growth in productivity is evident in both
the copper and iron ore industries. In the copper industry,
labour productivity has increased at a rate of 3.4% per year
over the past 140 years (Humphreys, 2001); in the iron ore
industry, there has been an average increase in productivity
of 2.5% per year over the past 140 years (Humphreys,
2001). The fall in real unit costs of copper production since
the 1980s reects the closure of high-cost mines, but also
the introduction of new solvent-extraction electro-winning
technologies. Better quality deposits have contributed to
the success of the Chilean copper industry but increased
labour productivity is also attributable to the introduction
and diffusion of new technologies and innovations (Garcia
et al., 2001).
Productivity growth also drives the performance of the
wider mineral industry, as price cycles and slowness to
innovate weed out the weaker rms. While the real prices
of metals have trended down over the longer term (see US
mine production composite index in Fig. 1), falling prices
do not necessarily mean declining prots if output volumes
are rising and unit costs are falling still faster. The
Fig. 1. Composite industrial minerals price index in constant 1997 dollars.
The index combines data for copper, gold, iron ore, lead, and zinc and a
number of industrial mineral commodities (Sullivan et al., 2000).
139
contribution of technological innovation is to push down
unit production costs, for example, through the discovery
of higher quality ore bodies or more reliable and lower cost
extraction and processing techniques.
A second important driver, already mentioned, is meet-
ing environment and social concerns. Increasingly compa-
nies need to attend to environment, public safety, and local
community concerns in order to maintain their licence to
operate in exploration, mining and processing activities.
Concerns about environment and sustainable development
(e.g. Sweeting and Clark, 2000) lie behind industry-wide
efforts to develop cleaner and more energy-efcient
production methods, and low-impact mining and proces-
sing operations.
The changing global industry
Industry trends
The minerals industry has undergone major structural
change as it has become increasingly internationalised over
the past few decades. As Crowson (2006) has noted, both
the demand for minerals and primary metals and their
supply are shaped by global political and economic
developments. The demand for metals, derived from the
demand for metal products, has shifted away from the
mature industrial economies to the newly industrialising
countries of the Pacic Rim, India, China, and Japan.
Prices have uctuated in response to changing balances
between supply and demand, trending downwards from the
early 1970s till the early 2000s, and while prices have picked
up from 2003 they have generally not returned to their
earlier peak in real terms. The location of production has
also changed in response to factors such as depletion of ore
resources, and changing economics of extraction and
processing (Crowson, 2006). While the minerals sector still
accounts for a signicant part of gross national production
in Australia, and in countries such as Canada, South
Africa, and Chile, it has declined in relative importance in
Western Europe and the United States (where it never-
theless remains large in absolute terms). Behind the
changes in location of production and increased offshore
investment and trade has been widespread industry
deregulation. Over one hundred countries have rewritten
their mining laws since 1985 (Humphreys, 2001): for
example, in Chile changes in investment laws in 1990 have
meant foreign mining companies now have the same legal
rights as nationals, with transparent registration processes,
and repatriation of prots. Deregulation has also led to
increased investment and expanded mining operations in
East Asia, South America, Africa, and the former Eastern
bloc.
The globalisation of the industry has been accompanied
by a change in the major players. One estimate is that of
the 50 largest mining companies in 1990 just 28 remained
by 2003 of which nine were state-owned enterprises (La
Nauze and Schodde, 2004) (Despite this there has been a
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140 G. Upstill, P. Hall / Resources Policy 31 (2006) 137145

decrease over the past 30 years in the market concentration

of production in copper, zinc, nickel, and gold mining and
in copper rening (Crowson, 2006, pp. 223)). In Australia,
the two major players are Rio Tinto and BHP-Billiton,
which are both dual listed in Australia and the United
Kingdom. La Nauze and Schodde (2004) argue these
changes are part of a bifurcation of the industry as the
larger companies take over or merge with the mid-sized
companies leaving a long tail of smaller companies. If so,
the implications for innovation are unclear. On the one
hand, it might be expected to lead to increased head-to-
head competition between companies that are rivals in
several markets. On the other hand, it could lead to new Fig. 2. Selected global mineral companies reported R&D expenditures
opportunities for outsourced and independent R&D by the (US$ million: current prices) (Twigge-Molecey, 2004). Reprinted with
permission of the author.
smaller companies, which have opportunities for an
expanded role across the industry.

R&D and innovation

As we have argued, R&D activity is a poor indicator of

the innovation performance of the industry. Nonetheless
trends in R&D expenditure do offer some insight into the
direction of change and the pattern of effort. While there
are denitional problems in getting consistent minerals
R&D data, we note with interest one recent industry
estimate that the global mining industry spends about
US$1.5billion each year on R&D, with 75% (US$1150 m)
being spent in house and 25% (US$350 m) outsourced
(Shaw, 2004).
In the United States, cuts in corporate and public
spending on minerals R&D expenditure have been
reported. A survey by the Rand Corporation (Peterson et
al., 2001) of the US mining industry points to a scaling
down or elimination of R&D operations in the rms within
the industry, and a shift toward technology problem
solving, as well as the extension of brown-eld sites rather
than developing green-elds sites. The changes in the
private sector are reected in a downsizing of public
funding with the abolition in the 1990s of US Bureau of
Mines, the principal source of US federal funding for both
academia and industry. In Western Europe, there are also
reports of reduced corporate and public sector R&D
expenditures (e.g. the closure of the research laboratories
of the UK National Coal Board) as the minerals industry
goes through a period of slower growth. And the reduction
in R&D expenditure may be reected in the decreasing
supply of post-graduate students: a recent report found
that over the past 20 years 20 mining engineering
departments (or 30% of the total) have closed in Australia,
Canada, UK, USA, and one has opened in Chile (Davison,
2004).
The decline in corporate R&D budgets in the industry is
also evident in R&D data drawn from the annual reports
of a number of major mining companies (Twigge-Molecey,
2004), while inter-company comparisons are difcult
because of different jurisdictions and different company
reporting methods. Figs. 2 and 3 point offer support for the
Fig. 3. Major copper producing companies reported R&D expenditures
(US$ million: current prices) (Twigge-Molecey, 2004). Reprinted with
permission of the author.
decline in R&D by the major companies over the past few
yearswith the exception of the aluminium industry in
which the R&D budgets of Alcoa and Alcan have risen.
A number of reasons have been offered for this apparent
trend. One view is that it is a response to the depressed
prices of the mid-1990s: since the pay-off on R&D
expenditure is distant there is a tendency for managements
to see R&D as a cost rather than a long-term investment
and consequently cut expenditure during a period of
economic downturns. Alternatively, R&D expenditures
may not have fallen as much as the published data suggest.
R&D activities have shifted from corporate laboratories to
strategic business units where they are more closely linked
to immediate problems but are less likely to be recorded as
formal R&D. Finally, there may actually have been a long-
term real change in attitudes as the larger companies
reassess the risk and return on R&D in the global industry
and seek alternative ways to achieve productivity growth in
the industry.
Innovation in a global era
With the lowering of international barriers has come
increased globalisation of innovation and technology in the
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G. Upstill, P. Hall / Resources Policy 31 (2006) 137145
minerals industry. The minerals industry satises the three
aspects for globalisation of technology (Archibugi and
Michie, 1995)global exploitation of technology, global
technological collaboration, and global generation of
technology. No longer are large minerals companies
dependent on local knowledge to gain competitive advan-
tage; they are able to access technology and experience
from across the world, and build technology collaborations
with research institutions and companies from home to
exploit overseas mines and markets. The ability to access to
research and technology expertise from around the world
means a wide range of diverse and complementary skills
can be applied to technology challenges.
The trend is typical of contemporary innovation as an
open, highly interactive process (Chesbrough, 2003) and
changes in the organisation of R&D in a new global era.
As Branscomb and Florida (1998) note: Industry is shifting
from the central R&D laboratory to the global R&D
network. In the past, corporations could internalise research
and technology development, but as the sources of
technology have become more decentralised and distributed,
the challenge has become how to manage external sources of
technology. To cope with these changes, corporations are
developing new collaborative relationships, alliances and
partnerships; relying more upon their suppliers, customers
and users as sources of technology; establishing overseas
R&D labs; and increasing their partnerships with univer-
sities and government laboratories (p. 22).
We can see this in the growing incidence of jointly
brokered research involving companies and research
providers from multiple countries. An example is the
Global Mineral Research Alliance (GMRA), which in-
cludes the national agencies CANMET-MMSL (Canada),
CSIR Mining & Technology/Miningtek (South Africa),
and CSIRO Exploration and Mining (Australia) in
conjunction with the National Institute for Occupational
Safety and Health (USA). GMRA offers opportunities for
collaborative research across the range of mineral explora-
tion, extraction, and processing activities. One form of
collaborative research is pre-competitive researchcon-
sortium-based research is not aimed at producing products
but rather solving problems of common concern or
developing technology platforms for future products and
services. Pre-competitive research is organised through the
R&D programmes of mineral industry associations such as
Australian Minerals Industry Research Association Inter-
national (AMIRA International, based in Melbourne),
the Canadian Mineral industry Research Organization
(CAMIRO, Toronto), and the Mineral Industry Research
Organisation (MIRO, Leeds).
Uptake of information and communication technologies
The minerals industry is adept at taking up technology
and innovation from other industries. In recent years, new
information and communication technologies have made
their mark, for example, in satellite and other remote
141
sensing applications in relation to exploration and mining,
and in advanced computational techniques in simulations.
The same technologies have also contributed in the areas of
marketing and internet procurement.
A recent study estimated, for example, $860 m of poten-
tial savings in 2000 through the introduction of e-markets
in the non-ferrous metals markets (International Copper
Study Group, 2000). Another example is the establishment
in February 2000 of the Quadrem Mining and Metals
Procurement Marketplace by Alcan, Alcoa, AngloAmer-
ican, Barrick, Corporacion Nationale de Cobre de Chile,
Companho do Rio Doce, De Beers, Newmont, Noranda,
Phelps Dodge, and WMC, which collectively accounted for
about 60% of the market capitalisation of global mining
industry. Quadrem is an e-procurement organisation that
provides product search, requisitioning, order tracking,
tendering, contract options, and data warehousing. It has
grown rapidly and now connects more than 47,000
suppliers and 700 buyers and handles more than $13
billion in order throughput annually, with transactions
reported to be growing at a cumulative rate of 21% per
month (Quadrem, 2006).
Kuller (2006) notes the underlying benets to the
industry: E-commerce allows companies to manage the
usage, maintenance, and supply of hard assets (machinery,
drills, trucks, etc.) by electronically linking suppliers to the
mining industry into the buyers maintenance management
and ERP systems, automating the parts ordering process
y E-procurement (such as Quadrem) brings economies of
scope to the mining industry across a wide range of
operations from being able to standardise equipment
across a companys operations and benet from the central
procurement of that equipment, from better coordination
of shipping and marketing activities and from being able to
share back-ofce services amongst several operations.
Companies can make the whole add up to more than the
sum of parts, leveraging the entire value chain through
from supplier to customer (p. 3).
The productivity effects of the new technologies are
likely to have been substantial. The nding that US total
factor productivity in the mining industry in the period
19871997 grew at a high rate of 4% a year has been
attributed to the contribution of ICT not just in traditional
areas of exploration and operations but also to integrated
business process systems, shared back-ofce services, and
coordinated marketing and shipping (Humphreys, 2001).
The Australian experience
A closer look at the Australian mineral industry offers
deeper insight into these global trends. The Australian
experience is likely to be similar to that of the global
industrya number of Australian companies are large
international players in the industry with a strong presence
in other markets, and the industry is subject to the same
globalising trends and to the same vortex that affects other
players in the international minerals industry.
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142 G. Upstill, P. Hall / Resources Policy 31 (2006) 137145
Importance of minerals industry in Australia
The minerals industry has been an important part of the
Australian economy since gold was discovered in Victoria
in the 1850s. It has been important to economic develop-
ment and social infrastructure in a number of regions since
then. Mineral exports amounted to A$43billion in 2002/03
or about 90% of Australian mineral production, notably
coal, gold, copper, nickel, aluminium, alumina, and iron
ore. The mineral industry accounts for about 6.5% of
Australias gross domestic product and 29% of its exports
(Minerals Council of Australia, 2004). Australia has the
worlds largest economic demonstrated resources of lead,
mineral sands, nickel, tantalum, uranium, and zinc, and is
in the top six worldwide in terms of economic demon-
strated resources for bauxite, black coal, brown coal,
cobalt, copper, gold, iron ore, lithium, manganese ore, rare
earth oxides, and gem/near gem diamond (Minerals
Council of Australia, 2004). About 16% of the worlds
mineral exploration in 2003 took place in Australia
(Geoscience Australia, 2004).
The pattern of industry change in Australia in the past
decade or so mirrors the global picture. BHP-Billiton and
Rio Tinto have grown to be major international players
and the bulk of mid-capitalisation minerals companies such
as Conzinc Riotinto Australia, Normandy, Mount Isa
Mines, North and Western Mining Corporation (WMC)
have disappeared as a result of takeovers and mergers.
Partly offsetting this trend has been the emergence of new
mid-tier companies such as Oxiana and Zinifex and the
existence of a large number of small-to-medium companies.
The Australian industry has become more internationalised
with investment by overseas mining companies and
investment by the Australian industry in overseas projects
and exploration. In 2000, Australian companies were
involved in at least 105 projects in Africa, 133 projects in
the Asia Pacic and 42 projects in South America.
(Maponga and Maxwell, 2000). In 2003, the larger
Australian mineral companies were reportedly spending
about 36% of their exploration budgets overseas (Minerals
Council of Australia, 2004).
The smaller companies are important in areas such as
minerals exploration and mining services but few, apart
from companies such as the mining software producer
Mincom, maintain large dedicated R&D activities. Mining
exploration continues to be the domain of small or
junior companies which often conduct exploration on
a contract or joint venture basis, that is small companies
joining with major companies from Australia and overseas
to explore leases.
R&D activity
R&D spending by large mineral companies has fallen in
recent yearsfor BHP Billiton the R&D budget fell from
A$221million in 1998/99 to A$60 million in 2002/03 and to
A$43 million in 2004/05, and Rio Tinto from A$84million
in 1998/99 down to A$33million in 2002/03 and to A$22
million in 2004/05 (Intellectual Property Institute of
Australia, 2004). R&D expenditure by the mining industry
overall remained reasonably steady over the 1995/962002/
03 period, despite a downward blip in 1999/00 (ABS, 2005).
In 2004/05, the mineral industry R&D expenditure
(primary mining and extraction processes, rst-stage
treatment of ores and minerals, other mineral resources
but excluding energy resources) was $771million (ABS,
2006a); total government R&D expenditure for the same
industry sector was $97 million (ABS, 2006b). These gures
correspond to 9.1% of total industry R&D expenditure,
and 3.9% of total government R&D expenditure in 2004/
05 (ABS, 2006a, b)
The bulk of R&D is directed toward experimental
development. Just 5% of industry R&D expenditure is
categorised as Basic Research while this accounts for 40%
of government R&D. The balance of industry R&D
spending is 23% Applied Research and 72% Experimental
Development; for government the corresponding gures
are 48% (Applied Research) and 13% (Experimental
Development) (Hogan, 2004).
Industry R&D funding is supported by the federal
governments 125% taxation concession scheme for
minerals companies with eligible R&D expenditures and
by programmes such as the ARC Linkage Grants, as well
as through public funded research agencies. Notable
agencies include Geoscience Australia, which supplies
geo-scientic information for government and industry,
CSIRO (the national research laboratory), and several
Cooperative Research Centres (CRCs) and university-
based centres of excellence.
Importance of collaborative R&D
Opportunities for knowledge pooling and sharing
through collaborative and consortium research have
increased in recent years. This can be seen in CSIROs
collaborative research activities, in several CRC pro-
grammes related to the minerals industry, and in the
research brokering activities which Australian companies
enter with research institutions and other companies. All
these expand the research talent base available to work on
industry projects.
Dodgson and Vandermark (2000a, b) describe the
networking and collaboration in the Australian minerals
industry as a dynamic web, which involves private
research providers, universities CSIRO, CRCs, dedicated
exploration companies, high-tech service providers, equip-
ment suppliers and contractors, government agencies, and
other mineral companies. It enables companies to out-
source technology development, to work with public
research providers and other companies and also to access
technology from abroad. This changes the nature of
technology management for companies; in this new
environment new skills and capabilities are requiredto
scan the international research horizons for the best people
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G. Upstill, P. Hall / Resources Policy 31 (2006) 137145
and teams available, to design mechanisms in which they
can contribute to in-house research, and to transfer
technology efciently within and across borders.
The principal public research providers are CSIRO, the
CRC programme and a number of university-based
mineral research centres. CSIRO is Australias largest
public research organisation and supports the industry
through its divisions of minerals, exploration and mining,
and energy technology; it manages a portfolio of projects
across a range of exploration, extraction, processing, and
related environment projects in excess of $80 million per
year, with about 40% of its funding coming from contract
or collaborative funded research (CSIRO, 2006). CRC
programmes pertaining to the mineral industry are the
CRC Mining, the Parker CRC for Integrated Hydrome-
tallurgy Solutions, the CRC for Landscape Environments
and Mineral Exploration, the CRC for Predictive Mineral
Discovery, the CRC for Sustainable Resource Processing,
and CRC for Coal in Sustainable Development, and the
CRC for Clean Power from Lignite. These are joint
ventures typically involving several private sector compa-
nies, and one or more university or public research agency
such as CSIRO, which implement a collaborative research
programme based on funding from the federal government
for with supplementary funding from other parties
involved. There are several university-based mineral
research centres, prominent among which are the Julius
Krutschnitt Mineral Research Centre (JKMRC) in
Queensland, the Ian Wark Research Centre in South
Australia, and the Centre for Ore Deposit Research in
Tasmania, all of which conduct contract research and
consulting for the industry. A recent addition is the
Australian Mineral Science Research Institute, which
brings together a number of Australian university research
centres.
Industry-funded research alliances are another impor-
tant element in the national research infrastructure for the
minerals industry. Notable here are AMIRA International,
the Australian Coal Association Research Program
(ACARP) and the Australian Centre for Mining and
Environmental Research (ACMER). They operate pre-
competitive research programmes directed toward new
methods, tools, and technology for the industry. AMIRA
International exemplies this approach; it is funded
exclusively by its industry members and operates research
programmes in exploration, mining, and processing.
AMIRA International operates a A$40 million programme
of about 60 projects, with an annual budget of about
A$10million. The projects each involve a suite of mineral
company sponsors, which participate in and jointly oversee
the research. Research teams are drawn from the various
research providers such as CSIRO, the CRCs, and the
JKMRC as research providers. In a notable change
reecting the global nature of the industry and the
importance of collaborative research AMIRA became
international in 1998. About one-third of its 67 members
are Australian companies, one-third are overseas compa-
143
nies, and one-third are multinationals. The research teams
also involve non-Australian research institutions: for
example, the long-standing AMIRA P9N project on
comminution and otation involves researchers from
McGill University, the University of Cape Town as well
as the JKMRC and includes among its sponsors companies
of Australian, Canadian, South African, Chilean, US,
Swiss, Finnish, German, and Swiss origin.
Uptake of information and communication technologies
The adoption of information and communication
technologies has led to innovation and productivity
improvement in the Australian industry beyond the areas
that usually feel the impact of R&D and technology
management. The company WMC (Foley, 2003) illustrates
this in its experience with marketing. Following success in
the electronic management of production and stock
control, it introduced from 1999 a cobalt open sale system
website, then a nickel internet marketing system, a copper
sales information system (CopperSIS), and an internet
tendering Site. The BHP Steel Division also implemented a
far reaching ecommerce strategy during the 1990s, transi-
tioning from trialling an electronic data interchange, to
installation of an electronic trading system to an internet-
based business trading system in a process which has
generated major efciencies for the company and for
suppliers (Chan, 2003). Both WMC and BHP-Billiton were
founding members of the metals and mining procurement
organisation, Quadrem.
Step-change innovation activities
Step-change technologies transform the industry over
time and may yield major spin-off benets. But they are
generally technologies with a long gestation period and are
frequently costly.
As the large mineral companies reduce their R&D
spending, there is a concern that the industrys capacity
for radical innovation is declining.
Two examples of step-change innovation show the
reason for anxiety. The rst is the Jameson cell induced
air otation device invented for recovery of valuable
minerals in the mineral processing plants. The technique,
invented in 1986 by Graeme Jameson at Newcastle NSW
after 21 years of research, now has a commercial value of
over A$500 million per year in coal exports (Allen
Consulting Group, 2003). The second example, from
BHP-Billiton, is gravity gradiometry. This is a technique
which allows high-resolution detection of small variations
in the earths gravity and detection of ore bodies hundreds
of metres below the earths surface. Extremely sophisti-
cated software is needed to detect small changes in the
density of rocks, after subtracting the impact of hills and
valleys and ignoring aircraft motions and then producing
density models of the earth. The BHP-Billiton Falcon
airborne gravity gradiometer, which was launched in 1999,
 ARTICLE IN PRESS
144 G. Upstill, P. Hall / Resources Policy 31 (2006) 137145
is the outcome of a project that had its origins in the early
1990s and technology developed by Lockheed Martin for
the US Navy. It has been employed in airborne surveys on
four continents, including surveys in partnership with most
major mining companies, with junior exploration compa-
nies and government agencies.
The worry is not so much that radical technology
developments are not occurring, but that they will become
less likely in a restrictive corporate R&D funding environ-
ment. The gravity gradiometer is an example of the
breakthrough proprietary technology that can deliver
competitive advantage but also one whose size (A$40mil-
lion) makes it ill-suited to development by rms without
large R&D budgets. Step-change technologies are fre-
quently costly, longer term projects. They are generally less
well suited for development by smaller companies, which
generally cannot afford to bet the company on new
technologies nor are they well suited to collaborative
research, given that they are generally undertaken by
companies to achieve a unique competitive edge. This is
not the case in projects that have wide public-good
payoffs, such as research into geosequestration and clean
coal technologies, which are in a position to receive strong
support from the Australian government (Australian Coal
Association, 2006; CO2CRC, 2006).
The concern that the corporate capacity for radical
development has been diminished was noted recently in an
AMIRA International Annual Report: In our industry
there is widespread demand for ongoing improvement in
mineral processing performancehigher recovery rates,
reduced costs, improved safety and environmental impact.
Over the past 50 years or more improvements in minerals
processing efciency have come in waves. Over the past
decade improvements have been mainly driven by con-
tinuous improvement. Few major ore bodies have been
discovered, few mines have been opened, few smelters or
plants commissioned; instead brown eld expansions and
squeezing more from existing capital has been the order of
the day. There is a need for a quantum leap or step
change in performance through new approaches. We may
be seeing such changes emerging in exploration and mining
but a detailed evaluation of mineral processing operations
is required. These evaluations should lead to entirely new
research programmes that will enable the elimination of
stages because only in this way will we achieve signicant
reduction in capital costs and improved energy efciency
required for future plants (La Nauze, 2002, p. 4).
Conclusions
As it moves into the new century, the minerals industry
faces a suite of challenges calling for major technological
innovation. The challenges include the urgent need to
discover new minerals deposits to replace depleted
resources, requirements for safer and more efcient
methods of mining and processing, and step-change
process improvements in addressing the environmental
impact and social acceptability of large new minerals
operations (Wagner and Fettweis, 2001; Hitzman, 2002).
Technological innovation has an important role to play
in raising productivity through the exploration and
delineation of new and higher grade ore bodies, better
mining and extraction methods, and improved reliability
and quality control in mineral processing. It can also make
contributions in addressing potential barriers to operation,
notably those linked to impacts on the environment and
local populations and ensuring companies are able to
maintain their licence to operate in both new and
established operations.
The international industry has been reshaped in the past
decade as new countries have entered the market and large
companies have restructured to meet new global opportu-
nities. The pattern of innovation effort in the industry also
has changed with a shift to greater collaborative research.
Efciency enhancements are also being sought from the
uptake and diffusion of information and communication
technologies which have improved organisational efciency
in non-technology areas such as administration, sales,
and delivery. One possible outcome of the cutback in
corporate R&D spending is a reduction or delay in the
development of step-change process improvements,
which generally take the form of extended projects
involving large up-front R&D expenditures. These
are generally unsuitable for collaborative development
and often beyond the resource capabilities of smaller
companies.
Overall the changes point to the need for new capabilities
in innovation management to improve existing processes,
tap into the potential of new technologies to improve
efciency all along the industry value chain, and to develop
inter-company and interpersonal links to draw on external
knowledge for innovation. The required skills include
scanning globally for people and technologies, building
cross-organisational teams, managing outsourced and
collaborative research, and exploiting pre-competitive
research alliances to build technologies to be used later
for competitive advantage.
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