Why are African Tech Startups not focusing on the Mining Sector?

Africa has a vast wealth of mineral resources. The mining industry on the continent contributes significantly to the economies of the various countries. For many African countries, mining remains an important source of export earnings.

In 2012, the mining sector contributed 5.5% to South Africa's GDP and accounted for 38% of its total exports.

Globally, some of the continent's mineral reserves are ranked either first or second. Botswana, for instance, is the world’s largest diamond producer by value.

In the past decade, however, mining companies faced various challenges and we’ve seen some of these challenges contribute towards GDP declines. In South Africa for example, some of the comapnies in the mining sector saw rising costs and labour unrest.

Mining overall has been under an unsustainable environment and continues to call for innovative solutions.

Goldman Sachs lists “Driving innovation via increased investment in research and development and technology” as one of the ten key issues to address South Africa’s declining global competitiveness. I would imagine that the same would be recommended for other African countries.

With the impression that Africa is a world leader in mining and given the sector's technology challenges,

should we not have increased activity in Information and Communications Technology (ICT) from African Tech Startups in this space?

ICT Adoption in Mining

We’re past the stage of convincing Africa’s mining industry that advantages exist from technology investment if applied well. We're over the period of “lack of business commitment to/awareness of IT” as an impediment.

ICT is seen as a strategic necessity for improvement of safety and operational effectiveness. Africa’s mining industry as a whole invests billions of South African Rands per annum towards ICT and innovation. This stems from the need for mining companies to innovate to meet falling real prices. Between 2011 and 2013, gold has had its steepest decline in 30 years as an example.

According to Tracking The Trends 2014 (Mining) by Deloitte,

“Rather than one-off cost reductions, mining companies must embark on sustainable cost management programs to become – and remain – lowest-quartile-cost producers.”

Deloitte lists some strategies to consider in these programs and one of the key elements of these strategies is technology.

AngloGold Ashanti CEO Srinivasan (Venkat) Venkatakrishnan recently told Mining Weekly Online that technology is the

“single key we have to improve productivity, which is the answer to a number of issues within the South African mining industry”.

Diminishing engineering skills on mines means that companies have had to reduce capacity to experiment with alternative solutions in-house. They’re also looking for you, “garage inventor”.

Status Quo

We've seen a number of excellent Technology solutions come out of big mining companies, primarily sourced from technology companies outside Africa. For decades we had South African gold mining companies pioneering innovation through the Chamber of Mines Research Organization with hydraulic technologies, for instance.

We currently have great innovation research programmes like Coaltech 2020 which involves some large corporations and research institutions.

Mintek is another formidable player in South Africa. The average African techie and tech startup unfortunately doesn't know much about such programmes, regardless of the size of this industry.

Large corporate companies aside, I've personally come across very few tech startups looking at ICT solutions in this space. Besides, having only seen "repeat technologies" adopted from other continents and the lack of invention and innovation, I find that these tech entrepreneurs are not vocal about what they’re doing or visible enough. At least not to the degree I would expect, given that Africa is a world leader in mining.

I've also seen relatively few products or discussions come out of Innovation Hub, JoziHub, Silicon Cape, iHub etc. primarily focused on Mining Technology.

Are discussions around Mining Technology ever featured in Tech Hangouts or any of the TedX events in Africa?

If we have to examine the activity of black owned companies in this space, the picture becomes even more displeasing. That’s however a topic that deserves its own article.

The Challenge

I've heard many stories of employees in mining companies writing innovative software applications to optimize existing mining methods or processes, and having the intellectual property taken from them by their employer.

We cannot say the capability is not there. What could possibly keep the average techie from exploring this industry?

Perhaps the culture of tech entrepreneurship is not mature enough in Africa to be prominent in the mining industry. Historically, ICT penetration in the mining industry has been lower than in many other industries, which is understandable given the high correlation between ICT penetration and the scale and scope of the knowledge work performed by an organisation.

Could it be the lack of lucidity of “Ability to Service” and the assumption that a Mining background is mandatory?

I think we can rule out the old belief that majority of ICT spend goes towards in-house ICT support and less towards development of new solutions aimed at efficiency.

This has changed significantly over the past decade.

Recently, the South African mining industry is seen as unstable and marred with labour strikes leading to business change. Business change affects the complexity and spend for the ICT landscape.

This instability and, an industry tainted with corruption and unaccountable bureaucracies could be contributors.

Could there also be a fear of labourers and unions opposing certain technologies that might be misconstrued as being introduced to police or replace jobs?

Sabotage by the labourers is a problem faced by many companies that introduce ICT change. There are solutions to overcome some of these challenges. For instance, the method of transparency and clear communication of change benefits has been used to overcome resistance from labourers.

The above considerations don’t warrant this amount of silence from tech startups in this industry.

Let’s Get Cracking!

There is no doubt that developed countries have decades of research behind them. They’re significantly advanced in terms of tech development and measures taken to address problems of adoption.

However, the closer you are to the problem the better a solution you can produce. Local African entrepreneurs have that advantage.

Governments and mining companies have committed to injecting a lot of money into technology and innovation. We have an industry with identified needs and not enough SMME activity. Outside of what existing companies traditionally explore (mining methods, process control, etc), there are many technologies that SMMEs could be looking at (training applications, solutions using Augmented Reality, surveillance systems, product tracking systems, etc).

If you're already out there, you're not loud enough!

Image Credit: Erik Hersman

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