The entrance of the big boys: The changing landscape of the mine planning software business

The new mine planning software companies are huge compared to their competitors

The new mine planning software companies are huge compared to their competitors. © Marc Kjerland

The recent acquisition of Mintec, providers of MineSight, by Hexagon AB of Sweden is the second such entry  by a large company into the mine planning software business. This news has caused me to think about what this means for mine planners and the software we use. In this post, I intend to share my thoughts on the effect these recent changes may have on mine planning software and encourage discussion on this important subject.

Traditionally, most mine planning software providers have been relatively small private companies. For instance, Maptek Pty Ltd., providers of Vulcan, are still private and have estimated earnings of AU$10-20 million per year. Hexagon’s 2013 annual report shows €2.4 billion (AU$3.5 billion) in annual sales. Last year, I blogged about the entry of Dassault Systemes into this business with the acquisition of Gemcom (read that post here). This follows a trend of some consolidation in this business. Remember Gemcom itself had acquired Surpac, MineSched, and Minex in its bid to grow.

What is different about the recent activity is the size and nature of the new entrants. Dassault and Hexagon had no prior mine planning software on the market. Both companies are large compared to the companies they are competing with now. Dassault’s market capitalization is $16.45 billion while Hexagon’s is at $10.5 billion (at the end of 2013). So now we have gone from no large company to two large companies, with presumably deep pockets in the market.

The question is, what impact will this have on the sector? This could lead to better products (software). Most mine planning software are running on old platforms (mostly FORTRAN) and don’t take advantage of modern advances in computing. To improve them requires investment to rewrite the code completely, instead of the wrap-arounds that most of the providers have resorted to. These new entrants appear to have the resources to make the necessary investments. Also, the new entrants have experience from software development in other applications that they can bring to bear. Dassault, in particular, is a leader in 3D rendition with SolidWorks and other applications.

On the negative side, if this kind of activity leads to consolidation and emerging competition (companies like Minemax come to mind) get purchased, then we are going to see reduced competition and higher prices. That will not hurt the major mining houses but will affect mine planning practice for the juniors and industrial minerals and aggregates. Also, do these new entrants have the corporate culture to handle the inevitable cycles of mining? We seem to be in a lean period. Are these new companies going to cut costs so much that the ability of these companies to innovate will be damaged? These lean times come and go: we know that. The key is how a business navigates through the lean times to be prepared for the boom that always lies on the other side.

I certainly hope we are going to see a period of innovation in mine planning software with the arrival of these new companies. I hope they invest in making the products (in this case, MineSight and the GEOVIA suite) better. Then the others (Maptek and co) will have no choice but to follow suite. We will all benefit from better and faster algorithms  combined with superior display capabilities. I wonder, though, where would they start? If you are a user of one of the products affected by these acquisitions, I would like to hear what you think they should fix first. Do you have any hopes and concerns beyond those I have outlined above? Do you think Maptek and the others will also seek bigger backers?