“The crises of our time, it becomes increasingly clear, are the necessary impetus for the revolution now under way. And once we understand nature’s transformative powers, we see that it is our powerful ally, not a force to feared our subdued.” – Thomas Kuhn
“Mining companies are no strangers to volatility, but this past year delivered a string of serious blows. As China puts the brakes on its ultra-high growth rates, key commodities such as iron ore and coal threaten to tip into over-supply. Despite weaker commodity prices, costs continue to escalate and many governments are still demanding a growing piece of the pie. As a result, share prices, revenues and profits are falling, and debt levels are rising, with gold miners particularly devastated.”
The global mining industry is entering a near perfect storm. Softening prices for minerals have led to a weakening investment climate coupled with real and immediate need for cost reductions. The number one controllable expense for any corporation is headcount. The immediate result of corporate downsizing is a highly skilled and dedicated workforce of educated people with deep domain knowledge being displaced for an indeterminate amount of time. Industry wide cuts of significant numbers of workers can be a major shock to communities where the affected people are primary contributors to the local economy.
The hollowing out of an entire industry can create major socio-economic problems for all of the key stakeholders in a region. The three key stakeholders in the mining industry are: affected workers, regional economy and the mining companies. The interests, alignment and interdependence of all three stakeholders are highly intertwined.
Seeds of Opportunity
While the mining industry may be entering a near perfect storm, this time of transition also presents some significant opportunities to the key stakeholders. The opportunity presented by the displacement of significant numbers of highly skilled workers with deep domain knowledge is to focus their energies on providing solutions to industry wide problems.
The intent is to develop sustainable businesses through entrepreneurship and innovation that: harness the skills and knowledge of the displaced workers, keep talent working / living in the region to provide wealth and value for the local economy by solving industry wide problems that provide real monetizable value to the mining companies and / or adjacent industries. The real opportunity is to help facilitate and strengthen local business ecosystems by building long term sustainable venture companies with the skills and knowledge of the displaced workers that help to solve real problems for local industry.
You facilitate and strengthen local business ecosystems through entrepreneurship and innovation. Entrepreneurship is the act of translating innovation into economic goods or, more precisely:
An entrepreneur is “one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods”. This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. ii
Innovation is “the process through which economic and social value is extracted from knowledge through the generation, development, and implementation of ideas to produce new or improved strategies, capabilities, products, services, or processes.”iii
A December 1st, 2013 article in the Globe and Mail titled “Dundee’s real-time data innovations are as good as gold”iv highlighted Canadian wireless and data networking innovation implemented in the Toronto-listed Dundee Precious Metals Inc.’s Bulgarian gold mine. This is a perfect example of the type of innovation that can be commercialized through entrepreneurship.
The next post in this series will delve more deeply into the “HOW” to facilitate and strengthen local business ecosystems by building long term sustainable venture companies with the skills and knowledge of the displaced workers in the mining industry.
i “Tracking the trends 2014”, Deloitte Global Services Limited, Phil Hopwood, pg2
ii The 2008 Legatum Prosperity Index Report, Methodology, Data and Findings
iii “Center for Business Innovation” The Conference Board of Canada, Innovation Defined