12.2.1 Patenting by Australian Innovators over Time

Analyzing patent filings over time (Figure 12.1) can help to identify innovation trends. Such trend analysis is useful for informing R&D investment decisions and related activities such as collaboration and commercialization. The following section of this chapter, using data from the Australian Government’s R&D Tax Incentive program, investigates R&D investment in the mining industry and compares this to patent filings to give a broader picture of Australian innovation in this sector.

Figure 12.1 Patent families of Australian origin, by priority year, 1997–2015

As a basis for this study, we used the dataset of Reference Daly, Valacchi and RaffoDaly et al. (2019), derived using a modular hierarchical search strategy of International Patent Classification (IPC) and Cooperative Patent Classification (CPC) classification symbols and keywords. The data used in this chapter includes 2,997 unique INPADOC patent families derived from PATSTAT 2017 Autumn Edition and IPGOD 2017 data, with earliest priority dates from 1 January 1997 onwards.Footnote ⁴

The number of patents filed annually rose from 117 in 1997 to 169 in 2008, an increase of 44 per cent. A further 24 per cent increase from the level of 2008 was observed during 2010–12, averaging around 210 annual filings. This is in line with increased investment in the mining sector during the latest Australian ‘mining boom’ period. Since the mining boom’s peak, patenting activity has sharply declined from 2013, to 134 filings in 2015, comparable to the 1997–2004 period average.

12.2.2 Australia’s Mining Boom

In a Reserve Bank of Australia research paper, Reference Downes, Hanslow and TulipDownes et al. (2014) used historical time series data to review and model Australia’s ‘mining boom’, in which the world price of Australia’s mining exports more than tripled over the 10 years to 2012, and investment spending in the mining sector increased from 2 per cent of GDP to 8 per cent during this period. Iron ore prices rose from about $20 a tonne in 2002 to peak at about $170 a tonne in 2011.

This mining boom had three phases: price rise, investment boom and production boom. The investment boom began as world commodity prices rose, driven largely by a Chinese demand to fuel its infrastructure investment. The boom in mining production lagged a few years until the capacity created by the surge in mining investment became available. While export prices have fallen from their peak in 2012, the volume of Australian mining production has remained high, thus maintaining strong export revenues, although the picture varies by commodity (Australian Government Department of Industry, Innovation and Science, 2018a).

Reference Downes, Hanslow and TulipDownes et al. (2014) portrayed the mining boom as a confluence of events that boosted world minerals prices and mining investment, and in turn the volume of Australian mining output. For example, the development of horizontal drilling and seam fracturing or fracking technology allowed the exploitation of coal seam and shale gas reserves that previously were difficult or impossible to tap. Together with the development of new technological capabilities and resources, a combination of factors in Asian energy markets, particularly concerns over energy security, pollution and greenhouse gas emissions, led to a demand for long-term contracts that allowed commitments to build large-scale projects. The boom can also be explained by less complex factors, such as growth in Chinese steel demands.

12.2.3 Top Australian Innovators

In Australia, a patent provides the owner of an invention an exclusive right for 20 years to commercialize the invention. Inventors file patents to protect their products and processes from imitation without compensation, and so the number of patent families filed by an applicant in a particular technology can be indicative of their interest, strength and market presence, or their desire to build and maintain a market share.

Figure 12.2 identifies the top innovators originating from Australia.Footnote ⁵ The top three patent filers contributed 15 per cent of total patent filings in the mining sector; about 59 per cent of these were related to metal refining technology.

Figure 12.2 Top Australian patent filers

While the multinationals Rio Tinto and BHP Billiton dominate Australian patent filing through their Australian subsidiaries, Australia’s publicly funded Commonwealth Scientific and Industrial Research Organisation (CSIRO) is the third largest Australian filer.Footnote ⁶

The relatively large number of patent filings by CSIRO demonstrates the importance of the mining sector in Australian publicly funded research. However, overall, patent filings in the mining sector are driven by corporate entities and individuals. Figure 12.3 shows that 67 per cent of patent filings are directly attributable to companies, in a total of 2,997 patent families filed by Australian innovators.Footnote ⁷

Figure 12.3 Australian entities who file patents, by entity type

Note: Data on entity type is not available for 47 Australian patent filers.

12.2.4 Technology Specialization by Australian Innovators

So far, we have observed the volume of patents and patent filers over the past two decades. This section explores the different patenting technology areas with a view to understanding areas of strength and competitive advantage for Australian innovators. Patents are assigned a technology category based on the inventions they describe. This allows us to compare activity levels for different categories or subcategories in the technology.

Based on the IPC and/or CPC symbols, Figure 12.4 illustrates the total number of patent families by each broad technology category, while Figure 12.5 shows their movements over time. These broad groups are further subdivided in Table 12.1 and Table 12.2.Footnote ⁸

Figure 12.4 Patent filings by Australians, by mining technology

Figure 12.5 Patent filings by Australians, by mining technology, by priority year, 1997–2015

Patents within the mining operations category make up 36 percent of total patent filings, with twice as many filings as the metal production category, which is the second largest category overall. Filings over time in the metal production category do not reflect the overall pattern of the whole sector observed in Figure 12.1, of growth to 2010–12 followed by a sharp drop in 2015.

Table 12.1 (mining operation, production and exploration) and Table 12.2 (mining support services) show the number of patent families filed within technology sub-categories by entity type. Corporate entities filed the highest number of patent families in most areas. This was closely matched by numbers of patent families filed by entity type ‘other’, which may be individuals or entities not identified as companies or public entities.

12.2.5 Where Do Australians Seek Patent Protection?

Applicants must file patent applications in each country or patent jurisdiction where they wish to have patent protection. This means that possible target markets for inventions in any technology can be indicated by the jurisdictions in which patent applications are filed.

Figure 12.6 shows the countries where Australian innovators file patent applications in the mining sector. Australian patents are primarily filed in Australia, with 2,571 patents filed since 1997. This represents 77 per cent more patent filings than those filed by Australians in the second largest target market, the USA, which highlights the importance of the domestic market for Australian-origin mining innovation. The relative number of filings into Australia by Australians has increased from the analysis of Reference FrancisFrancis (2015). The USA and Canada represent the second and third largest target markets for Australian innovators, respectively.

Figure 12.6 Jurisdictions in which Australian innovators seek patent protection

Note: The number of patent filings in the top nineteen target jurisdictions are listed in Figure 12.6, all target jurisdictions are shown on the map.European Patent Office (EPO), Eurasian Patent Organisation (EAPO) and African Regional Industrial Property Organization (ARIPO) patents are enforceable in designated contracting states at the date of filing of the application. They are, therefore, included in the target market analysis, and are represented here by non-proportional dots over central Europe, central Asia and central Africa, for indicative purposes only. Patent applications can also be filed directly in individual European, Eurasian or African countries.

12.2.6 Research Collaboration in the Mining Sector

One advantage of analyzing patent data is the ability to identify research partners collaborating on patent applications. The presence of multiple applicants on a patent application may be used as a proxy indicator for collaboration.

Figure 12.7 shows the proportion of patents filed collaboratively by Australians by entity type. Overall, Australians have low levels of collaboration in the mining sector. Publicly funded entities are more likely to collaborate than companies. The proportion of applications filed collaboratively by publicly funded entities (12 per cent) is more than double those filed by companies (5 per cent).

Figure 12.7 Australian patent filing collaboration by entity type

Collaboration between Australians and non-Australians was also analyzed (data not shown); domestic and overseas collaboration was roughly equal. Public entities were somewhat more likely to collaborate internationally than companies. The proportion of collaboration of the publicly funded entities with overseas entities (53 per cent) was slightly more than that of companies (42 per cent).

Figure 12.8 shows the top collaborating Australian applicants for patent filings in the mining sector. Most of the top collaborators are companies, which reflects the dominance of companies in overall patent filings by Australians. In the public sector, Rio Tinto has filed four patents in collaboration with the University of Sydney and one with the University of Manchester, and two patent filings are three-way collaborations between CSIRO, BHP Billiton and the University of Queensland.

Figure 12.8 Top Australian collaborators in patent filings

12.2.7 Case Study: Cooperative Research Centres

The Australian Government’s Cooperative Research Centre (CRC) Program supports industry-led research collaborations between industry, researchers and the community. This is a proven model for connecting researchers with industry for the purpose of commercial R&D. The CRC Program is a competitive, merit-based grants program that supports industry-driven, multi-year research collaborations. Since its inception in 1991, the Australian Government has supported over 210 CRCs and committed over $4 billion in program funding (Australian Government Department of Industry, Innovation and Science, 2016).

Figure 12.9 shows patents filed by CRCs in the mining sector. Identifying CRCs is a complex task as they normally have a short life cycle (up to ten years) and can have multiple iterations where the collaborating entities may differ in some cases (Encyclopedia of Australian Science, 2010; Reference LeverLever, P., 2014; Mining3, 2018a). As a result, the data may not capture all involvement of CRCs in the mining sector.

Figure 12.9 Australian patent filings by CRCs

The CRC for Mining Technology and Equipment (CMTE), the Deep Exploration Technologies CRC (DET CRC) and the CRC for Greenhouse Gas Technologies (CO2CRC) have each filed more than one patent family.

Established in 1991, CMTE was one of the first CRCs formed. This CRC had successful funding renewals in 1997 (CMTE 2), in 2003 (CRC Mining 1) and 2009 (CRC Mining 2). Its most current iteration, Mining3, is a partnership between CMTE and the CSIRO Mineral Resources group formed in July 2016. Their research includes areas such as fracture and damage mechanics, rock and coal characterization, and fragmentation and instrumentation. CMTE has filed 29 patent families, which is three times more than the combined number of filings by all other mining CRCs. Most of its patent filings are in technologies related to excavation, drilling, exploration and safety (Mining3, 2018b).

DET CRC was established in 2010 to address the challenge of decreasing mineral resource availability due to high production rates and low mineral exploration success. This CRC has filed five patent families broadly covering aspects of drilling, data logging, and sensing and targeting of mineral deposits. DET CRC was wound up in September 2018 at the end of its Commonwealth funding period. DET CRC licensed a number of its products and services to its company sponsors; these licences are now being managed by MinEx CRC.

The CO2CRC was established with the aim of researching and demonstrating carbon capture and storage as a major industrial emissions reduction technology. All three patent families filed by the CO2CRC are associated with carbon capture technologies.

12.3.1 The R&D Tax Incentive and the Australian Mining Sector

To assess the impact of the R&D Tax Incentive on the mining sector, we analyzed data on mining companies registered with the program.Footnote ¹⁰

Figure 12.10 shows R&D expenditure of registered mining entities using data from the R&D Tax Concession (2000–1 to 2010–11) and the R&D Tax Incentive (2011–12 to 2015–16) programs.

Figure 12.10 Mining sector expenditure in the R&D Tax Incentive, 2000–1 to 2015–16

Note: There is a break in the data in the 2011–12 income period, in moving to the R&D Tax Incentive from its predecessor, the R&D Tax Concession; this transition is denoted by the grey line.

Under these programs, R&D expenditure in the mining sector has grown six-fold from 2000–1. At its peak in 2008–9, the expenditure of $3.74 billion was nearly 21 per cent of the total R&D expenditure of the entire program that year. After a decline from 2008–9 to 2010–11, there was a small recovery in expenditure to 2012–13, following a pattern across the whole program (Australian Government Department of Industry, Innovation and Science, 2018c). This was followed by further decline, with a total decline of 67 per cent by 2015–16 relative to its peak in 2008–9. This decline reflects the overall picture of investment over time in the mining sector following the mining boom, as discussed in the following sections of this chapter.

Company Size

An analysis of company size can provide insight into the differential impact of the program on different business classes. The annual turnover threshold of $20 million is used to separate small to medium-sized enterprises (SMEs) from larger ones. The data on mining companies registered with the R&D Tax Incentive was analyzed by company size (Figure 12.11).Footnote ¹¹

Figure 12.11 Mining sector companies by entity size, 2000–01 to 2015–16

R&D expenditure of both SMEs and large firms followed the overall expediture trend from 2000–1 to 2015–16 shown in Figure 12.10. The R&D expenditure of large firms grew from 2003–4 to 2008–9, with a peak expenditure six times greater than that of SMEs. Since 2008–9, R&D expenditure by large firms has dropped to a ten-year low in 2015–16.

Mining by Industry Subdivision

We analyzed the data on mining companies registered with the R&D Tax Incentive by Australian and New Zealand Standard Industrial Classification (ANZSIC) code (Reference Trewin and PinkTrewin and Pink, 2006) for two subdivisions: mining and exploration and other support services (Figure 12.12). While R&D expenditure of the registered companies in the mining subdivision drove the overall trend shown in Figure 12.10, companies in the exploration and support services industry subdivision did not conform to this trend, with a lower uptake of the program. Figure 12.4 also shows more patenting activity in the mining area compared with exploration and support services, although not such a marked difference as seen here.

Figure 12.12 Comparison of mining sector industry subdivision trends under the R&D Tax Incentive by industry subdivision, 2000–1 to 2015–16

12.3.2 Patenting Activity and the R&D Tax Incentive

To explore potential correlations between R&D expenditure and patenting activity in the mining industry, we analyzed patent family filings and R&D expenditure of R&D Tax Incentive-registered entities (Figure 12.13).

Figure 12.13 Mining sector R&D expenditure and patent filings for R&D Tax Incentive companies, 2000–01 to 2015–16

Note: Due to the lag in publication of patent applications, the number of patents for 2015–16, with a priority date after 1 January 2016, is incomplete.

R&D expenditure and patenting show similar patterns over time, with an overall increase from 2000–1 to 2009–10. Both the number of patents filed and R&D expenditure increased from 2009–10, with a peak in 2012–13.

R&D expenditure grew three-fold from 2009–10 to 2012–13, representing a stronger increase than the corresponding growth in the number of patent filings. This indicates the expenditure was not associated with innovation in products and processes requiring commercial protection to hold or build market share.

Both R&D expenditure and patenting activity declined steeply since 2012–13, which follows the overall decline after the peak of the Australian mining boom in 2012.

R&D Expenditure and Patent Filing by Australian State and Territory

Mining investment and activity varies considerably across Australia. To provide insight into the impact of the R&D Tax Incentive on the mining industry in different Australian States or Territories, we have compared R&D expenditure, patenting activity and the number of R&D Tax Incentive-registered entities in the mining sector by State or Territory (Figure 12.14).Footnote ¹²

Figure 12.14 Mining sector performance under the R&D Tax Incentive by State and Territory, 2000–1 to 2015–16

This geographical analysis demonstrates considerable differences between the number of companies registered for the R&D Tax Incentive, R&D expenditure, and the number of patents originating from each state and territory.

Western Australia (WA) has the highest R&D expenditure under the R&D Tax Incentive ($2.55 billion) and the highest number (84) of R&D Tax Incentive-registered entities in the mining sector. WA also has the second highest number of patents (328) filed by matched companies. This may be attributable to the richness of the iron ore and gold resources of this region: the majority of Australia’s gold exploration activity and iron ore deposits with operating mines are located in WA. This makes WA’s mineral resources particularly valuable to the global market since Australia is the largest iron ore exporter in the world, holding 29 per cent of global iron ore reserves, and is the second largest producer of gold in the world, after China (Australian Government Department of Industry, Innovation and Science, 2018a).

Victoria (VIC) has the second highest mining R&D expenditure ($1.42 billion) and the third highest number of patents (285) filed by matched companies. However, only 16 R&D Tax Incentive-registered entities are located in Victoria. Queensland (QLD) has the second highest number (55) of R&D Tax Incentive-registered entities, third highest R&D expenditure ($1.12 billion) and is fourth in terms of the number of patents filed.

The overall disparity in the number of patent filings by state and the R&D Tax Incentive data could be a consequence of corporate headquarters filing both patents and R&D Tax Incentive claims. These corporate offices are usually located in metropolitan cities, with Sydney being a very popular choice. This might account for New South Wales (NSW) having the highest number of patent filings recorded in Australia, but much lower R&D expenditure than Victoria, Queensland and Western Australia.

This indicates that, while there is useful information to be derived from comparing matched R&D Tax Incentive data with patent data in the mining sector, geographical data does not appear to be directly comparable, likely due to differences in defining entity locations.

12.4.1 Patent Filing in Australia over Time

Over the past two decades, a total of 16,374 patent families were filed in Australia in the mining sector. Figure 12.15 shows the annual number of patent families filed from 1997 through 2015. Patenting activity tripled between 2005 and 2012, with a decline since then. While this may be partly due to incomplete data for 2015,Footnote ¹⁴ the severity of the decline indicates that there may be further underlying factors.

Figure 12.15 Patent filings into Australia, by priority year, 1997–2015

To understand the fall in mining sector patenting activity in Australia since 2013, we have investigated other proximate factors such as commodity prices as well as mining profits and investment. First, Figure 12.16 shows movements in commodity prices (Reserve Bank of Australia, 2018). Second, Figure 12.17 shows Australian mining sector profits as a share of GDP (Australian Bureau of Statistics, 2018c). Third, Figure 12.18 shows mining sector investment proportional to GDP (Australian Bureau of Statistics, 2018d). In all three Figures 12.16 to 12.18, we observe a sharp drop from a peak around 2012–13, which coincides with the fall in patenting activity in Australia.

Figure 12.16 RBA Index of Commodity Prices, 1997–2015

Note: Commodity price is SDR; 2016/17 average = 100.

Figure 12.17 Mining sector profits as a share of nominal GDP, 1997–2015

Note: Gross operating profits, inventory valuation adjusted.

Figure 12.18 Australian investment in mining as a percentage of GDP, 1997–2015

While the decline in patent filings and R&D expenditure by Australian companies (Figure 12.13) coincides with the fall in commodity prices as well as mining profits and investment after 2012–13, this does not reflect the severity of the drop in patent filings into Australia from 2013–15. This suggests a number of other factors, including global issues, may have contributed to the decline in patent filings into Australia since 2012–13 (Reference KentKent, 2016).

While acknowledging that the patent filing data is incomplete for 2015 onwards, as discussed previously, it seems likely that a complex combination of factors has contributed to the dramatic drop in patent filings into Australia from 2013–15. This drop – to a 20-year low and with half the number of patent filings of 1997 – is particularly noticeable given the mining industry was much bigger in 2015 than in 1997. The drop in R&D expenditure by Australian companies may be attributable to the overall drop in mining investment, which is in turn attributable to the drop in commodity prices and in corporation profits, none of these downturns are as severe as that in patent filings into Australia. Revealing its underlying causes therefore warrants further research.

12.4.2 Technology Specialization in Australia

An analysis of patenting in different technology areas provides an overall picture of innovation in the sector. In this vein, Figure 12.19 shows the number of patent families filed into Australia in different mining technology areas.Footnote ¹⁵

Figure 12.19 Patent filings into Australia by mining technology

The top three technology categories for patent filings into Australia are exploration, mining and refining. This differs from global patent filings originating from Australian applicants, in which the top three technology areas are mining, refining and exploration, respectively (Figure 12.4). This reflects the differences between foreign and domestic patent applicants in terms of what they invent and want to protect in Australia.

12.4.3 Who is Filing Patents in Australia?

Patent filing data can be used as a proxy indicator of innovation performance of a nation; therefore, the analysis of patent applicant origin may reflect how innovative a country is. Figure 12.20 shows the total number of patent families filed in Australia in the mining sector by various source countries from 1997 onwards. Australia ranks second, with 1,968 domestic patent filings filed by Australian applicants. A total of 6,477 patent filings originate from applicants in the USA, by far the most from any country, and about three times more filings than the second-placed Australian applicants. The most prominent Australian companies filing into Australia are the Australian subsidiaries of Rio Tinto (139 patent filings) and BHP Billiton (103 patent filings).

Figure 12.20 Patent filings into Australia by applicant origin

12.4.4 Top Innovators Filing patents in Australia

The number of patent families filed by an applicant in a specific technology can be indicative of its strength, interest and market presence or desire to build and maintain a market share. Figure 12.21 shows the top applicants for inventions that were filed into Australia in the mining sector.

Figure 12.21 Top applicants filing patents into Australia in the mining sector

The core business for a number of these applicants, such as the top applicant, Halliburton, appears to centre on providing products and services predominantly to the oil and gas sectors, which are specifically excluded from the definition of mining technologies in this analysis. The fact that these companies are key players for patents in the mining technologies covered by this chapter indicates an overlap of technologies used by both the mining and the oil and gas sectors.

12.4.5 Collaboration in Patent Filings in Australia

The presence of multiple applicants on an application is indicative of collaboration. Figure 12.22 shows the top countries of origin for collaborative mining sector patents filed in Australia. The USA is the most collaborative country filing patents in Australia, with Australia ranking second. All the top collaborative countries have a mixture of domestic and international collaborations.

Figure 12.22 International collaboration on patent filings into Australia in the mining sector

Note: This figure compares collaborations between applicants in the same country (internal collaborations) and between applicants of different countries (external collaborations).

Figure 12.23 shows the top mining technology areas for collaborative patents; the top three areas are mining operations, exploration and refining technologies. Differences in collaboration in different technologies by country of origin are shown in Figure 12.24, which highlights patterns of specialization and indicates the resultant competitive advantage of countries.

Figure 12.23 Collaboration on patent filings into Australia in the mining sector by technology

Figure 12.24 Collaboration on patent filings into Australia by technology by country.

Note: Collaboration by the top four collaborating countries.

In summary, interest in the Australian mining market has been through a period of turbulence from 1997–2015, including strong collaboration and strong investment by domestic innovators. The market has a focus driven by USA firms on exploration, mining and refining technology development.

There has been a steep drop in patent filings into Australia during 2013–15, which does not appear to be purely cyclical. It is possible that factors not identified in the data used for this chapter have affected the perceived value and strength of this sector in Australia.