Ministers missing mining supply sector
The keywords when Canada’s provincial energy and mines ministers met last August were collaboration, leveraging and building an innovation culture.
The ministers started with a pile of documents. Most were pretty harmless. It is a little worrisome that they needed to be told about “aspirational goals for residential windows, space heating and water heating.’’ It is also a bit worrisome that ministries are being asked to promote air-source heat pumps instead of the much more efficient geothermal systems.
Widespread use of geothermal systems requires a cost-breakthrough in drilling technology. There is a huge export market waiting for the Canadian equipment company that produces a low-cost rig for drilling vertical closed-loops.
Ministers should have been told this was a big opportunity for the mining sector.
Gaps like this suggest that the energy and mines ministers still don’t understand the significance of the supply chain in mining.
The document called The National Collaboration Strategy for the Mining Industry was prepared by KPMG. The consultants consulted mining companies, research organizations and government organizations. They didn’t look closely at the supply chain. In the end they recommended more of the same: government should lead, mining companies should tell government where to lead, and suppliers and researchers should fall in line.
The KPMG report is like a prescription for growing the trunk of a tree while ignoring the root system that supports it.
Mining in the conventional sense is a shrinking industry. The jobs and the productivity come from the brains, the equipment and the consumables supplied to the industry. The real hubs of innovation are in the supply sector. A successful national collaboration strategy would have to focus on building up the root system – on developing the export capacity of Canada’s mining supply chain.
Unfortunately, the mining supply sector is diverse and diffuse. It is easy for governments or KPMG to ask the few large mining companies what they want. It is hard to ask a huge number of small companies scattered across the country what they can do. Mining companies have an effective voice. The supply sector doesn’t.
A few organizations have emerged that claim to speak for suppliers. The oldest of these, CAMESE, founded in 1981, describes its mission this way: “supporting the export of Canadian mining exploration equipment and services to mining companies around the world.” Rebranded in 2017 as the Mining Suppliers Trade Association, the organization now wants to represent “the full mining industry value chain” both in foreign markets and in Ottawa. It is not in the business of promoting innovation in the supply sector.
A number of more regional supply organizations have also emerged, including SAMSSA in Northern Ontario, SIMSA in Saskatchewan and MSABC in British Columbia. They reflect the growing breadth and depth of Canada’s supply sector.
None have made the jump to effectively representing the research funding needs of the broad sector to governments.
In Canada’s current mining ecosystem, research and innovation organizations are like transistors. Instead of controlling a large flow of electrons with a small voltage, they control a moderate flow of public money with small industry contributions. The same few large companies are in almost every research organization — they regulate the flow of government cash to the projects they choose.
This “industry led” approach to innovation seems sensible seen from the cities where companies and government are headquartered. However, it may not be the most effective way to build the supply chains or to expand exports. KPMG told the ministers that “Industry is generally risk-averse when adopting new and unproven technologies and processes and “industry is less collaborative with other stakeholders in the ecosystem, requiring supporting stakeholders to bear the majority of the risk.”
The supporting stakeholders who bear the majority of the risk according to KPMG are academia, researchers, not-for-profit organizations, special interest groups, suppliers and service providers. The ministers were told that these “supporting stakeholders” are responsible for delivering “the necessary research and innovation to address sector priorities, and playing an important catalytic role in the innovation continuum.” Even so, KPMG recommended that the mining industry set the direction for research. It seems that the solution to the problem is a problem itself.