Future(s) of mineral exploration - Sykes et al - Apr 2017 - Centre for Exploration Targeting

1. The future(s) of minerals exploration
John P. Sykes123, Allan Trench124 & T. Campbell McCuaig15
1. Centre for Exploration Targeting, School of Earth Sciences, The University of Western Australia; 2. Business School, The University of Western Australia;
3. Greenfields Research Ltd., United Kingdom; 4. CRU Group Ltd., United Kingdom; 5. BHP Billiton Ltd., Australia
Email: john.sykes@research.uwa.edu.au
Acknowledgements: The authors would like to thank Sandra Occhipinti (CET, UWA), Nicolas Thebaud (CET, UWA), Mark Lindsay (CET, UWA) and the other organisers of TARGET 2017 for their efforts in organising this conference.
John would like to acknowledge the support of the non-authoring members of his PhD supervision team: Mark Jessell (UWA-CET) and Nicolas Thebaud; as well as the financial support of a Centre for Exploration Targeting ‘Ad hoc’
scholarship and an Australian Government Research Training Program Scholarship. The authors would like to thank the participants in the three CET “Future of Minerals Exploration” Scenarios Workshops: Jonathan Bell (CET, Curtin),
Leila Ben Mcharek (Muslim Studies, UWA), Rob Bills (Emmerson Resources), Aida Carneiro (Mining Engineering, UWA), Ivy Chen (CSA Global), Aaron Colleran (Evolution Mining), Tim Craske (Geowisdom), Liz Dallimore (KPMG),
Deon deBruin (Diamond Indicator Minerals), Edoaldo Di Dio (Calibre Projects), Joe Dwyer (HiSeis), Mayara Fraeda (CET-UWA), Nick Franey (NFJ Consulting), Simon Gatehouse (BHP Billiton), Jeremie Giraud (CET, UWA), Marcelo
Godefroy Rodriguez (CET, UWA), Chris Gonzalez (CET, UWA), Isabel Granado (Information Systems, Curtin), Matt Greentree (SRK Consulting), David Groves (CET, UWA), Mike Haederle (Rio Tinto), Mike Hannington (Metalicity),
Nick Hayward (Teck), Amanda Hellberg (Law, UWA), Paul Hodkiewicz (Anglo American), Amy Imbergamo (Environmental Science, UWA), Constanza Jara (CET, UWA), Caroline Johnson (CSIRO), Heta Lampinen (CET, UWA), Helen
Langley (Law, UWA), John Libby (Digirock), Martin Lynch (Author of “Mining in World History”), Stuart Masters (CS-2 Consulting), Michael Mead (Gold Fields), Adele Millard (Anthropology, UWA), Joanne Moo (Environmental Science,
UWA), Suzanne Murray (Billabong Gold), Sandra Occhipinti, Ahmad Saleem (CET, UWA), Ian Satchwell (PerthUSAsia Centre), Robert Sills (Sills Strategic Materials), John Southalan (Law, UWA), David Stevenson (CET, UWA),
Narendran Subramaniam (Transmin), Siobhan Sullivan (Plant Biology, UWA), Daniel Sully (Teck), Janet Sutherland (Business, Curtin), Marcus Tomkinson (MMG), Marnie Tonkin (Anthropology, UWA), Jan Tunjic (CET, UWA), Will
Turner (Independent Geological Consultant), Stanislav Ulrich (AngloGold Ashanti), Jessica Volich (BHP Billiton), Wenchao Wan (Chemical Engineering, UWA), Peter Williams (HiSeis), Marcus Willson (CSA Global) and Afira Zulkifli
Tahmali (Environmental Science, UWA). John would also like to thank Steve Beresford (Independence Group), Jon Hronsky (Western Mining Services), Robbie Rowe (NextGen Geological), Richard Schodde (MinEx Consulting), John
Vann (Anglo American) and the members of #explorationtalk for the continued support, guidance and championing of this research.
References
Andrews, T., Harman, J., Horgan, M., & Volich, J., 2016, ‘Future licence to prosper’ key to unlock mining sustainability, Centre for Exploration Targeting News & Events, 19 February: http://www.cet.edu.au/news-and-
media/news/news-details/2016/02/19/future-licence-to-prosper-key-to-unlock-mining-sustainability
Baghai, M., Coley, S., & White, D., 1999, The Alchemy of Growth: Kickstarting and sustaining growth in your company, Orion Business Books, London, UK, 250p
Cliff, D., Harris, J., & Bofinger, C., 2016, Ensuring health and safety through the entire mining cycle, The AusIMM Bulletin, August: https://www.ausimmbulletin.com/feature/ensuring-health-and-safety-through-the-entire-
mining-cycle/
Greenwood, K., 2016, Practicing the Art of Innovation, Critical Essay, Strategic Management of Resource Companies, The University of Western Australia
Porter, M.E., & Kramer, M.R., 2011, Creating shared value, Harvard Business Review, 89, (1/2), p62-77
Ramirez, R. & Wilkinson, A. 2016, Strategic Reframing: The Oxford Scenario Planning Approach, Oxford University Press, Oxford, UK, 272p
Sykes, J.P., & Trench, A., 2014, Chapter 14: Finding the copper mine of the 21st century: Conceptual exploration targeting for hypothetical copper reserves, in Special Publication Number 18: Building exploration capability for
the 21st century, (eds., K.D. Kelley & H.C. Golden), Society of Economic Geologists, Littleton, CO, p273-300
Sykes, J.P., & Trench, A., 2016, Using scenarios to investigate the long-term future of copper mining and guide exploration targeting strategies, International Mine Management Conference, Brisbane, QLD, 22-24 August,
p265-289
Sykes, J.P., Trench, A., McCuaig, T.C., Craske, T., Dwyer, J., Subramaniam, N., Sullivan, S.T.M., & Turner, W., 2016a, Transforming the future of minerals exploration, AusIMM New Zealand Branch Conference, Wellington,
New Zealand, 3-6 September, p407-418
Sykes, J.P., Wright, J.P., & Trench, A., 2016b, Discovery, supply and demand: From Metals of Antiquity to critical metals, Applied Earth Science, 125, (1), p3-20
Sykes, J.P., Trench, A., Wright, J.P., Davies, R.S., & Dixon, A., 2017, The energy transition: A mining and exploration industry perspective, World Renewable Energy Congress XVI, Perth, WA, 5-9 February.
Sykes, J.P., Trench, A., McCuaig, T.C., & Jessell, M., 2017, Charles Dickens on the (potentially) changing role of globalization and sustainability in the long-term future of mining and exploration, Tenth International Mining
Geology Conference, Hobart, TAS, 20-22 September, in press
9Trench, A., 2016, Towards big exploration, MiningNewsPremium.net, 11 January: http://www.miningnews.net/insight/strictly-boardroom/towards-big-exploration/
Wikipedia, 2016, Sydney Ferries, Wikipedia: https://en.wikipedia.org/wiki/Sydney_Ferries
The challenge: Targeting ‘accessible’
and ‘economic’ mineral deposits
What is accessibility? The problem: Predicting economics
and accessibility is not possible
Potential solution one: Adapt to
the future as it emerges
The problem: The industry may not
be able to adapt to the future
Potential solution two: Generate
new ideas and open up new
search spaces
Potential new search space one:
New commodities
Future test: Are you competing
on three horizons?
Practical advice: Watch and
listen
Potential new search space two:
Behind ‘socio-political’ barriers
An example: ‘health & safety’ as a
source of excellence & opportunity
Potential new search space three:
Behind ‘geopolitical’ barriers
Tip: Politics is a playgroundSome ideas, so far
Another problem: We may be unable
to see the future, even if it’s here
Getting ready to take on the
challenge and see the future
Discovered and
economic but
inaccessible
Undiscovered and
inaccessible but
economic
Discovered
accessible but
uneconomic
Undiscovered
uneconomic
but accessible
Geological certainty
Economicviability
Discovered
accessible
and
economic
(Behind)
Discovered but
inaccessible and
uneconomic
Undiscovered and
inaccessible and
uneconomic
Undiscovered
but accessible
and economic
Geological certainty
Economicviability
Discovered
accessible
reserve
Scenario 1
Scenario 2
Scenario 3
Undiscovered
accessible
reserve
Discovered Undiscovered
Alice in
Wonderland
1984
Discworld
Now
The
Wardrobe
“Trapped
in a cycle”
“Breaking the
cycle”
Localisation
Globalisation
EconomicValue
SharedValue
Important uses:
economic
demand
Geopolitically
restricted
production
Socio-politically
restricted
production
0
200
400
600
800
1900
1905
1910
1915
1920
1925
1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Growth in market size indices of copper and aluminium 1900-2014
(1900 = 1)
Cu Index Al Index
For a mineral resource to become a mine, not
only must a geological discovery be made, the
deposit must also prove economically viable, and
environmentally and socio-politically accessible
(Sykes and Trench, 2014).
The complex and uncertain factors associated with
economics and access, however, means it is not
possible to predict the nature of ‘undiscovered
accessible reserves’. The Centre for Exploration
Targeting ‘Future of Minerals Exploration’ scenarios
programme was launched to investigate this issue.
Access to mineral deposits can be
restricted by either strategic
considerations (geopolitics) i.e. when
production is dominated by one or two
countries / mines; or sustainability
considerations (socio-politics) i.e.
when production is restricted for
environmental reasons or by local
communities (Sykes et al., 2017).
Scenario
planning
investigates
multiple different
options, rather
than making
one specific
prediction
(Ramirez &
Wilkinson,
2016).
Scenarios set one: aimed to develop a range of
scenarios about the short- and long-term future
of copper mining, then compared them to leading
copper companies, mines and projects to
determine how well the industry could adapt from
the short- to long-term (Sykes and Trench, 2016).
No copper company, mine or project is robust in
both the short-term and long-term. This leaves the
industry with two options:
1. Blend portfolios from the numerous brittle
assets focusing on the ‘margin optimisation’ axis
– a financial and economic approach;
2. Generate new ideas as to what a robust mine
could be – focusing on the ‘idea space’ axis and
thus the competencies of the industry.
Mining industry thinking
is generally asset and
portfolio orientated so
the scope for generating
‘new’ ideas this way is
limited.Increased
Decreased
Long-term idea space generation
Crusades Counting House
Peasants’ Revolt Under Siege
Short-termmarginoptimisation
Increased
Decreased
Industry capabilities is a less developed area of
thinking in mining so seemed more likely to be
fruitful in developing new ideas.
Scenario set two: generated a pathway to the
long-term future, considering the whole mining
industry and its capabilities (Sykes et al., 2017).
Drawing from Baghai et al., (1999) to make
it through the transition a company must:
• Horizon 1: ‘Survive the present’;
• Horizon 2: ‘Go through the transition’;
• Horizon 3: ‘Thrive in the future’.
To make it through the transition, two key
capability sets at two corporate levels are
required:
• Working at a high-level with government and
understanding major technological shifts;
• Working on the ground with local
communities and emerging innovators.
Both ‘horizon scanning’ (Ramirez & Wilkinson,
2016) and ‘listening posts’ (Greenwood, 2016)
are required. The former for the high-level; the
latter for local level.
An example for ‘breaking down socio-political
barriers’ is the evolution of ‘health and safety’ (H&S)
in the workplace, including mining. Originally H&S
was treated in a ‘compliance’ manner with managers
seeing it as a ‘barrier’ to profit (social licence is
currently at this stage). H&S implementation was
ineffective. Later, H&S became a ‘culture’ leading to
effective implementation (Cliff et al., 2016).
Eventually, companies like DuPont saw it as a source
of ‘excellence’ and competitive advantage. Turning
‘social licence’ into an ‘excellence’ could open up
opportunities for explorers, via access to new areas.
Scenario set four:
sought to bring
together the findings
of all the workshops
(Sykes et al., in
press). The final
scenarios were
based on two socio-
economic axes:
1. Economic value
versus shared
value (Porter and
Kramer 2011);
2. Globalisation
versus
localisation.
Adapting to the future
may prove very
challenging. It is likely
that some radically new
ideas are required, as
suggested in the previous
section. However, these
ideas may require very
different skillsets and
people to those currently
present in the industry. As
such, it is plausible that
the industry is currently
not capable of seeing the
future, even if it wants to
and it is already here.
A parable: Sydney
Ferries was once the
world’s largest ferry
company, but it literally
failed to see the future
being built above it: in
the shape of the Sydney
Harbour Bridge.
(Wikipedia, 2016).
One new search space could be new
commodities. Many minor metals are currently
‘geopolitically’ restricted in production, yet seem
critical for a ‘sustainable’ future as they are used
in batteries, renewable energy, hybrid cars etc.
This has happened in the past: Aluminium was a
minor metal in the 19th century, but is now a
major commodity market (Sykes et al., 2016a).
One of the
common problems
in the mining
sector is
‘generating ideas
not businesses’
(left) where long-
term thinking is
not linked to
business practice.
Scenario set three: considered how to build industry
reputation and break-down socio-political barriers
(Sykes et al., 2016b). In one scenario (‘Hunger Games’)
explorers focus only ‘commercial licence to operate’
(Andrews et al., 2016),
or ‘small exploration’ i.e.
just finding mineral
deposits. In the other
scenario (‘Star Trek’)
explorers pursue both
commercial and ‘social
licence to operate’ or
‘big exploration’
(Trench, 2016) i.e. also
working with innovators
and communities.
Strategists tend to overreact to the
short-term in politics – the ‘swings’
back and forth between political parties
that are inevitable in a democracy, thus
something we should remain
strategically neutral about.
Over time politics undergoes gradual
shifts, which affect all parties
(‘roundabouts’) – we may currently be
seeing this with increased ‘localism’ in
politics. We need to adapt to these over
the long-term.
Finally, there are ‘climbing frames’ –
inevitable, unmovable parts of the
future. A focus on sustainability seems
to be part of the future – it must be
tackled.
The initial findings of this research project
are:
• That it is unlikely we can adapt the
current mining industry and its assets to
a long-term future that is too different.
Explorers need to generate some new
ideas to transition to this future, such as:
• Focusing on new commodities
associated with a different long-term
future;
• Developing a better ‘social licence’ so
that we can overcome socio-political
barriers to entry;
• Being more cognisant of political trends
and overcoming geopolitical barriers to
entry.
Minerals explorers will need to make some changes
to be able to see what a future economically viable,
and environmentally and socio-politically accessible
resource will look like. These include:
• Developing strategies and capabilities to
effectively enter emerging commodity markets;
• Building a diverse exploration culture to bring in
ideas from other industries and disciplines;
• Encouraging creativity and ideation;
• Linking short and long-term thinking;
• Monitoring local and global socio-political,
economic and technological trends;
• Measuring and understanding the potential
impact of these trends.
Maybe then we can take on the challenge…
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