METS Ignited: Australia’s mining technology services sector preps for growth

In a bid to grow the A$90m Australian mining equipment, technology and services sector, government-funded initiative METS Ignited has compiled a ten-year industry-led plan to strengthen the sector after some challenging years of limited activity due the commodities slump. Heidi Vella caught-up with METS Ignited CEO Ric Gros to find out what the initiative has planned.

The recent commodities downturn resulted in a tough three years for the Australian mining equipment, technology and services (METS) sector, as mining construction came to a near halt.

The sector still exports A$15bn worth of goods and services each year however, and has been identified by the Australian Government as an area for potential growth through the METS Ignited initiative, which published its ‘10 Year Sector Competitiveness Plan’ in November.

From the organisation’s Queensland-based Industry Growth Centre, CEO Ric Gros discusses the sector and the plan, including how innovation will inevitably result in increased automation and more highly skilled jobs, and why companies should view collaboration as self-enlightenment.  

Heidi Vella (HV): Would you agree that it’s been a bumpy journey for the METS sector over the last decade?

Ric Gros (RC): Well, from 2003-2013 there was significant deployment and development of projects across the world, significantly in Australia, which created a boom in the sector.

But you should remember that the mining sector has two sides – mines that are operating and producing and mines being built – so the boom throughout that time was building significant capacity throughout the world.

But then after the financial crisis at the end of 2013, there was a crash in the market and all these projects were completed and commodity prices collapsed because all the extra capacity came online. This created a significant drop-down in profitability in the sector.

The METS companies that boomed and grew tremendously through that period no longer had work because the projects were all completed. However, in the same period in Australia production of iron ore tripled. Today iron ore production is a fraction of the cost it used to be ten years ago.

Now prices are coming back a bit and we are getting back to a situation where commodity prices and production and demand are starting to balance out again. I don’t think we are returning to another ten-year construction boom as before, but the mining industry will continue to grow and the METS sector will continue to grow, and hopefully, in the future, the industry will be able to manage those cycles a bit better.

HV: How will the ‘10 Year Sector Competitiveness Plan’ help industry do this?

RC: With the sector competitiveness plan we are working with industry to look at five key areas; they centre around industry alliance, our global brand, the global supply chain and competitiveness, innovation and collaboration, and finally, skills. We want to underpin all of those.

There is work to be done on industry knowledge priorities which are the gaps in knowledge that exist. These include looking at where the industry is likely to be ten-20 years from now and looking at regulatory reform, both self-imposed and state-imposed, that impact on productivity in the sector.

In Australia we have great know-how and expertise but we are not necessarily very good at commercialising that technology.

If we understand where the mines of the future are likely to be, the drivers the industry will be facing, we can start to ensure that our research focuses on those requirements, that our innovation is focused on those mining requirements, and that we are driving our educational programmes and recruitment of future graduates into the sectors that are likely to need them.

HV: Why is collaboration so important for a modern, competitive METS sector?

RG: With so much innovation at our forefront the need for collaboration is bigger than ever.

We haven’t, over the last ten years, had much collaboration between the mining and the METS sector.

"Collaboration is really self-enlightenment – if we work together we will move faster."

Collaboration is really self-enlightenment – if we work together we will move faster. I think that concept, of competing and collaborating at the same time, is better understood in Europe than in Australia.

We had a good example of collaboration last year when industry collaborated to increase the standard in WiFi. Establishing a new standard brought a whole host of opportunities that created new business. Once the standard was created, of course, companies competed heavily to best position themselves in that sector. But industry understood that without putting the standard in place the opportunity wouldn’t have emerged.

HV: You said the sector needs to attract a strong skills base, why does it have a problem in this regard?

RG: I think there is a perception of a boom-bust industry, and it is in some context, but there is more iron ore being produced in Australia now by a factor of four than three or four years ago – so in the iron ore industry Australia is strong.

I am certainly passionate about this element, the need for young people to understand how exciting and challenging the sector is. The mining industry is not only about digging holes; it is sophisticated, it is complex, it is extremely demanding from an engineering and scientific perspective and it is a good place to be.

We are working with industry to make sure we have the skills we need in the future.  We are leading the conversation – that is our role – and we are doing this with engagement from industry. Over the next ten years we see this as being industry led.

HV: How do you plan to spur innovation in the sector?

RG: In regards to innovation and collaboration there are a range of initiatives we see as impertinent. We are working at establishing enablers for innovation, things like developing a network of living labs across Australia that are from the virtual to the real where you can test various elements in test mines.

We want to link all these labs and test mines across the country as a collaborative and accessible network to facilitate early stage development and research and advanced innovation.

Miners are conservative in their approach to technology, for a whole host of reasons, the more you can create these networks and facilitate access to them the more likely they are to progress to the mine.

HV: Will innovation result in more automation?

RG: Definitely. Already you are seeing more automation; collision avoidance systems across mines are here now. There is already an emergence of driverless trucks and equipment. Much of those are now progressing to what we call the orchestration of equipment in underground mines and surface mines to have multiple vehicles and pieces of machinery operating independently and without humans – all of that is happening now.

"There will be, potentially, a reduction of base-skilled jobs through automation."

We see an emergence where the nature of the work will change in mines. There will be, potentially, a reduction of base-skilled jobs through automation. But on the other side you will see an increase, potentially, of analytical work that reduces the cost of running mines.

There are some arguments this will have a net reduction of jobs in the mining industry, but I think that is going to be pretty marginal.

HV: How strong is investment in the METS sector?

RG: There are hundreds and hundreds of METS in Australia and most of those are SMEs and majority Australian-owned. Some companies are turning over between A$25m and A$200m and they are typically 80%-90% Australian-owned ones.

But there is only one venture capital fund in Australia that focuses solely on METS companies. Certainly, one of the areas we see as needing some work is with the venture capitalists globally to continue to demonstrate where the emerging opportunities are in the sector and there are many when you look at all the start-ups in Australia.

Australia is open to foreign investment. We have extensive foreign investment across multiple sectors. In the METS sector we see an opportunity to attract more whether it is Australia-based or foreign.