Is the Mining Sector Complacent and Lacking Ambition to Innovate?

Complacency, aversion to change, and a lack of appetite for innovation are threatening the future of the mining sector. In a recent meeting with industry leaders, I heard a provocative comment: “This will only change when Elon Musk buys a mine,” followed by laughter and agreement. In another meeting about innovation and energy transition, a key supplier in the sector said: “Our biggest challenge is not having a better product than the competition, it’s overcoming the complacency and lack of ambition among the sector’s executives.”

Why does this resignation and lack of ambitious strategies persist in the mining sector? Two decades after the beginning of the largest commodities boom of the industrial era, the sector faces new challenges and opportunities:

• Increasing demand related to the decarbonization of the economy
• Societal opposition to mining activities
• More complex geological resources
• More challenging operation
• Lengthy and uncertain permitting process
• Difficulty attracting and retaining talent
• Rising operating costs not offset by efficiency gains
• Need for new waste management solutions
• Need to decarbonize mining operations themselves

This doesn’t seem like a scenario that allows for passivity. With 20 years of experience in the sector, I can confirm that the aversion to change is real. We frequently hear: “We won’t be the first to adopt that” or “If it affects my short-term delivery capability, it’s not up for discussion.” As a supplier, I often had to demonstrate where a particular innovation had already been adopted and was operating with established results before making any progress in conversations, regardless of the benefits involved.

The mining sector, being at the beginning of the production chain, is relatively less dependent on upstream suppliers, technology, or innovation. High exposure to risks requires well-defined processes and procedures, strictly followed to avoid fatal accidents. It’s a traditional sector, composed of specialists with many years of experience, and a production process uncertain regarding inputs (mineral resources) and operational characteristics (mine geomechanics). All of this may explain the aversion to any factor that adds complexity and potential volatility to the conventional, known, and controlled process.

However, the current management model doesn’t meet the urgency of the immediate challenges. Reality will be harsh for companies that do not adapt in the coming years. Therefore, it is imperative that companies and executives in the sector focus their efforts on specific actions and initiatives:

????????????? 1.????????? Stimulate a Culture of Innovation: Cultural change must be prioritized, with innovation on the c-suite and board agendas. It’s essential to establish a specialized structure to encourage and develop business cases, responsible for proof of concept, benefits, and best market practices.

????????????? 2.????????? Establish Strategic Relationships with Suppliers: Innovation currently comes primarily in collaboration with suppliers. The traditional procurement model, focused on standardizing proposals, is an obstacle to innovation. Adopting flexible “master service agreement” contracts with strategic suppliers who invest in innovation is fundamental. Creating procurement processes that allow the development of proof of concept, rewarding innovation, is crucial. This work must involve compliance and legal areas.

????????????? 3.????????? Collaborate with Startups and Research Centers: Supporting innovation hubs backed by companies, suppliers, and academia is an effective practice. Sharing practices, adopting open innovation, and accelerating the proof cycle are ways to create the necessary innovation environment and reduce the sector’s traditional resistance.

????????????? 4.????????? Develop Flexible Organizational Structures: Reducing bureaucracy, promoting a more horizontal structure, encouraging multidisciplinary teams, and being more receptive to executives with diverse experiences improves quality and accelerates decision-making. Flexible organizational structures are also more attractive to talent and help retain high-potential professionals.

????????????? 5.????????? Establish and Communicate a Vision for Key Transformational Topics in the Industry: Responses to transformations vary. Open pit and underground operations, as well as those with different life-of-mine (LOM) expectations, will have very different decarbonization strategies. It’s crucial to establish and clearly communicate strategies for your company and your team. It's not necessary to have the most aggressive and innovative strategy in the sector, but it's essential to show your stakeholders that there is a strategy aligned with your reality and society's demands.

By implementing these practices, a mining company can better position itself to face future challenges robustly, increasing its competitiveness in the global market. With this approach, the mining sector will not only survive future challenges but also lead the necessary transformation.