October 2013

Innovation

Canada needs to rediscover its innovative streak

By Vic Pakalnis

The honest truth is that Canada is doing poorly in innovation and failing to invest in research. Particularly in mining, we are losing our edge and becoming less competitive. The World Economic Forum ranks Canada at 21st in innovation and 22nd among Organization of Economic Co-operation and Development countries in expenditures on research and development. This correlation is glaring. Mining research and innovation in Canada needs a rebirth, a renaissance and leadership.

The subject has been front and centre at many recent high-profile events. At the World Mining Congress, held in August in Montreal, representatives from around the world heard Mark Cutifani, Anglo American CEO and congress co-chair, stress how the global mining industry needs to recognize that in many areas we are decades behind other sectors in innovation. On a revenue-to-revenue basis, mining spends 80 per cent less on technology research and development than the petroleum industry does. He called for long-term investment in mining and not short-term thinking.

And then, at the recent Energy and Mines Ministers Conference in Yellowknife, keynote speaker Kevin Lynch, vice-chair of BMO Financial Group, laid out the problem. Nationally, we rank behind Slovenia and Iceland in research expenditures, with less than one per cent of our national gross domestic product going into research. And the figures are even worse for our industry. The Canadian Chamber of Commerce, in its 2013 report “Mining Capital,” pointed out that our mining sector spends less than $800 million per year. This compares to $2.7 billion invested by the Australian mining industry annually.

But it wasn’t always this way. Think back to the culture of innovation in the 1970s and 1980s. Canadian remote control technology, such as remote control scooptrams, led the world. New mining methods like vertical crater retreat also emerged during this time. Improvements in mechanization led to a decrease in accident rates and costs. We had mining leaders like Mike Sopko and Walter Curlook from INCO, Bill James and Warren Holmes from Falconbridge, Henry Brehaut from Dome and Alfred Powis from Noranda. They had the vision to look at long-term investment in research and innovation. There was a sense of nation-building back then.

But the last large investments in mining research and innovation were led by the Ontario Government in 2006, when it matched $5-million investments by both INCO and Xstrata. That took vision, courage and collaboration between government and industry.

The industry is in a down cycle, and times will be tough for the next couple of years. We need leadership to position us for the inevitable upturn. We must nurture and develop highly qualified people. Traditionally, in every other down cycle, summer jobs for mining students disappeared, and young engineers-in-training were let go and job offers dwindled. With cutbacks, research and training are discretionary and so get chopped first. The industry’s eye is on the short term and yet investments are required to keep the research and innovation pipeline from drying up.

The mining industry’s research capacity is fragile. In other sectors, such as forestry and the automotive industry, the government assists in ensuring the sectors survive a downturn. The forestry sector, for instance, gets $100 million per year from government sources for research. In January 2013, the federal government announced $250 million for the automotive sector. This past year, the mining industry received $5.1 million over five years for an exploration-related project. Given the mining industry’s contribution to Canada’s economy and its future, these numbers don’t add up.

Here’s a call to arms: Industry and government leaders must renew investments in the mining industry. We need to re-establish our leadership role in areas like mining safety and mine rescue, mine ventilation and sustainable mining. If voluntary action isn’t likely, then public policies, such as improved financial incentives or the establishment of a research fund based on one cent per tonne mined, should be instituted. If that sounds onerous, consider that Australia currently devotes five cents per tonne of coal mined to a research fund. Such initiatives would ensure a sustainable future funding stream to once again establish the Canadian mining industry’s leadership role in mining innovation, technology, and mining expertise.


Vic_PakalnisVic Pakalnis, P.Eng., is the president and CEO of MIRARCO, a mining research organization at Laurentian University in Sudbury, Ontario.

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