Wednesday, April 23, 2014

Mineral Rich Continent Without Enough Tech Start-Ups To Match

It is well known that Africa has vast wealth of mineral resources and that the Mining Industry contributes significantly to its economy. For many African countries, Mining remains an important source of export earnings. In 2012, the Mining Industry contributed 5.5% to South African GDP and accounted for 38% of its total exports, for example. Globally, some of our mineral reserves are ranked either first or second. Botswana, for instance, is the world’s largest diamond producer by value.

In the past decade, however, Mining companies faced various challenges and we’ve seen some of its contribution to GDP decline. In South Africa for example, some of the Mining sectors saw rising costs and labour unrest. Mining overall has been under an unsustainable environment and continues to call for innovative solutions.
Goldman Sachs lists “Driving innovation via increased investment in research and development and technology” as one of the 10 key issues to address South Africa’s declining global competitiveness [1]. I would imagine that the same would be recommended for other African countries.

With the impression that Africa is a world leader in Mining and given its Technology challenges, should we not have deafening activity in Information and Communications Technology (ICT) from local Small, Medium and Micro-sized Enterprises (SMMEs) in this space?

ICT Adoption in Mining

We’re past the stage of convincing Africa’s Mining Industry that advantages exist from Technology Investment if applied well. We're over the period of “lack of business commitment to/awareness of IT” as an impediment [2]. ICT is seen as a strategic necessity for improvement of safety and operational effectiveness [3]. Africa’s Mining Industry invests billions of Rands per annum towards ICT and Innovation. This stems from the need for Mining companies to innovate to meet falling real prices. Between 2011 and 2013, Gold has had its steepest decline in 30 years for example.

According to “Tracking The Trends 2014” (Mining) by Deloitte, “Rather than one-off cost reductions, mining companies must embark on sustainable cost management programs to become – and remain – lowest-quartile-cost producers.” Deloitte lists some strategies to consider in these programs and one of the key elements of these strategies is Technology.
AngloGold Ashanti CEO Srinivasan (Venkat) Venkatakrishnan recently told Mining Weekly Online that technology is the “single key we have to improve productivity, which is the answer to a number of issues within the South African mining industry”.

Diminishing Engineering skills on mines means that companies have had to reduce capacity to experiment with alternative solutions in-house. They’re also looking for you, “garage inventor”.


Status Quo

We've seen a number of excellent Technology solutions come out of big Mining companies, primarily sourced from Technology companies outside Africa. For decades we had South African gold mining companies pioneering innovation through the Chamber of Mines Research Organization (COMRO) with Hydraulic Technologies, for instance.

We currently have great Innovation Research Programmes like Coaltech 2020 which involves some large corporations and research institutions. Mintek is another formidable player in South Africa. I’m by no means discrediting any of their contributions. The average South African Techie unfortunately doesn't know much about such programmes, regardless of the size of this industry.

Big companies aside, I've personally come across very few SMMEs looking at ICT solutions in this space. Besides, having only seen "repeat technologies" adopted from other continents and the lack of Invention/Innovation, I find that these Entrepreneurs are not vocal about what they’re doing or visible enough. At least not to the degree I would expect, given that Africa is a world leader in Mining.

I've seen relatively few products or discussions come out of Innovation Hub, JoziHub or Silicon Cape primarily focused on Mining Technology. Are discussions around Mining Technology ever featured in Tech Hangouts or any of the TedX events in Africa?
If we have to examine the activity of 100% black owned companies in this space, the picture becomes even more displeasing. That’s however a topic that deserves its own article.

Where’s the challenge?

I've heard many stories of employees in Mining companies writing innovative software applications to optimize existing Mining methods or processes, and having the Intellectual Property taken from them by their employer. We cannot say the capability is not there. What could possibly keep the average Techie from exploring this industry?
  • Perhaps the culture of Tech Entrepreneurship is not mature enough in Africa to be prominent in the Mining industry. Historically, IT penetration in the Mining industry has been lower than in many other industries, which is understandable given the high correlation between IT penetration and the scale/scope of the knowledge work performed by an organisation. Could it be the lack of lucidity of “Ability to Service” and the assumption that a Mining background is mandatory?
  • I think we can rule out the old belief that majority of IT spend goes towards in-house IT support and less towards development of new solutions aimed at efficiency. This has changed significantly over the past decade.
  • Recently, the South African mining industry is seen as unstable and marred with labour strikes leading to business change. Business change affects the complexity and spend for the IT landscape. This instability and, an industry tainted with corruption and unaccountable bureaucracies could be contributors.
  • Could there also be a fear of labourers and unions opposing certain Technologies that might be misconstrued as being introduced to police or replace jobs. Sabotage by the labourers is a problem faced by many companies that introduce ICT change.
There are solutions to overcome some of these challenges. For instance, the method of transparency and clear communication of change benefits has been used to overcome resistance from labourers.
The above considerations don’t warrant this amount of silence from Tech SMMEs in this industry.

Let’s Get Cracking

There is no doubt that First World countries have decades of research behind them. They’re significantly advanced in terms of Tech Development and measures taken to address problems of adoption. However, the closer you are to the problem the better a solution you can produce. Local Entrepreneurs have that advantage.

Governments and mining companies have committed to injecting billions of Rands into Technology and Innovation. We have an industry with identified needs and not enough SMME activity. Outside of what existing companies traditionally explore (mining methods, process control, etc), there are many technologies that SMMEs could be looking at (training applications, solutions using Augmented Reality, surveillance systems, product tracking systems, etc).
If you're already out there, you're not loud enough.


References

  1. Two Decades of Freedom – Goldman Sachs
  2. South African Coal Mining Industry, State of IT - Deloitte
  3. The implementation of new technology in southern African mines: Pain or panacea by A.S. Macfarlane*
  4. Mining: Tracking the trends 2014, Deloitte
  5. http://www.miningweekly.com/article/exciting-new-gold-mechanisation-achieving-more-success-anglogold-2014-02-19