Why Peru's mining suppliers have a hard time innovating

Despite incorporating new technologies for greater efficiency and risk reduction, general innovation in Peru’s mining sector is limited to specific areas, as suppliers also face challenges to implement disruptive solutions.

While mining companies are open to innovation, they demand very solid evidence of effectiveness and adaptability, which closes spaces for suppliers to demonstrate and develop their technologies. In this scenario, suppliers prefer to focus on less disruptive areas, according to the CEO of Chilean consulting firm Phibrand, Cristian Mansilla. 

“Mining companies are risk averse, but they are risk averse like any other company that seeks to take care of its business. Currently, there are no real mechanisms for these to buy innovation directly; and innovative proposals fall into the same bag as regular purchases of goods and services,” Mansilla told an event hosted by the Peruvian Institute of Mining Engineers (IIMP).

SURVEY

Phibrand conducted a survey with 208 mining workers and executives in Peru and found that 73% of respondents want innovative solutions to focus on operational safety, 68% on cost reduction and a 58% on productivity of equipment and processes.

See the Phibrand survey in the Documents box in the top right corner.

Some 48% believe that innovative solutions should be used to reduce environmental impacts and 25% think they should be used to lower the carbon footprint.

“This tells us two things: the focus is on operational continuity, and that environmental sustainability is not yet seen as a business or a practice that generates dividends,” Mansilla said.

Also, 39% believe innovation is required for processing and transportation, 27% for mine planning and development, 18% for extraction and 11% for exploration.

INCENTIVES

Although 59% of respondents said they considered changing suppliers, 56% also said they would likely not find a better than the current one. This situation leads suppliers to cling to mining companies they have contracts with, and since innovation is competitive, there are few incentives to propose new solutions, according to Mansilla.

Competitors seeking new customers have the greatest incentives to innovate, but they have little chance of winning tenders, Mansilla said.

Over 80% of survey respondents recognized Metso and FLSmidth as the main suppliers of plant equipment and components.

Mansilla said that although it is understandable the miners, many with foreign owners, prefer outside suppliers due to international standards and economies of scale they cannot neglect, local companies will find room to grow in the services, spare parts and maintenance areas.