Explorers need majors to fund innovation: report

Explorers depend almost exclusively on established miners for innovation even though larger companies restrain their pioneering research, according to a new study.

Almost 90% of the industry says explorers don’t lead the way with new processes while 60% say major and mid-tier miners should be responsible for innovation, Perth, Australia-based resources industry researcher State of Play said in a 78-page report issued on Tuesday.

The high-risk nature of exploration is a key reason why larger operators have limited their exploration, the researchers said. They found more than half of all respondents to a survey listed risk appetite as the biggest impact on the rate of exploration.

“The solution isn’t necessarily getting the large miners to do exploration themselves,” State of Play chairman Graeme Stanway said in a release. “But rather putting the collaborative and financial structures in place to actively support the small companies doing exploration.”

There’s a deep disconnect between explorers and those deciding the future of exploration technology and techniques, according to the report. State of Play surveyed 720 miners, suppliers, government officials, investors and researchers involved in the mining industry across 50 countries and conducted 18 interviews with industry leaders. It’s billed as the largest report issued every two years on innovation and strategy in the resources industry.

Accelerator program

Exploration venture funds are the best option for improving access to exploration finance, followed by partnerships, the research group said. The sharing of information and capital can also help the process, it said. BHP’s (LSE: BHP; NYSE: BHP; ASX: BHP) Xplor accelerator program is an industry-leading example of how a strategic partnership can foster exploration innovation, according to the researchers.

The surveys also found geopolitical alliances will have the biggest impact on global supply chains in the mining industry, according to 56% of respondents.

Battery minerals will offer the most attractive investment returns over the next 15 years, 81% of respondents said.

Nearly 70% of CEOs said their timeframe for innovation focus was less than three years.

There will be a carbon-based price differential for their commodities in the next five years, two-thirds of those surveyed said.

A nexus of new technologies including downhole sensors, data processing, machine learning and artificial intelligence modelling solutions is needed to drive discoveries, says Sandra Occhipinti, a director at the Commonwealth Scientific and Industrial Research Organisation. The body is Australia’s national science agency, which helped sponsor the survey.

“The question that remains is what the future of mining will look like given the imperative to decarbonize, the growing need to innovate when it comes to exploration and supply chains, and the growing negative perceptions from broader society,” the report’s authors concluded. “We can only imagine the disruption that may take place over the next few years.”