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Automation is driving innovation in mining

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Over the past decade, the mining industry has been a driving force behind the Australian economy. 

The growth in demand for Australian minerals and the tripling of commodities prices between 2003 and 2008 have made our economy the envy of other developed nations. 

But is mining an innovative industry? 

The answer is definitely a qualified yes.

The IBM-Melbourne Institute's Innovation Index of Australian Industry measures the rate of innovative activity across 13 key Australian industries. 

It evaluates six dimensions of innovation: R&D intensity, patent intensity, trademark intensity, design intensity, organisational/managerial innovation and productivity.

The recently published fourth edition of the Innovation Index showed overall innovation rising by 6.1 percent from 2007 to 2008, following three years of fairly flat performance. 

Compared to this national average, the mining industry's results were disappointing. 

The mining industry's overall score did not change from 2007 to 2008 and has grown only 23 percent since 2000. However, this overall score masks a more complex picture. 

Mining productivity has fallen considerably since 2000, when the industry was one of the country's most productive - it now lags the all-industry average by 15 per cent. 

Miners have invested heavily in labour and capital to meet booming demand, but these investments have not yet delivered higher levels of productivity overall.

Strong commodity prices have encouraged miners to target more marginal deposits, while the industry suffers from bottlenecks in infrastructure and labour supply.

However, this drop in productivity was compensated by large increases in trademark and design intensity. i.e. the amount invested in the registration of trademarks and patents.

These are likely explained by the massive increases in mining companies' R&D activities over the past decade. R&D intensity more than doubled between 2000 and 2007, although it tapered off in 2008 as companies faced uncertainty in the shadow of the Global Financial Crisis.

After this intensive R&D, mining companies took out patents, trademarks and design registrations as their efforts came to fruition.

A key driver of innovation during this period was the increased focus on the environment and corporate social responsibility.

Carbon emissions have become a particular area of focus.

The results of research in this area that are now starting to emerge will contribute considerable productivity gains as well as beneficial environmental outcomes.

Another driver is Australia's talent pool of engineers and scientists, supported by research groups, universities and government R&D subsidies.

We have bodies such as the Energy Research Alliance, which is a consortium involving Curtin University, the CSIRO and the University of Western Australia, delivering technology solutions to the global industry.

One flagship innovation that has emerged from this period is Rio Tinto's remote operations centre near Perth's domestic airport, which allows the company to remotely operate and optimise assets such as mines, processing plants, ports, power plants and its rail network.

It includes driverless trains to carry iron ore, driverless trucks and remote-controlled intelligent drills.

Innovations like this will become much more common across the mining industry over the next five to ten years. In 2010, IBM opened a Natural Resources Solution Centre in Perth, as part of its commitment to bringing innovation to the mining industry.

As mining companies adopt these innovations, they will achieve efficiencies in exploration, production, supply chains and overall operations to drive the next wave of productivity growth. 

*Kumar Chandrasekaran is a senior leader at IBM's natural resources division.

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