The mining sector鈥檚 recent shift towards adopting technology to tackle rising costs is turning digital intellectual property into a valuable commodity in its own right, says global law firm White & Case.
鈥淭echnology is increasingly becoming a core component of mining and metals sector business strategies,鈥� a partner with the firm, Daniel Turgel, told The Northern Miner in an interview Wednesday.
This trend is driven by rising operational costs and a need for the supply of minerals essential for the energy transition, according to the law firm鈥檚 March 5 report entitled Technology 鈥� The hottest commodity in the mining & metals sector.
IP is becoming crucial, transforming into a valuable asset exchanged among industry players to boost efficiency and reshape business models, Turgel explained.
A prime example is the partnership between Ivanhoe Electric (TSX: IE; NYSE AM: IE) and Saudi state-owned miner Ma鈥檃den, leveraging Ivanhoe鈥檚 Typhoon technology to explore large areas in Saudi Arabia. Ivanhoe鈥檚 Typhoon technology, used for large-scale geological surveying, was essentially the 鈥榩ayment鈥� or value offered to Ma鈥檃den for access to explore vast mineral-rich areas in Saudi Arabia.
鈥淭echnology actually becomes the currency,鈥� Turgel said, highlighting the evolving nature of transactions in the sector and technology鈥檚 rising role in making new strategic cross-industry alliances.
鈥淚t鈥檚 becoming much more prevalent that for example, you might contribute your technology in return for an equity stake or some kind of debt instrument,鈥� he said.
Rebecca Campbell, group head of global mining & metals, says this type of innovation is new for a generally conservative sector. 鈥淥ne of the fascinating things for us, as we鈥檙e starting to see a little bit of a shift.鈥�
This trend underlines the growing importance of securing and managing IP rights amid the potential for new legal challenges. While hardware traditionally dominated the spotlight, the rise of software and AI has the potential to revolutionize mining operations. The report highlights the cost savings and efficiency gains achievable through these technologies.
Machine learning and AI have already provided considerable improvements in efficiency, accuracy, and safety mine planning and processing, White & Case associate Nick Crawford says.
鈥淕enerative AI, in particular, has opened new possibilities in exploring and processing vast amounts of geological data, significantly accelerating the project development process,鈥� he said. 鈥淐ompanies like BHP and Vale are leveraging these technologies to improve safety, maintenance, and operational efficiency.鈥�
Meanwhile, White & Case found that despite the urgent need to innovate, the sector鈥檚 spending on research and development (R&D) remains relatively low. Miners historically spend less than 3% of their EBITDA on R&D, as opposed to 8% for materials producers, 30% for industrials, and 40% for automakers and relevant original equipment manufacturers.