A joint post by Prof. Carlo Pietrobelli and Beatriz Calzada.
Since the mid-1990s, Latin American countries have become an attractive destination for foreign mining investment — largely thanks to established regulatory frameworks that provide legal stability and security of mining ownership, as well as incentives for exploration and exploitation. This process led to major investments in the metals sector, mainly by international firms. However, despite this growth in mining activity, there has been little value added in the region since the founding of a group of innovative mining companies.
The case of industrialised countries such as a Canada or Australia is different since they have developed by combining the availability of mineral resources with innovation in services, technologies and products around them. In the case of Australia, exports from the mining sector represent the largest source of domestic value-added generation both directly (by the companies that operate the mines themselves) and through service providers and intermediary products.
This development strategy is now possible for other countries endowed with natural resources thanks to new forms of innovation. Innovation can be stimulated through interactions between mining companies, their suppliers and other organisations active in the innovation system, such as universities and research centres. When applied to the mining sector, new materials and biotechnology, as well as information and communication technologies (ICT), open opportunities for new suppliers from emerging countries to access and add value to mining value chains.
Opportunities for innovative mining
Mining companies increasingly demand specific solutions from suppliers, to reduce operating costs and offset the declining productivity of existing mines. They also need to meet the challenges of extreme geographical conditions, as in Bolivia, Chile and Peru – where mines are operated at high altitudes, in narrow veins and in very dry climates. One example is the La Rinconada mine in Puno, Peru, which at 5,100 metres above sea level is the highest in the world. Here, the standard equipment and existing technologies are not fit-for-purpose and therefore need to be adapted or replaced.
According to our research, recent scientific advances have opened up new technological opportunities for the mining industry. These include revolutionary advances in ICT, computer vision systems, satellites and other remote sensing applications, advances in molecular and synthetic biology for bioleaching (extraction of heavy metals from minerals through the use of living organisms) and bioremediation of pollutants for copper and gold.
In Chile, the company Micomo has developed highly innovative monitoring technologies that assist the extraction process through fibre optics. Power Train has entered the market with new remote control systems for trucks operating at high temperatures, and wireless monitoring systems that predict where key equipment will wear and need to be replaced – thus preventing stoppages. In Brazil, Geoambiente has developed sophisticated geological maps, sensors and radar images that help in the exploration phases, predicting the contents of minerals or areas prone to erosion in order to monitor environmental impacts. This company is now Google’s largest partner in Brazil.
The use of new materials is also revolutionising the industry. For example, Verti in Brazil has developed dust suppressors that run on excess glycerine from biodiesel plants. Meanwhile, Innovaxxion in Chile has applied new approaches to mechanical, robotic and electrical engineering to substantially reduce waste generated in copper mining.
Challenges for the region
Despite these positive examples, most success stories come from just a few regional companies. Current public policies do little to stimulate innovation activities, which often require large investments and specialised infrastructure (such as for testing prototypes or simulating subsoil operations).
Likewise, the organisation of hierarchical chains of value in mining frequently limits the opportunities for innovation and learning of local companies. Large mining companies rarely forge long-term formal links and engage in innovation projects in collaboration with local suppliers. On the contrary, they usually depend on incumbents. When new technological challenges arise, they rely on solutions that come from the headquarters abroad or from their international suppliers, generating a dependency that limits the introduction of local technologies.
Despite advances in research, there are still many areas that we know little about, and in which the IDB, in partnership with governments across the region, could help increase the number of companies successfully integrated into value chains via high-tech services and / or innovative products.
For this reason, UNU-MERIT is working with the IDB on a series of studies on mining competitiveness and innovation in Latin America and the Caribbean. We want to know how best to nurture development among local suppliers, in light of how the sector and mining chains are structured, including the best timing to open such channels. Likewise, we seek to understand specifically which links in the chain offer greater and better opportunities for insertion and creation of value.
We also want to identify what capacities for local companies need to successfully integrate into value chains, create new markets, carry out transactions within the chain and reap the benefits, taking into account a long-term perspective that guarantees sustainability and improves the dynamics of innovation within the industry.
Some questions to explore:
- How can we anticipate the challenges that require innovation and innovative solutions?
- What will be the capacities needed for the mining of the future – which promises to be more intensive and systemic in terms of innovation – taking into account the demands of communities, environmental and social sustainability, as well as defence of non-renewable public goods?
- How can we guide knowledge generation and innovation processes to solve the hallmark of mining: dynamic inconsistency?
- How to correct the myopia of the industry against the rigidity in exploitation and current production with a view to solving future problems?
All this academic work is linked to a process of identifying what policies are most effective to face the challenges involved in the described transformation process. For mining to become a real engine of sustainable growth in emerging economies, it is essential to generate, improve and strengthen links in mining value chains as well as the innovation system around them.
This post originally appeared on the IDB blog (in Spanish).
See the related Call for Proposals (deadline 30 September 2018).
The opinions expressed here are the authors’ own; they do not necessarily reflect the views of UNU.
Wikimedia / Ferjacon. Translated and edited by D.Salama and H.Hudson