Commodity Industries Fear Change

Do you have an amazing innovation that will improve productivity? Struggling to get a company involved in a commodity market to adopt your new innovation? “Resourcing the Future” 2013 Annual LESANZ Conference was a great place to learn about strategies to increase adoption and more… (http://lesanzconference.org.au/)

We learnt that this resistance may solely be due to fear. Fear of what? The answer: perceived integration risk. A fragile linear supply chain, full of sequential projects that currently work perfectly together to keep the companies below the cost curve and profitable. Potential downtime of a sequential step causes delays and will cut the profit margin. Some would say that this is very short term thinking.

Physics is the fundamental driver of mining and the fear of unintended consequence causes this resistance. It is thought that once all the easy areas are mined, the companies will move country – as early as five years away. For the Australian Mining Industry to stay competitive they will need to change and adopt new innovations now. Apparently it could take 15 years for the mining industry to adopt, if this is the case, if it’s not already adopted – then we are already too late.

Two potential strategies were suggested, 1) Partnering and licensing to existing companies that are already established and working with the fragile mining system and/or 2) decouple the perceived risk through demonstration in a working system.

Collaboration, partnering and licensing to de-risk innovation became a common theme of the conference. Other takeaways included:

  1. Data analytics is gaining traction in the resource industries, where “big data” is considered an important intellectual asset. Proprietary algorithms are considered very valuable.
  2. UK has a new popular tax incentive for companies coming into affect this year – Patent Box. This offers a lower tax rate on profits from a patented process. To be eligible the invention must be a granted patented in the EU and has to at least be an active subsidiary in the UK. Apparently GSK and ARM are already investing heavily due to the announcement of this scheme. (http://www.hmrc.gov.uk/ct/forms-rates/claims/patent-box.htm)
  3. Clear differences between Australian, USA, European and Chinese law; in an international licensing agreement you cannot rely on Australian Law.

The LESANZ Conference was a valuable experience, much was learnt and many connections in the licensing field gained. Next year the “Ideas. Create. Prosperity” 2014 Annual LESANZ Conference is going to be held in Perth, 20-22 March. (https://lesanz.org.au/realmevents/conference.html)

For more information contact

Lisa van den Berg – Commercial Manager