The future(s) of minerals exploration

John P. Sykes123

, Allan Trench124

& T. Campbell McCuaig15

1. Centre for Exploration Targeting, School of Earth Sciences, The University of Western Australia; 2. Business School, The University of Western Australia;

3. Greenfields Research Ltd., United Kingdom; 4. CRU Group Ltd., United Kingdom; 5. BHP Billiton Ltd., Australia

Email: john.sykes@research.uwa.edu.au

Acknowledgements: The authors would like to thank Sandra Occhipinti (CET, UWA), Nicolas Thebaud (CET, UWA), Mark Lindsay (CET, UWA) and the other organisers of TARGET 2017 for their efforts in organising this conference.

John would like to acknowledge the support of the non-authoring members of his PhD supervision team: Mark Jessell (UWA-CET) and Nicolas Thebaud; as well as the financial support of a Centre for Exploration Targeting ‘Ad hoc’

scholarship and an Australian Government Research Training Program Scholarship. The authors would like to thank the participants in the three CET “Future of Minerals Exploration” Scenarios Workshops: Jonathan Bell (CET, Curtin),

Leila Ben Mcharek (Muslim Studies, UWA), Rob Bills (Emmerson Resources), Aida Carneiro (Mining Engineering, UWA), Ivy Chen (CSA Global), Aaron Colleran (Evolution Mining), Tim Craske (Geowisdom), Liz Dallimore (KPMG),

Deon deBruin (Diamond Indicator Minerals), Edoaldo Di Dio (Calibre Projects), Joe Dwyer (HiSeis), Mayara Fraeda (CET-UWA), Nick Franey (NFJ Consulting), Simon Gatehouse (BHP Billiton), Jeremie Giraud (CET, UWA), Marcelo

Godefroy Rodriguez (CET, UWA), Chris Gonzalez (CET, UWA), Isabel Granado (Information Systems, Curtin), Matt Greentree (SRK Consulting), David Groves (CET, UWA), Mike Haederle (Rio Tinto), Mike Hannington (Metalicity),

Nick Hayward (Teck), Amanda Hellberg (Law, UWA), Paul Hodkiewicz (Anglo American), Amy Imbergamo (Environmental Science, UWA), Constanza Jara (CET, UWA), Caroline Johnson (CSIRO), Heta Lampinen (CET, UWA), Helen

Langley (Law, UWA), John Libby (Digirock), Martin Lynch (Author of “Mining in World History”), Stuart Masters (CS-2 Consulting), Michael Mead (Gold Fields), Adele Millard (Anthropology, UWA), Joanne Moo (Environmental Science,

UWA), Suzanne Murray (Billabong Gold), Sandra Occhipinti, Ahmad Saleem (CET, UWA), Ian Satchwell (PerthUSAsia Centre), Robert Sills (Sills Strategic Materials), John Southalan (Law, UWA), David Stevenson (CET, UWA),

Narendran Subramaniam (Transmin), Siobhan Sullivan (Plant Biology, UWA), Daniel Sully (Teck), Janet Sutherland (Business, Curtin), Marcus Tomkinson (MMG), Marnie Tonkin (Anthropology, UWA), Jan Tunjic (CET, UWA), Will

Turner (Independent Geological Consultant), Stanislav Ulrich (AngloGold Ashanti), Jessica Volich (BHP Billiton), Wenchao Wan (Chemical Engineering, UWA), Peter Williams (HiSeis), Marcus Willson (CSA Global) and Afira Zulkifli

Tahmali (Environmental Science, UWA). John would also like to thank Steve Beresford (Independence Group), Jon Hronsky (Western Mining Services), Robbie Rowe (NextGen Geological), Richard Schodde (MinEx Consulting), John

Vann (Anglo American) and the members of #explorationtalk for the continued support, guidance and championing of this research.

References

Andrews, T., Harman, J., Horgan, M., & Volich, J., 2016, ‘Future licence to prosper’ key to unlock mining sustainability, Centre for Exploration Targeting News & Events, 19 February: http://www.cet.edu.au/news-and-

media/news/news-details/2016/02/19/future-licence-to-prosper-key-to-unlock-mining-sustainability

Baghai, M., Coley, S., & White, D., 1999, The Alchemy of Growth: Kickstarting and sustaining growth in your company, Orion Business Books, London, UK, 250p

Cliff, D., Harris, J., & Bofinger, C., 2016, Ensuring health and safety through the entire mining cycle, The AusIMM Bulletin, August: https://www.ausimmbulletin.com/feature/ensuring-health-and-safety-through-the-entire-

mining-cycle/

Greenwood, K., 2016, Practicing the Art of Innovation, Critical Essay, Strategic Management of Resource Companies, The University of Western Australia

Porter, M.E., & Kramer, M.R., 2011, Creating shared value, Harvard Business Review, 89, (1/2), p62-77

Ramirez, R. & Wilkinson, A. 2016, Strategic Reframing: The Oxford Scenario Planning Approach, Oxford University Press, Oxford, UK, 272p

Sykes, J.P., & Trench, A., 2014, Chapter 14: Finding the copper mine of the 21st century: Conceptual exploration targeting for hypothetical copper reserves, in Special Publication Number 18: Building exploration capability for

the 21st century, (eds., K.D. Kelley & H.C. Golden), Society of Economic Geologists, Littleton, CO, p273-300

Sykes, J.P., & Trench, A., 2016, Using scenarios to investigate the long-term future of copper mining and guide exploration targeting strategies, International Mine Management Conference, Brisbane, QLD, 22-24 August,

p265-289

Sykes, J.P., Trench, A., McCuaig, T.C., Craske, T., Dwyer, J., Subramaniam, N., Sullivan, S.T.M., & Turner, W., 2016a, Transforming the future of minerals exploration, AusIMM New Zealand Branch Conference, Wellington,

New Zealand, 3-6 September, p407-418

Sykes, J.P., Wright, J.P., & Trench, A., 2016b, Discovery, supply and demand: From Metals of Antiquity to critical metals, Applied Earth Science, 125, (1), p3-20

Sykes, J.P., Trench, A., Wright, J.P., Davies, R.S., & Dixon, A., 2017, The energy transition: A mining and exploration industry perspective, World Renewable Energy Congress XVI, Perth, WA, 5-9 February.

Sykes, J.P., Trench, A., McCuaig, T.C., & Jessell, M., 2017, Charles Dickens on the (potentially) changing role of globalization and sustainability in the long-term future of mining and exploration, Tenth International Mining

Geology Conference, Hobart, TAS, 20-22 September, in press

9Trench, A., 2016, Towards big exploration, MiningNewsPremium.net, 11 January: http://www.miningnews.net/insight/strictly-boardroom/towards-big-exploration/

Wikipedia, 2016, Sydney Ferries, Wikipedia: https://en.wikipedia.org/wiki/Sydney_Ferries

The challenge: Targeting ‘accessible’

and ‘economic’ mineral depositsWhat is accessibility? The problem: Predicting economics

and accessibility is not possible

Potential solution one: Adapt to

the future as it emerges

The problem: The industry may not

be able to adapt to the future

Potential solution two: Generate

new ideas and open up new

search spaces

Potential new search space one:

New commodities

Future test: Are you competing

on three horizons?

Practical advice: Watch and

listen

Potential new search space two:

Behind ‘socio-political’ barriers

An example: ‘health & safety’ as a

source of excellence & opportunity

Potential new search space three:

Behind ‘geopolitical’ barriersTip: Politics is a playgroundSome ideas, so far

Another problem: We may be unable

to see the future, even if it’s here

Getting ready to take on the

challenge and see the future

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Discovered

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Undiscovered

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Undiscovered and

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Growth in market size indices of copper and aluminium 1900-2014 (1900 = 1)

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For a mineral resource to become a mine, not

only must a geological discovery be made, the

deposit must also prove economically viable, and

environmentally and socio-politically accessible

(Sykes and Trench, 2014).

The complex and uncertain factors associated with

economics and access, however, means it is not

possible to predict the nature of ‘undiscovered

accessible reserves’. The Centre for Exploration

Targeting ‘Future of Minerals Exploration’ scenarios

programme was launched to investigate this issue.

Access to mineral deposits can be

restricted by either strategic

considerations (geopolitics) i.e. when

production is dominated by one or two

countries / mines; or sustainability

considerations (socio-politics) i.e.

when production is restricted for

environmental reasons or by local

communities (Sykes et al., 2017).Scenario

planning

investigates

multiple different

options, rather

than making

one specific

prediction

(Ramirez &

Wilkinson,

2016).

Scenarios set one: aimed to develop a range of

scenarios about the short- and long-term future

of copper mining, then compared them to leading

copper companies, mines and projects to

determine how well the industry could adapt from

the short- to long-term (Sykes and Trench, 2016).

No copper company, mine or project is robust in

both the short-term and long-term. This leaves the

industry with two options:

1. Blend portfolios from the numerous brittle

assets focusing on the ‘margin optimisation’ axis

– a financial and economic approach;

2. Generate new ideas as to what a robust mine

could be – focusing on the ‘idea space’ axis and

thus the competencies of the industry.

Mining industry thinking

is generally asset and

portfolio orientated so

the scope for generating

‘new’ ideas this way is

limited.In

cre

ase

d

De

cre

ase

dLong-term idea space generation

Crusades Counting House

Peasants’ Revolt Under Siege

Short

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arg

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Increased

Decreased

Industry capabilities is a less developed area of

thinking in mining so seemed more likely to be

fruitful in developing new ideas.

Scenario set two: generated a pathway to the

long-term future, considering the whole mining

industry and its capabilities (Sykes et al., 2017).

Drawing from Baghai et al., (1999) to make

it through the transition a company must:

• Horizon 1: ‘Survive the present’;

• Horizon 2: ‘Go through the transition’;

• Horizon 3: ‘Thrive in the future’.

To make it through the transition, two key

capability sets at two corporate levels are

required:

• Working at a high-level with government and

understanding major technological shifts;

• Working on the ground with local

communities and emerging innovators.

Both ‘horizon scanning’ (Ramirez & Wilkinson,

2016) and ‘listening posts’ (Greenwood, 2016)

are required. The former for the high-level; the

latter for local level.

An example for ‘breaking down socio-political

barriers’ is the evolution of ‘health and safety’ (H&S)

in the workplace, including mining. Originally H&S

was treated in a ‘compliance’ manner with managers

seeing it as a ‘barrier’ to profit (social licence is

currently at this stage). H&S implementation was

ineffective. Later, H&S became a ‘culture’ leading to

effective implementation (Cliff et al., 2016).

Eventually, companies like DuPont saw it as a source

of ‘excellence’ and competitive advantage. Turning

‘social licence’ into an ‘excellence’ could open up

opportunities for explorers, via access to new areas.

Scenario set four:

sought to bring

together the findings

of all the workshops

(Sykes et al., in

press). The final

scenarios were

based on two socio-

economic axes:

1. Economic value

versus shared

value (Porter and

Kramer 2011);

2. Globalisation

versus

localisation.

Adapting to the future

may prove very

challenging. It is likely

that some radically new

ideas are required, as

suggested in the previous

section. However, these

ideas may require very

different skillsets and

people to those currently

present in the industry. As

such, it is plausible that

the industry is currently

not capable of seeing the

future, even if it wants to

and it is already here.

A parable: Sydney

Ferries was once the

world’s largest ferry

company, but it literally

failed to see the future

being built above it: in

the shape of the Sydney

Harbour Bridge.

(Wikipedia, 2016).

One new search space could be new

commodities. Many minor metals are currently

‘geopolitically’ restricted in production, yet seem

critical for a ‘sustainable’ future as they are used

in batteries, renewable energy, hybrid cars etc.

This has happened in the past: Aluminium was a

minor metal in the 19th century, but is now a

major commodity market (Sykes et al., 2016a).

One of the

common problems

in the mining

sector is

‘generating ideas

not businesses’

(left) where long-

term thinking is

not linked to

business practice.

Scenario set three: considered how to build industry

reputation and break-down socio-political barriers

(Sykes et al., 2016b). In one scenario (‘Hunger Games’)

explorers focus only ‘commercial licence to operate’

(Andrews et al., 2016),

or ‘small exploration’ i.e.

just finding mineral

deposits. In the other

scenario (‘Star Trek’)

explorers pursue both

commercial and ‘social

licence to operate’ or

‘big exploration’

(Trench, 2016) i.e. also

working with innovators

and communities.

Strategists tend to overreact to the

short-term in politics – the ‘swings’

back and forth between political parties

that are inevitable in a democracy, thus

something we should remain

strategically neutral about.

Over time politics undergoes gradual

shifts, which affect all parties

(‘roundabouts’) – we may currently be

seeing this with increased ‘localism’ in

politics. We need to adapt to these over

the long-term.

Finally, there are ‘climbing frames’ –

inevitable, unmovable parts of the

future. A focus on sustainability seems

to be part of the future – it must be

tackled.

The initial findings of this research project

are:

• That it is unlikely we can adapt the

current mining industry and its assets to

a long-term future that is too different.

Explorers need to generate some new

ideas to transition to this future, such as:

• Focusing on new commodities

associated with a different long-term

future;

• Developing a better ‘social licence’ so

that we can overcome socio-political

barriers to entry;

• Being more cognisant of political trends

and overcoming geopolitical barriers to

entry.

Minerals explorers will need to make some changes

to be able to see what a future economically viable,

and environmentally and socio-politically accessible

resource will look like. These include:

• Developing strategies and capabilities to

effectively enter emerging commodity markets;

• Building a diverse exploration culture to bring in

ideas from other industries and disciplines;

• Encouraging creativity and ideation;

• Linking short and long-term thinking;

• Monitoring local and global socio-political,

economic and technological trends;

• Measuring and understanding the potential

impact of these trends.

Maybe then we can take on the challenge…

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