The future of mining innovation
The federal government wants to boost innovation in mining. It is doing it the wrong way.
Mining is a relatively small sector — 70,000 workers in 2016 — but it accounts for a stunning 19 per cent of the value of Canadian goods exports. The roughly 170 producing mines comprise only part of the market for about 4,000 Canadian businesses that supply it with a huge range of equipment and services. The mines of the past helped create the world’s leading mining finance centre in Toronto, as well as a large and high-powered system of consultants and growing menu of technology exports. The mines of today still support a huge smelting and refining sector.
This industry, with the traditional mining companies at its centre, has the potential to add even more to Canada’s wealth. Doing that will take major advances in science and technology. To cash in on the opportunities, Canada has to supercharge its capacity to innovate around mining.
The federal government is ready to spend taxpayers’ money to boost innovation across the entire economy. The question is how to get funding for innovation in mining to where it will generate the most wealth for Canadians.
The feds plan to boost groups of firms, or “clusters.” This is a strategy that emerged in the late 90s under Paul Martin, vanished under a government that was generally unsympathetic to the idea of industrial strategy, and re-emerged in 2017 as the Innovation Superclusters Initiative. The federal government is now dangling up to five $125–$250 million prizes for groups that can turn networks of businesses, research organizations and academic institutions into “superclusters.”
The first phase attracted more than 50 letters of intent from hungry would-be clusters. Clusters are generally geographically concentrated, usually found in cities with research universities and precision manufacturing. Mining is the exact opposite of a conventional cluster. Mining is done at dispersed, remote sites with heavy equipment, gravel roads and explosives. When Michael Porter introduced modern cluster theory in 1990, mining was seen as a “sunset industry” rather than the source of a nation’s competitive advantage.
Despite this prejudice, one of the five supercluster finalists does come from the mining sector. The Clean, Low-energy, Effective, Engaged and Remediated (CLEER) project promises to “transform Canada’s mining sector and position Canada as a global leader in clean resources, clean technology and responsible sourcing of metals.” The proposal was submitted jointly by the Canadian Mining Innovation Council and Sudbury’s Centre of Excellence in Mining Innovation.
It seems mining may finally be recognized as a leading sector able to generate new technology for export. This is a big step forward.
But the focus is still on the needs of mining companies instead of on the innovators in the system. The large mining companies are the centre of any definition of the mining industry. No initiative related to mining is credible without their participation. But mining companies account for less than a quarter of the industry. More and more of the benefits from our mineral wealth are generated upstream, in the mining supply and services sector.
To get job growth, expanded exports and technological leadership, federal innovation money has to go where innovation happens: to the dynamic companies that produce supplies and services that miners need. These SMEs live or die based on their ability to innovate. These are companies that compete every day with firms around the world. These are the companies that know what the global mining industry needs and spend their own money to develop it.
Operating miners focus on bringing down costs for existing operations. Bringing costs down generally means shedding labour and contacting out. It doesn’t mean creating new export products or jobs. When government lets major mining companies set the agenda, it is missing the main opportunity. The industry knows what it needs, but Canada has to have a broader focus.
It is time for the feds to focus much more on the real innovators — the businesses in the supply and service sector. The challenge is to see past the small, organized group of operators that control Canada’s innovation organizations and to begin to fund a mining innovation ecosystem that helps Canadian-based companies compete globally.