No time like the present for Australia’s mining-tech missionaries

Top image :
Laboratory-scale testwork at one of Australia's mining research centres.
Conference highlights helpful convergence of market forces

Timing, Laing O’Rourke’s Andrew Harris reminded everyone at the (delayed) Energy and Mining Technology Investment Summit in Sydney, is pretty important to successful commercialisation of a new product and ultimately conceiving profitable enterprises. “We built the world’s biggest 3D printer before anybody wanted one,” Harris said. “Us included, it turned out.”

The chemical engineer and part-time professor at the University of Sydney has been leading UK-based engineering and construction company Laing O’Rourke’s internal innovation group in Australia for more than 11 years. He describes himself as an “accidental entrepreneur” who’s been involved with 11 start-ups, including 2020 Laing O’Rourke industrial AI spin-out, Presien.

The intersection of the construction company’s deep domain expertise and market presence, and a commercialisation approach refined with venture capital fund input, has given Presien a decent start in life. “For everything that appears on the front page of the paper as a good thing, there are 99 things we tried that didn’t work,” Harris said. “We were too early in the 3D printing space.

“We’ve iterated our model a lot. When we started … [construction] was the last great, undisrupted mega-sector. When we started there were no construction technology start-ups anywhere.

“Today there are hundreds each day. It’s impossible for us to keep up with them.”

German-headquartered construction and mining technology VC, Foundamental, which says it’s raised about US$1 billion and invested in more than 50 companies in the past four years, maintains that “even late adopter [technology] industries” such as manufacturing, shipping, energy and agriculture have been “transformed over the last 20 years”.

Construction and mining, described by Foundamental as US$10 trillion and $1 trillion markets, respectively, “still look almost exactly like they did 20 years ago where most of the market leaders … are still at the top”.

“Not surprisingly it’s a [combined] market plagued by inefficiency – and a gold mine for outside innovators,” the VC says.

Mining and construction are undisrupted mega-markets.

Timing a move into the mining technology arena – some have called it a minefield – has always been incredibly difficult for innovators and small companies. Australian Securities Exchange-listed Imdex, which is increasingly coming to be recognised as an international mining tech firm, started its pivot off a more traditional mining supply base about 10 years ago. It was formed in 1980. One of the leading privately-owned mining software companies in the world, Adelaide-based Maptek, also set out on its adventure 40 years ago.

Imdex has a current market value of more than A$1 billion. Maptek might be worth something similar.

The road for both companies has obviously been long and at times exceedingly difficult (just ask recently retired, long-time Imdex boss, Bernie Ridgeway, and Maptek’s Bob and Peter Johnson). Among the reasons they’re sector standouts is they’ve so far ignored the exit signs others have followed. Imdex and Maptek were built to be resilient rather than nimble but now, the Sydney summit heard, they are at the vanguard of a small group of domestic firms that need to multiply to convert more of Australia’s vast “stranded” store of mining intellectual property wealth into “new industry” jobs, profits and exports.

“We probably have a trillion dollars’ worth of IP sitting there locked in drawers,” Climate Salad’s Mick Liubinskas told the Energy and Mining Technology Investment Summit. “What we could create in jobs and economic, export and impact value by just basically letting it all go for free.”

The need for speed

The climate-tech advisor and angel investor was probably joking about the free bit.

But the focus on, and conversation around, potentially high-value IP held by researchers, large mining companies and a bunch of mining and non-mining tech companies, has definitely become more urgent in recent times and particularly since COVID hit.

“More large corporates, particularly mining and energy, are learning how important speed actually is for everyone’s success and are becoming more flexible all the way up the value chain from very small, nimble start-ups to more leading-edge, later-stage stuff,” said Ulric Ferner, a principal at Sydney-based VC firm, Right Click Capital.

Karl Simich, CEO of circa-A$3 billion Australian copper miner Sandfire Resources, recently presided over an extraordinary $1.87 billion all-cash acquisition of Spain’s Minas de Aguas Tenidas SA (MATSA), to deepen Sandfire’s global exposure to the future of the red metal. He says the past two years – “when people seem to have got a bit of a sense of their vulnerability and the vulnerability of the world, and that if something is not right, we should change things” – has seen a dramatic shift in social, corporate and even government attitudes and actions. “We’ve been talking about lots of these things forever but … all of a sudden we seem to have pulled the trigger and we’re in this transition,” Simich told InvestMETS.

“You go to COP26 and you’ve never seen so many graphs with hockey-stick trends in your life in terms of energy transitions and the materials we need.

“We sort of archaically think about mining as digging holes, but I think we need to see significant technological advancement to try and extract the elements we need with the lowest possible impact and we need that at the greatest possible rate of change.

“That is the conundrum that we’re dealing with.”

Ken Brinsden, CEO of the Australian lithium producer that has grown its market value from A$870 million to $8.7 billion since July 2020, Pilbara Minerals, says political debate about achieving net-zero carbon emissions by 2050 might still be raging and “some people fret about it, or worry about the change”.

“But it’s actually going to happen faster than that because economics will dictate it,” he said.

“Having criticised our industry for being slow to innovate and change, I’m pleased to say we’re really starting to push the leading edge of this emission reduction stuff now. Notable examples are the application of battery electric haulage vehicles [and] hybrid energy generation; we have Gold Fields’ wind-solar battery combination in the Leinster region. I think in Australia we’re going to be doing a lot more of that. Remote locations dictate that you should actively consider the renewable resource because it’s cheaper. Don’t truck all that diesel in because it’s bloody expensive and there is all this free sun and wind around.

“Yes, it’s carbon out and that is the right thing to do, but don’t lose sight of the fact that that’s actually going to be the most economic outcome.

“And it is a huge opportunity for the mining industry as a whole. What we’re drilling down on here is the most important tool to attract the next generation of labour, trades, technical input, management staff; leadership as a whole. Young people should be excited about the potential in the mining industry to change the world. We are now mining for global solutions, not the sort of historical legacy of being a big problem … Mining your coal, extracting your gas, or somehow damaging the earth. No, now we mine these things because the end-solution makes the world a better place.”

Connecting the dots between mining and a different future for energy, buildings, communications, transport, even construction and agriculture, is still a major education and marketing piece the industry has only begun to tackle. There would be plenty of angst in strategy rooms around just how this one might play out given the increasingly visible signs of wear and tear on the industry’s mega-scale, energy and water-intensive modus operandi of the past 40-50 years. But play out quickly it must, according to many mining leaders.

“To produce a unit of copper today as compared to 100 years ago, you need to move 16-times more rock, use 16-times more energy, and use double the amount of water,” Anglo American CEO Mark Cutifani said in December. “Up until now, our industry has solved the supply challenge by scaling everything up – bigger was better. That is clearly no longer sustainable, nor is it acceptable. We need to be far smarter than that and this is an exciting time.

“Across the world, our industry is on the cusp of a significant change led by the accelerating pace of technological innovation. Digitalisation, automation, new separation techniques and artificial intelligence are all opening up opportunities for the industry to be safer, more productive and more environmentally and socially sustainable.”

Providers of technology critical to both mining’s capacity to keep pace with shifting demand and its ability to meet higher environmental, social and governance standards would seem to be in a reasonably good position to convince investors – even those with exit horizons out of sync with normal mining investment patterns and/or needing to be convinced of mining’s green bona fides – they are in the right place at the right time.

Yet funding for start-ups and the few more mature technology companies is still relatively tight. Investors want and need to see more success stories, more articulate and charismatic sector leaders, and faster commercialisation of game-changing technology.

“There is a lot of capital looking for a good return,” Justin Strharsky, managing director of Perth-based Unearthed, told InvestMETS. Unearthed has connected large mining companies with a network of thousands of innovators and start-ups around the world. “Last year there was something like double the previous record for dollars invested in venture capital around the world. That’s insane.

“The macro trends are probably positive for lots of start-ups, but it’s the competition for mining’s share with other shinier things that is the challenge the industry has always had.

“Having said that the rising tide that’s happening at the moment will continue to lift all the boats.”

Out of mine, out of sight

“I think there is such a [strong] tailwind around the need for change, and that it can’t be stopped,” RFC Ambrian’s Sydney-based executive chairman Rob Adamson, a former miner who recently oversaw the launch of the firm’s new A$75 million Basic Industries Venture Fund, said at the Sydney summit. RFC Ambrian has had early wins backing Australian mining technology companies such as Chrysos Corporation and NextOre.

“[Australian mining equipment, technology and services companies] account for 50% of global mining technology and that’s where we can make a difference,” Adamson said.

“Our scientific institutions are the best in the world. We are working with the CSIRO to set up an NREL-style [US-based National Renewable Energy Laboratory] incubator to try and get more science out more quickly in an impactful way.

“I am hoping as we develop a track record and show some success we will build momentum and get others [investors] to join in the mission.”

Adrian Beer from METS Ignited addresses the Energy and Mining Technology Investment Summit in Sydney, Australia.

RCF Jolimont Innovation director Charles Gillies said: “I think there is a significant secular trend going on in the mining industry, the energy industry … there is a very big trend out there and the opportunity is significant. Where there’s probably a bit of frustration for those of us who are more directly involved in investing in companies that are in, in our case, mining and energy innovation … is they are doing some extraordinary things and they’re going to be very significant companies that can radically change the way these industries are operating. But it’s not apparent to people yet.

“It’s hard to get large institutions like superannuation funds to see that, or some large investors to see it, because it’s not a trend to them yet. And they don’t get paid to take risks on this sort of stuff. So you’ve got to do quite a bit of work to convince people and create a story around the asset class, around why it is that the innovation in mining and energy and elsewhere is very important.

“One of the challenges is the moment you mention the word mining half the room turns off – even in Australia they say, I’ve got too much mining, which is frankly bizarre given how … important it is to our economy. In the US when you talk about mining you’re in a resources bucket that also includes oil and gas and that’s a big problem because it’s so volatile.

“So we do need to change the conversation. BHP and Rio are saying they will be carbon neutral by 2050; Anglo and Fortescue Metals are saying carbon neutral by 2030. These are audacious challenges which are surprising to hear from mining companies.

“They’re going to need technology which is in businesses that are supplying them now to actually deliver on those changes.”

Richard Adams (pictured below right), who has overseen NREL’s Wells Fargo-sponsored IN2 and GCxN technology incubation programs, the latter backed by energy major Shell, told the Energy and Mining Technology Investment Summit the focus on transferring and commercialising more laboratory technologies in end-markets started with US$10 million of support from Wells Fargo. Nearly eight years later more than 50 start-ups in the program have raised over $1 billion of external funding.

Adams, an Australian who returned to Sydney for the first time in 2.5 years at the time of the summit, is working with RFC Ambrian and CSIRO to repeat key elements of the NREL experience Down Under.

“In the US we have 17 national labs, all funded by the [federal] Department of Energy, much the way CSIRO gets funded by the Australian government here. In the case of NREL, the DoE funds the lab to the tune of about US$500 million a year,” he said.

“Think of NREL as CSIRO on steroids in the energy space.

“If you think about what it’s going to take to power the energy system of the future, we’re talking about terawatts of power that aren’t available yet. And despite the fact that we’ve made so much progress over the last 40-50 years in things such as solar energy and wind power and geothermal etc, we still don’t have enough technology in the marketplace to meet the needs of the future.”

RFC Ambrian says the NREL program has helped make many technologies “characterised by capital intensive and/or large equipment” more attractive to investors “and in doing so has become a pillar of the clean tech innovation ecosystem in the USA”.

Adrian Beer, CEO of the Australian-government funded METS Ignited industry growth centre for the past 2.5 years, said in Sydney what the US and other markets had and Australia generally lacked was a vendor ecosystem that could profit from the country’s “research juggernaut”, build on the technical and commercial successes, and develop into the large, powerful enterprises that typically drove job and wealth creation.

“If we make our local technology vendors more commercially capable, there’s plenty of investors willing to back them. There’s plenty of kids who want to go and work for them. And there’s plenty of opportunity globally for us to export our know-how as products and services to the global market,” Beer said.

He said the Australian Government’s $1.6 billion economic accelerator program was welcome, but it addressed one dimension of a two-dimensional problem.

“I think what’s different about the US market and the Australian market is we have massive end-market operators in big primary industries willing to invest a lot of money to solve some of the biggest challenges for the sector,” Beer said.

“And as a result we have this huge research sector with great domain expertise and significant capability.

“But the conduit between the research and the market is a gap we have in our local market.

“We don’t have many Australian technology companies whose sole purpose is to convert research outcomes, innovation, and turn it into products and services that mining companies can buy.

“Some might argue the mining industry might have done that to itself and there was probably a period of time where they spent far more money than anyone else developing the technologies and solutions they needed for their own operations. But those days are past. Those mining companies can no longer sustain and maintain their own in-house developed technologies. They’re actually looking for partners who can take what they’ve developed inside their supply chains, and productise them, and make sure that they can be supplied and supported and delivered and serviced and maintained.

“And probably more importantly, upgraded and modernised and integrated with new technologies that come from other vendors.

“So now we’ve got this huge research capability, all these technologies stranded in the supply chain of our operators, and we need to support the vehicles to commercialise and productise that innovation and take it to market. The demand for that is global and the opportunity is significant for Australia because of that sustained investment over such a long period of time.”

 

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