Mining companies don’t have the
equivalent of the magic pudding (with apologies to Norman Lindsay for the
analogy). They have limited resources with which to create a return for
their shareholders and as they are mined they deplete. For all mining
companies there is continual pressure to turn what is in the ground into a
financial return. This is one side of the issue which sees productivity
rates and costs used in mine plans almost always optimistic. I suspect
the old saying, “Don’t let the truth get in the way of a good mine”, or
something like that, is pretty apt. The other side of this problem is
that despite what most mine planners (consultant or company) say they don’t
have enough data to provide (statistically) credible inputs. The
decision-making process by executive management and many Boards of Directors is
at best doubtful, usually flawed, and in some cases, just downright dishonest.
This week I will use an example
of a job we did for a mine planning consultant as a demonstration of how the
mine plan goes seriously pear shaped. I should emphasise that in this case the
consultant is using real inputs; they do understand the issues; and will be
using the information correctly. Shame they are in the minority!!!
The request was for benchmark
information for an RH 340 hydraulic excavator with 34 CuM bucket
capacity. The first point to note is that in the particular application
being looked at, the worldwide, average annual output for these machines was
12.6 million tonnes while best practice (average of the top 10%) was 23.1
mt. Just a small difference there. Can you believe a best practice
RH340 moves twice as much as the average? The natural tendency for the
mine is to think, “of course we are good” and for the consultant to want to
provide the best outcome. More often than not a rate somewhere in the
vicinity of, or above 75th percentile is used. However, you have to be
realistic. Only one in four mines using the RH340 will achieve 23 mt or
higher and maybe you are one of the 3 out of 4 who won’t. If you have
always had average performance then why would it suddenly improve?
The second issue is why do some
people believe that a piece of equipment will move well over best
practice? This example provides the perfect demonstration. The
request from the mine planning consultant was for a benchmark of availability,
utilisation and dig rate. That is, they wanted 25th percentile, median,
75th percentile and best practice of these three KPI’s. The availability,
utilisation and dig rate combine to produce the annual output. The
problem is that there is no mine in the world using this loader where they
achieve best practice availability, best practice utilisation and best practice
dig rate. In fact if you take best practice for these three KPI’s the
output is in excess of 27 mt compared with the actual best practice output of
23 mt.
A number of human factors are
at play here. Firstly, different companies have different definitions of
the KPI’s. Availability for one company is not availability for another
company. So for mine X to say they achieve 90% availability and that
makes them good is wrong. Worse still is the executive who just simply
applies numbers without understanding what they mean or what is included in
them. Secondly, people use results achieved for short time frames and
apply them to longer timeframes. Availability or utilisation achieved
over one to three good months normally bears no semblance to what is achieved
over 12 months. A third problem is people extrapolate rates in a straight
line up from smaller equipment and this is often not correct. There are a
range of factors at play as sizes get bigger. For example, a best
practice 218 tonne truck will carry 208 tonnes (95.4%) while a 327 tonne truck
will carry 301 tonnes on average (92.0%). Another example is
draglines. An M8050 with 50 CuM bucket will carry 107.5 tonnes of payload
(2.15 t/CuM) on average and an M8750 with 100 CuM bucket will carry 200 tonnes
at best (2.00 t/CuM). Add to this the fact that bigger equipment operates
for less hours and you will understand why you can’t just extrapolate up.
A fourth mistake which people make is to apply results from one manufacturer
and say that the same equipment from another manufacturer will be the
same. It isn’t. As an example the difference in actual annual
output between different manufacturers’ hydraulic excavators in 2010 with 30-34
CuM buckets was up to 84%. (Oh by the way, which one did you buy?)
At the end of the day we are
interested in what the equipment will move in a defined time. The defined
time will depend on the level of accuracy required of the plan. If it is
a really short term plan (next shift or day) we might use the dig rate, (what
is moved per operating hour). As the time frame goes up more and more operational
factors come into play.
I have a real issue with what
some mine planners (company and consultants) are doing. They don’t have
sufficient data nor knowledge about performance but tell you they do. I
simply ask that if they have the information then why are mine plans
continually wrong?
OK, some companies don’t want
the truth but some do. The "mine development industry" will
continue to get away with producing poor plans until we as an industry
plus shareholders and stock exchanges hold them accountable; now, 3 years, 5
years, etc into the future.
Graham Lumley
BE(Min)Hons, MBA, DBA, FAUSIMM(CP), MMICA, MAICD, RPEQ
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