As an editor, I generally learn about new mining technologies and solutions when they land in my inbox as a press release or, if I’m lucky, a site visit in advance of the launch.
I imagine it’s the same for most of the mining workforce and its wider business ecosystem. Unless you’re directly involved in the inception, testing and purchasing of these innovations, very rarely do we get to peep behind the curtain and learn about the processes and mechanisms by which they come to fruition.
But, unless we have a complete picture of mining innovation, how can we accurately talk about how to improve and accelerate it?
Product development is a topic that’s been on my wish list to cover for a while. I just needed the right person to walk me through it. That person was NORCAT CEO and business development guru, Don Duval.
“First of all, it’s important that we set the context for product development in mining,” he told me when we spoke over Zoom in mid-May. “If we look at the macro market perspective…
“Historically, the largest mining companies prided themselves on having very sophisticated in-house R&D groups charged with innovating and building new products as a competitive differentiator.
“Over the past 20-30 years, many of those groups have been divested, giving rise to a vibrant supply service-tech ecosystem. That’s important because, most mining solutions – whether tangible products or software – are now being developed by an outsourced ecosystem of startups.
“These small-medium enterprises (SMEs) rely upon a strong buy-side of the equation to see a pathway for product development and market uptake. And currently, it’s a lengthy sales cycle.
“According to my research, the tenure from point of initial contact to first sale or reference sale averages between 18-24 months of a nurtured relationship for an emerging company.”
The move from build to buy
Duval explained that this is due to a couple of variables.
First, the shift in innovation model from build to buy means that the process of validating and verifying a proof of concept, through to testing and deployment in a production environment with an ecosystem of SMEs is still evolving in most mining companies.
Second, as part of the product development pathway, emerging companies must validate the market need, understand product market timing, and be prepared to weather the sales cycle from a business perspective.
“It’s really hard,” said Duval. “Companies must ensure that they have the liquidity and cash flow to fund, not only the product development, but also put proverbial food on the table while they find that first important reference customer.
“When it comes to the operational deployment of new technologies in mining, there’s a strong appetite to ensure that the technology has been de-risked. As part of that, the financial stability of the vendor must be such that it will last long enough (at least) to maintain and support the product for its deployed lifetime.”
An additional layer of complexity is that, in mining, as in the medical tech, agriculture and manufacturing industries, there is a decentralised regulatory environment.
That means that, while a company, whether emerging or mature, may ensure that their product adheres to corporate, sub-national and national regulatory requirements for one application in one market, those requirements can be vastly different in another province, state or country.
This can add significant time and complexity to the sales cycle and increase the amount of capital that needs to be raised (dilutive or non-dilutive) to support product development, adoption and sustain the business.
“We see this in a number of legacy industries that have migrated to outsourced innovation models and that are heavily rooted in intellectual property (IP) acquisition or engagement to solve complex problems within their respective organisations,” Duval explained.
“But let’s be clear: the mining industry does not have an innovation problem; it has a technology adoption problem.
“In my opinion, the biggest opportunity to expedite technology adoption for the global mining industry, is to refine how to verify and validate emerging technologies quickly and ensure the integration pathways for those technologies are well understood and aligned to the broader innovation maturity model as defined by the mining company.”
He continued: “For integrators – engineering firms and business consultants, like Hatch, Worley, EY and Accenture, for instance – a lot of their work centres on understanding the resource requirements and integration pathways for new solutions and validating how emerging technologies could be stitched into mining operations and organisations.
“It can be unbelievably complex and time consuming to scout and scan hundreds of potential technologies from vendors trying to sell you stuff, to whittle them down and work out how they might integrate into an operation and talk to the incumbent equipment and software.”
Duval explained that the product development pathway for large original equipment manufacturers (OEMs) that have a robust and credible reputation of building and selling products into the mining industry, will likely be more streamlined than that of an SME.
This is because they will likely have long-standing relationships with large mine operators that can be leveraged, experienced teams and a very sophisticated pathway to develop proof of concept prototypes, as well as their own facilities to help validate the solution.
In fact, many large OEMs own and operate their own test mines purely for the purpose of having a live environment in which to test and tweak their latest creations.
In contrast, most SMEs, by virtue of being small, have less established product development pathways and less brand credibility (though there are exceptions). They need to demonstrate to a would-be buyer that the technology works as claimed.
For one company alone, that’s not a massive challenge but, when we consider that there are hundreds of SMEs knocking on the doors of mining companies every day and asking for their attention, it can be very hard to secure an on-site testing opportunity.
Having noticed this challenge, NORCAT set up its Underground Centre in Sudbury, Ontario, in 2013. Although this asset is an operational underground nickel mine with a supporting off-take agreement with Glencore, its primary purpose is not production.
This environment is focused on providing a ‘place’ for SMEs of all shapes and sizes, including some well-known names, to develop, install and validate their newest technologies in a production environment and, importantly, showcase them to prospective buyers.
“By default, for many of our clients, we become their all-important first reference customer for their company or product, or both in many instances,” said Duval. “We help to install the product in the Underground Centre and support the vendor for the duration they choose to develop, test, and/or demonstrate their technology.”
“The SME can then make adjustments and improvements based on their commercialisation pathway or feedback from the industry.
“Our clients conduct their own verification and validation that the product works, and they can build a story around it to help get the attention of mine operators both large and small. They can then walk in the door of would-be customers and say ‘of course we have this deployed in an operating mine. Come to the Centre to see it and touch it’.
“We have validated through research that this ability to engage with the product in an operating mine environment does expedite the potential of SMEs to get their product into market and into production-scale mining operations.”
Clarity, communication, collaboration
My next question for Duval was: what can the industry and its partners do to accelerate product development and the subsequent adoption of new solutions? But, given his previous answer, we now know that access to testing in a production environment is critical.
“Is there anything else?” I asked.
“Yes,” he replied. “The feedback that we hear from the supply-service tech ecosystem is that more clarity and communication from mine operators around their innovation priorities, themes and timelines as well as their appetite for risk in deploying new technologies would be helpful.
“Today, a lot of that insight is proprietary and mine operators want to share it only with a very select audience. But, if the industry had a more sophisticated approach to define what operators want and when, then their prospective supplier base could better determine the market fit and timing of their solutions, as well as how to stitch them into the broader technology landscape.”
He added that the growth of operator-led innovation forums or challenges which bring together a select audience, or make public, a specific challenge that an operator or group of operators would like solved, has been incredibly helpful in addressing this.
“That’s a really positive trend that we’ve seen in the last 10 years, and I think that movement is contributing to the on-going transformation of mining innovation,” he said. “You ain’t seen nothing yet in terms of the volume of these types of activities.
“It further inspires the capital markets too, mostly on the private side, including angel/venture capital and junior private equity. For these investors, seeing a meaningful pathway to market and a strong buy-side equation is facilitating an increasing number of investments in tech ventures primarily selling into the mining industry.
“Not ten years ago, it was challenging to find venture capital keen to invest in start-ups primarily focused on selling into the mining industry. Today, that has changed dramatically.”
Given the decentralised regulatory model for mining technologies and solutions, tools such as advanced simulation, rapid prototyping and testing in virtual reality, could also prove useful in speeding the test-improve-iterate part of the process, ultimately allowing OEMs to bring new solutions to market faster.
“The notion of spending a lot of time, effort and money, especially with tangible IP, to get to the proof of concept and realise that you’ve missed the mark, is really disheartening and companies often go bankrupt because they haven’t sought incremental feedback on the development path,” said Duval.
“There are channels to do that; with subject matter experts, with would-be buyers if you can get their attention, and now with organisations like NORCAT.
“It’s really important to gain incremental feedback on an ongoing basis, to course correct and make adjustments sooner, so that companies can be confident that their solution hits the mark when it finally goes to market.”
You ain’t seen nothing yet!
Final question. “How do you see mining innovation as we know it evolving over the next decade?” I asked.
“In the spirit of an outsourced innovation model, the buy side of the equation is only going to get stronger,” said Duval.
“I think we’ll see more pressure from mine shareholders on operators to figure out ways to be more productive, more environmentally sound and sustainable, and to be more creative. A lot of that will be rooted in the identification and subsequent procurement, adoption and deployment of emerging technologies.
“As innovation continues to grow in priority, I think we’ll see an ever-vibrant supply service-tech ecosystem, and unbelievable amounts of capital being made available via equity or non-dilutive grants in these vibrant clusters around the world, including in Canada, Australia, Chile and perhaps Africa… any jurisdiction that has a meaningful base of mine operators that can root a cluster of supply-service tech companies.
“We’ll see more AI and machine learning-based solutions deployed which will attract a huge amount of talent, because the capital will be available to recruit and retain those people. And there will be a growing role for entities like NORCAT which enable and expedite technology development, commercialisation and adoption.
“More specifically, in terms of products, I think we’ll see huge investments in electrification, ore characterisation, new processing and beneficiation technologies, biotechnology, remote autonomous infrastructure, communication infrastructure… and the list goes on and on.
“We’re seeing all of this right now on the ground at the NORCAT Underground Centre and we’ve only just seen the tip of the iceberg.”