Proudfoot Mining Quarterly E-Bulletin: May 2007

Recapture of Lost Tonnes
Identifying Barriers to Throughput
By Jon Wylie, Proudfoot Americas

Removing barriers. That, in short, is what talented managers do best. In our experience, an approach to optimizing value in the mining environment is to continually assess the process constraints limiting throughput. Unfortunately, many managers don't have the time or resources to take a step back from their organisation and address all the barriers hindering its productivity. For this reason, consultants are often engaged to identify the hidden constraints and then work to eliminate them through training, scheduling, improved management systems and more.

Our five-phase approach to recapturing lost tonnes is written from the perspective of equipment barriers in an open-pit mining operation, though it has been implemented in numerous incarnations across a variety of extractive environments. We implement this approach via joint working teams, where clients and consultants collaborate towards common goals in a partnership model. As always, engagement of the workforce and management is critical, as is alignment of goals and expectations.

Phase 1: Identify barriers to equipment utilisation.

Among the first places to identify and address barriers is in the operational utilisation of primary equipment, be they shovels, loaders, crushers, grinding circuits, etc. Following this, we examine the mechanical availability of the primary equipment and meantime between failures to assess how to increase the physical availability. This allows a reasonable increase in the number of production hours the equipment can be scheduled. Typical results are:

Improvement in utilisation of primary equipment — 3 to 5% depending on the base at which the operation is currently running
Improvement in the physical availability of primary equipment — 4 to 8% depending on the current levels of availability (while it varies by application, 92% to 95% is best-in-class)

Phase 2: Identify barriers to equipment and labour productivity.

Our next step is to increase the productivity of the primary equipment in terms of the number of tonnes per operating hour. Solutions in this area sometimes relate directly to how the equipment is being scheduled and managed (that is, how the organisation manages and controls queue times of haul trucks, hang time of shovels, shovel moves, start-up post blasts, shovel truck configuration, etc.). Discrepancies in operator performance are common, such as those relating directly to operator skills: speed across grade, dump times and spotting times. Solutions in this area tend to focus on operator training and evaluation.

Phase 3: Determine the value added by removing the identified barriers.

To demonstrate the value of potential utilisation and productivity improvements, we generally measure the value of an additional "recaptured" tonne. In order to manage for the best outcome, we typically treat ore tonnes and waste tonnes as the same since both must be moved and we do not want to encourage behaviour which focuses on production of ore tonnes at the cost of development. In simple terms, the value per tonne is calculated as total revenue less total costs. We then look at fixed and variable costs to define the value of each incremental tonne. We take everything into account including transportation and shipping costs and total smelting costs in order to calculate the value of each additional tonne. This is then measured against an agreed base — one that fairly represents current production levels for the operation. Armed with this information, we can make educated improvement recommendations and set accurate ROI expectations.

Phase 4: Implement the identified improvements and ensure sustainability (hardwire the improvements).

To be successful, any solution must have an engagement component. People must understand why there is a need to do things differently, what is in it for them if new targets are achieved and what alternatives have been considered. Without a robust engagement strategy, effectively delivered, the organisation will not sustain the benefits achieved. Once the benefits are achieved, a sustainability framework must be put into place. Understanding that all systems tend to atrophy, sustainability must be as actively managed as the improvement component of any initiative.

Phase 5: Add more value (in other areas).

In the current environment, increased throughput should translate as increased revenue. However, the demand surge that led to increased prices carries with it an industry-wide scarcity of inputs and general cost pressures. The surge in energy costs is itself having a huge impact in this energy-intensive industry. Our sixty years of experience allows us to achieve substantial cost savings through improved supply chain management, reduction of input consumption and increased utilisation of all inputs, not just primary equipment.

We all know the margin squeeze is coming — prices will fall while inputs remain scarce and costs remain high — and it will present a major management challenge. To extract maximum value while prices are high and prepare for leaner times tomorrow, remove barriers today.

Need help identifying or removing barriers? Click here for a no-obligation consultation.