Later this year, Rio Tinto will seek board approval to spend $2.2B to build the world’s first “intelligent” mine, a network of robots and autonomous vehicles all working together on the site of the earth’s largest iron ore complex in Western Australia. Whether or not the project is approved, the firm already is 10 years ahead of rivals in autonomous technology, the firm’s CEO told the Economist in a recent article.
In our research on Knowledge Leaders, a $2.2B commitment to the future is the type of measurable investment that stands out. That’s because the first step in our investment process is to capitalize intangible investments. We adjust a company’s financial history so that investments in the future – $2.2B in R&D, for example – doesn’t just get expensed and disappear from the financial record, rather it counts as an asset. This way, when we get to the next step – a quantitative screen for Knowledge Leaders – companies with intangible assets such as, say, the world’s first intelligent mine, will rise to the top.
A hallmark of a Knowledge Leader firm is industry leadership through advances that other companies (Knowledge Followers) then mimic in effort to compete. Indeed, a consistent theme in Rio Tinto’s reported strategic priorities is “breaking new ground in the industry … to deliver faster and better processes, cleaner and greener outcomes.” At Rio Tinto, this is executed by the firm’s 47,000 employees via the use of automated trucks and trains, remote operated drills and drones, and exploration via 3D modeling, to name a few of the tools evaluated and deployed by the firm’s Growth & Innovation group.
The site of the first intelligent mine and Rio Tinto’s most visible (and expensive) innovations is Pilbara, Western Australia, a complex of 16 iron ore mines, plants and distribution centers. Already at work on the ground is “AutoHaul,” a fully autonomous, high-speed, long-distance rail system, in addition to a new fleet of autonomous Komatsu trucks. Komatsu, by the way is another Knowledge Leader company investing in its future growth. In this case, Komatsu also has partnered with Rio Tinto to retrofit existing trucks in the direction of full autonomy.
Iron Ore, which accounts for about two-thirds of Rio Tinto’s earnings, is the home of the firm’s greatest investments in innovation, with the expectation that these advancements eventually will trickle down to other groups much like breakthroughs from NASA’s Space Program – memory foam, cordless power tools, lithium ion batteries in our phones — trickled down to life on earth.