New name, new role

Since we reported last year, Rio Tinto's Technology group has been recast as a new organisation with a new name. Its re-launching as Operational and Technical Excellence (OTX) reflects new imperatives in the industry and a changing role for the group within Rio Tinto. Like the old Technology group, OTX is the repository for much of Rio Tinto's technical capability. There are differences, however, in the way it will in future add value to the business.

As well as providing technical consultancy, OTX will work closely with the rest of the Rio Tinto Group to turn its own advice into measurable, bottom line value. According to OTX's new global head, Grant Thorne, the new organisation will ensure better business as well as better technology. "Our aspiration," he says, "is for business units and product groups to regard OTX as an effective partner in delivering value."

In this respect, OTX's mission converges with that of Improving performance together (IPT), the business improvement programme launched in 2004 to get the different parts of Rio Tinto working more closely together and to standardise successful business practices across the Group. By improving Rio Tinto's operational performance, IPT is already producing tangible financial benefits and should deliver very large value enhancements in the future.

On 1 January 2007, the IPT programme was transferred to OTX, which has now taken responsibility for pushing the process further. To this end, OTX has been structured in such a way that its Centres of Excellence correspond to the various IPT task forces. Grant Thorne adds: "IPT has achieved a lot in the last 12 months and our goals for the coming year are no less ambitious. Although OTX will be doing many other things as well, our near term priority is to keep delivering value from the IPT programme and embedding its principles across the Group."

Looking further ahead, he draws a distinction between creating value here and now and a fundamental set of changes that will keep Rio Tinto competitive in the longer term. "We're talking about transformation," he continues. "It's not just about incremental improvements to what we're already doing: it's about taking a lead in the industry and making sure we have the best mining and processing technology available. We seek to anticipate operational needs in our technology development.

"We can reasonably foresee the increased complexity of the technical challenges; the time to start innovation for the delivery of a competitive new technology is now - not once a new mineral deposit is at hand."

There are clear reasons why this is becoming more important. The orebodies that Rio Tinto will be mining in the future are likely to be harder to reach and more complex in their mineralogy. At the same time, the industry faces social and political pressures to use less energy and water and to leave a smaller environmental footprint both during and after mining - not just in established locations but in newer territories too.

These trends suggest new approaches to mining in the future. The large scale surface operations of the past will need to give way to underground techniques, such as block caving, that use less energy and create less disturbance at ground level. New hydro-metallurgical techniques may make it possible to extract minerals from the ore in situ without bringing huge amounts of rock to the surface - again saving energy. And given that most mining takes place in remote parts of the world, where it's hard to recruit or locate the necessary staff expertise, tomorrow's mines may need to rely more on remote monitoring and control - possibly even from thousands of kilometres away.

In all these areas it is important that Rio Tinto enhances its skills and develops new ones, in order to remain competitive in the decades ahead.

In the face of these challenges, OTX itself is likely to change in the coming years. While continuing to employ the best engineers and scientists, it will also need business analysts and change management professionals, who can work with Rio Tinto's business units to turn engineering and scientific solutions into better financial performance. It also needs to ensure that the radical, longer term changes required in the next quarter century receive proper attention alongside the opportunities for improvement in the near term.

"However OTX develops," adds Grant Thorne, "its work will be characterised by the same clear principles - the disciplined setting of measures, monitoring the changes to Rio Tinto's performance and translating those changes into real, bottom line value."