GBIData.com Mining Truck Full Sample Report

GBIData.com Mining Truck Full Sample Report

Syndicated Project for Rope Shovel Benchmarking in Russia

GBI are formulating a syndicated benchmark specifically for rope shovels in Russia with a focus on the Kartex EKG range. If you have these machines and would like to participate in this benchmark to find out how your equipment is performing compared to Best Practice please contact me for more information on laura.seviour@gbimining.com.

Truck and Loader Matching Part 6

This blog I want to present a case study where a mine had a large shovel with 44 CuM dipper loading 218 tonne trucks perfectly in two and a half passes!  (Situation normal for most!) The dilemma, faced by multitudes of mines around the world, is do you put a third small pass in the truck or do you send it away 80% full?

The average payload of the shovel was 85 tonnes.  The original methodology for determining the match was not known but the performance of the dipper was quite good when looking around the industry.  It appears likely that the original aim was to fill the 218 tonne trucks in three passes.  Two passes sent trucks away with an average of 170 tonnes payload.  The decision was made not to put the third pass into the trucks due to the loss in productivity, damage caused to trucks by overloading and the increased spillage. 

The desired average payload was 218 tonnes per truck (109 tonnes per dipper).  The mine had a quote from the OEM to change the boom geometry of the two shovels and provide two new dippers. Quote was for $6M+.

Using a combination of data analysis and physical modelling four stages of work were undertaken with the following outcomes;

Stage 1         Analyse data. Process changes recommended.  Discussions held with operators.

Result - Payload increased to 95 tonnes on average which was in line with best practice dipper performance.

Stage 2         Physical modeling of the existing dipper, the supplier’s recommended dipper and two boom geometries.

Result – Modelling proved accurate.  Modelling demonstrated under-performance of supplier’s recommended dipper relative to existing dipper.  Recommendation made not to change boom geometry.  Recommendation not to purchase new dipper due to substantial under-performance.  Recommendation to test changes to existing dipper.

Stage 3         Physical modeling of changes to the dipper.

Result – A number of changes had a positive impact on payload but none gave enough by themselves to increase payload to 109 tonnes. Recommendation to conduct further testing combining various options to modify the dipper.

Stage 4         Four options were presented which met the target 109 tonne average

payload, (Figure 1).

The mine chose the preferred option with a slight change, engaged a structural engineer to design the modifications and a local business undertook the modifications to one dipper (Figure 2).

End Result    All up cost $350,000, Average Payload 111 tonnes. Value to mine at the time $8M per annum.

Consequently a second dipper was modified for the second shovel. 

All up cost was $470,000 with two dippers achieving 111 tonnes and 109 tonnes average payload. Cash saved on the project >$5.5M.  Value to the mine $15M per annum.

The most important lesson here is that you can’t achieve anything if you won’t have a go.  The four stages here took 18 months and were rigorously evaluated before proceeding, but the key is that they did it and they added real value.

Truck and Loader Matching Part 5

This blog continues to investigate the issue of why many trucks are being perfectly loaded in 2.5 or 3.5 passes.  In this discussion I am looking at rope shovel capacity and why we need so much steel to carry what is often a very poor payload.

How is it possible that best practice in dipper performance provides a payload of 2.16 times capacity but the dominant manufacturers provide dippers which only achieve around 1.70 times capacity?  This is more than 20% less payload for the same capacity and around the same weight of steel.  This rhetorical question actually has a real answer.  It is because the mines don’t care.  So long as it keeps going and is supported when it breaks then that is OK.  Many mines don’t even complain when the loader truck match is 2.5 or 3.5.  To someone who has worked in equipment productivity for over 20 years this is really depressing.

 

Looking at some issues which impact shovel payload.  Firstly, dipper issues which the mine can have some impact on.  The tooth attack angle is really important. Payload increases by around 0.5% per degree as the tooth attack angle is increased.  However, it is not possible to simply keep steepening the tooth attack angle of the dipper due to the interaction between the heel and the bank.  Relative heel wear rises exponentially after about 65 degrees tooth attack angle.  By 70 degrees the heel wear is probably unacceptably high.  Many buckets are in the range 50-55^o and are losing a lot of payload.

The concept of Bail vs Bail-less is a function of where the hoist connection is made to the dipper. The connection of hoist ropes at the rear of the dipper increases payload.  Where the connection is 25% along the dipper the difference is -10% which is significant. 

The width : height : depth ratios as well as teeth arrangements have an impact on payload but there is little impact site people can have on these issues once you have the dipper so I won’t expand on these issues here.

The other side of the payload issue is operational issues.  Many of these can be controlled by the mine.  What is being dug causes variation in average payload by up to 20% in the same dipper. Herein lies a significant issue relating to truck/shovel matches.  It is possible that the same dipper, even on the same minesite, can get differences in payload of 20% simply due to the spoil being dug.  The key to higher payload is the degree of fragmentation.  The highest payloads are achieved in spoil where there is a range of particle sizes; not all large and not all small.  The implication is that payload is significantly enhanced by good blasting practices.

The power made available to the operator has a major impact on payload.  In harder digging, ie. blocky, poorly shot, etc., increased power provides increased payload up to 120% of the standard power level.  In softer spoils the shovel dipper achieves higher payloads at lower power levels.  In summary, it is beneficial (in terms of payload) to increase power to the maximum.

Bench height plays a major role in determining payload.  At any bench height greater than 30% of boom point height a full payload can be achieved consistently.  Similarly, the distance from the face has a major impact on payload.  The variation from cycle to cycle is quite large but a consistent trend is seen for each digging position.  The first few digs have the loading unit very close to the face.  During these cycles the payloads are reduced possibly due to the inefficient application of power to the trajectory of the dipper / bucket.  The payload increases as the face “moves” away from the shovel.  Once the dipper starts having trouble reaching the face the payload reduces quite quickly.   The decision about when to move the loader is not an easy one to get right.  Generally the operator will decide to move the loader when they encounter difficulty in loading the truck in the designated number of cycles.  To optimise the productivity a range of factors need to be considered, including, payload, fill time, another truck waiting, what the face is like.  As a general observation, if the loader is under-trucked, it would appear prudent to move the loading unit frequently.  If the shovel is over-trucked it becomes a multi-dimensional equation as to when the most efficient time to move is.

                                                      

It became evident from a very early stage in the work on shovels that on some loading equipment the efficiency of the bucket / dipper was severely compromised by large voids inside the dipper / bucket (Figure 1).  These voids ranged from 5% inside a backhoe bucket up to 25% inside rope shovel buckets.  The impact of these voids is included in the previously described impacts on payload.

Finally I would direct your attention to Figure 2.  This shows the variation in dipper payload for P&H and Cat (previously Bucyrus), (both unidentified) and VR Mining Dippers.  I have spent my career helping mines be more productive and the VR Mining dipper is the most efficient dipper design I am aware of.  I am aware there are maintenance, support and financial issues to purchasing a dipper but speak to dipper manufacturers, not just the OEM, the next time you want a dipper.

Just so you know: I worked for VR Mining in 1997 and 1998; before they designed this dipper.  GBI has had a number of small consulting jobs from VR Mining over the last 10 years.  I had no input into the VR design.  Neither I nor GBI receive anything from anyone for the comments made here.  They are simply my honest opinion – the VR dipper is the best and the mines are costing themselves a bundle by not looking at it.  Even if the mines used this fact to put pressure on P&H and Caterpillar to do better, the industry would benefit.

Truck and Loader Matching Part 4

Over the last few weeks I have systematically pulled apart the issue of nominal truck capacities to demonstrate why big mining trucks achieve 5-15% below what the manufacturer says they should get on average.  I don’t believe this is an issue that too many truck manufacturers’ want to address and the cynical side of me suggests that this article won’t help.  Maybe a single voice in the wilderness can gain support to force change. 

My focus is on mines moving more for less and apart from the engineering design work to increase the capacity of trucks from the 150 tonne maximum size 25 years ago to the 360 tonne maximum size now I don’t think that the truck suppliers have helped the “move more for less” equation too much.  Even the notion of bigger trucks being a great innovation and assistance in efficiency enhancement is questionable.  I will repeat something from a previous blog.  On the whole bigger trucks are less efficient than smaller trucks.  They carry less payload (as a percentage of nominal capacity) and work less hours. However, this is not a consistent picture between OEM’s.  In terms of nominal capacity the 360 ton trucks are 50% bigger than a 240 ton truck. however, in terms of actual annual capacity, average 360 ton trucks move just 20% more than 240 ton trucks.  I am not pointing the finger at one supplier. 

Figure 1 shows the 2010 median performance for each major mining truck make and model.  Some of the older and newer models are not included due to lack of data.  Mining truck performance is presented in this analysis as annual tonnes (normalised for full year operation) * km travelled per tonne of nominal tray carrying capacity.

Trucks with different designations (usually A, B, etc used by Cat and Liebherr) have not been separated in this analysis.  The capacities for these “sub-models” are generally similar as is the output.   It is important to note that this plot does not attempt to say whether the make and model results actually reflect better trucks or the operating characteristics of the sites at which they are used.  The trends with increasing size of mining trucks are mixed.  The Liebherr trucks become more efficient with increasing size while the Cat trucks become less efficient with increasing size.  The Hitachi, Komatsu and Terex trucks achieve peak efficiency with the 240 ton (218 metric tonne) capacity size EH4500, 830E and 4400 respectively.  The larger capacity trucks are not as efficient with these OEM’s.  Of the larger trucks the Liebherr T282 is the highest performer with Terex and Komatsu both achieving 20% less annual tkm/t and Cat 23% less annual tkm/t.  It is not without precedent for larger equipment to have lower unit production (ie. draglines) however, the exceptional performance of the Liebherr T282 range demonstrates that this is not a necessary outcome.  Another clear finding from this plot is that the performance of the smaller Cat trucks (777 and 785) was, and continues to be, relatively high.  They however, are not suitable for loading with the larger loaders. 

This industry has lived in a world where bigger is better.  But frequently when bigger equipment is released it just doesn’t perform well.  Those of us who remember the release of 240 ton trucks would remember that they had real problems.  It seems too easy for a poorly performing mine to just get bigger equipment and that is what they tend to do.  They waste more millions of dollars when the improvements they need are available by just operating more efficiently and would actually cost very little.

To demonstrate this point I will set up a scenario of a PC8000 hydraulic shovel loading Cat793 trucks.  These have not been chosen for any particular reason except it should be a comfortable three pass match.  The average PC8000 loader will require 7.5 average Cat 793 trucks.  Four crews plus spares plus trainees (you should always have a pool of people training) probably means around 40 truck drivers.  If a mine then goes and purchases Cat797 trucks the typical method of determining number of trucks is to simply work out the proportional capacity.  New trucks = old trucks * 793 capacity / 797 capacity.  Using this formula five new Cat797 trucks would be purchased with the expectation that around 13 people would be saved along with reduced running and maintenance costs.  Unfortunately, this scenario is fictitious.  In the real world the PC8000 on average needs 5.8 * 797 trucks and only saves 9 people.  Bigger trucks cost more to buy and more to run, so how far ahead are you?

OK so returning to the real point of this column; technology is progressing fast.  We now know that trucks are not carrying the nominal payloads.  This has not gone unnoticed by companies which make their way in the world by making equipment work better.  For the OEM the real money seems to be in the chassis and tyres.  Improvements in payload are coming from specialist tray suppliers.  Truck trays are no different to most other mining equipment.  What the equipment carries is made up of steel and payload and the aim is to maximise the payload and minimise the steel while achieving acceptable life.  In the past with trucks this was a nothing equation because OEM’s told the mine what payload the truck would carry.  We now know this was almost always wrong.  Truck trays seem to be following where the industry has been with draglines.  Now Bucyrus and P&H build draglines and shovels but CQMS currently build the most efficient dragline buckets while VR Mining have the most efficient shovel dippers.  In trucks you have specialised truck tray manufacturers like DT HiLoad, Duratray, Esco, Philippi-Hagenbach, Westech, etc. who seem to get it; the chassis is built to carry a certain load and if you can reduce tonnes of steel and increase tonnes of payload then the mine must be ahead. 

It is my proposal that we must here and now dispose of SAE Standard J-1363 for calculating truck capacity the same way suppliers have disposed of the CIMA formula for dragline bucket capacity.  We must also stop rating trucks based on a nominal payload.  We should establish a rated capacity for the truck trays which is struck capacity (contained capacity with no heaping according to computer models) multiplied by a factor.  With dragline buckets the factor is 0.9 which I have always disagreed with but everyone knows it and accepts it.  I believe the rated capacity of a truck tray should be equal to the struck capacity, (factor = 1).  In the same way that we have a Bucket Efficiency Ratio for draglines and a Dipper Efficiency Ratio for shovels, which is payload / rated capacity, we need a Tray Efficiency Ratio (payload / rated capacity) for trucks - TER.  There is also a steel weight ratio (Tray Unit Weight (TUW)), which is the weight of the tray divided by the rated capacity.  The formula for the optimum truck tray rated capacity is then;

OTC    =        GVM – Chassis Wt

                      TER + TUW

Only then can we get the best tray design with the right capacity to meet the gross vehicle mass.  At least then we will be covering Step 1 in the optimisation process; mines will be selecting the right piece of gear.

Mining and complexity – paradigm, paradox or parody?

I introduced the issue of complexity in my last blog and stated that there is little evidence in open cut equipment production data that “complexity” plays any role in decreasing equipment productivity over time.  This is a controversial view in the mining industry, particularly the large mining companies where increasing complexity has been used as an excuse for falling equipment productivity rates for some years now.

I stated in my last blog;

It is my theory that the corporatisation of the mine site is to blame for the reduction in availability and consequent productivity.  It is the focus on process and not the result.  Managers are often judged on how they do their job, not the end result, and a declining result can be hidden behind exceptional processes.  Part of that change is an increasing focus on safety but not the majority of it.  Because most managers have little real natural management expertise they embrace the processes which are encouraged by corporatisation.  Six Sigma or Lean are great because they provide the manager with a focus on process.  You can actually point to what you have done.  Unfortunately the performance metric is wrong.

I believe that the silent majority support this view but many just have to fit within the confines of the company that employs them.  I received the following from someone running a mine this week after they read my last blog (that makes two of us who read it).

You are so right about people getting hung up about the process of a process and the process of process improvement rather than the bottom line impact of the outcome it produces

You can extend this further by explicitly focussing on added value as the principle and proper measure of improvement. eg "For any given operational outcome, a process 'improvement' that does not measurably generate positive added value or improve safety without negative impact on the firm's overall value is no improvement at all." No matter how exceptional it might be.

This industry needs to take more notice of Prof Michael Porter - the father of the value chain concept. He had it spot on. If it doesn't add measurable value, prune it.  However, remember not all value is financial - reputation, employee wellbeing, and other "soft" forms of value also matter to different degrees in different companies.

Six Sigma and Lean do not cover the value chain concept well I reckon, and their experts too frequently have no wider business management training to know any better.

A few other personal operational observations for you;

• Pits do get more complex sometimes but usually just deeper and/or less "rich". Any complexity is mostly human induced.
• You are right about availability being a function of age. BUT its more complicated and its only true beyond a certain age. There is a trade-off between depreciation of new equipment with age and repair with age on 2 axes vs availability with age on the third. If you map profit (or net value added) against these axes you will find here is a reasonable sweet spot for average fleet age where profit is maximised - and it’s not at any of the extremes. Operational rosters (eg 4 days a week, 24*7 etc) change the sweet spot quite a bit.
• I've never seen any specific mining industry research on this and there are a lot of misconceptions out there.
• Availability is an issue but not the only one. Cost saving pressures, lack of professional knowledge, managerial ignorance and inappropriate performance metrics are an even bigger part of it. Maybe some would argue this is the actual "complexity" causing most of the problems, eg...
• Payload and digging cycle time (esp truck shovel) are affected (often severely) by poor pit design (relative to deposit and equipment), poor road placement, poor matching of blast performance, poor dump design, but also limited communication between the engineers and mining supervisors - the latter usually make the shift to shift decisions with no knowledge or understanding of the former's work (= poor decisions frequently).

I will repeat my last paragraph from the last column.  Commodity prices (maybe with the exception of gold) are going to decline.  You won’t be able to keep making money without focusing on the real reason you are in business.  You need more of your commodity going out the gate at a lower cost, not a new business improvement process every week or month. 

  

Graham Lumley 

BE(Min)Hons, MBA, DBA, FAUSIMM(CP), MMICA, MAICD, RPEQ

Complexity and Productivity

If you were to ask a mining executive why their mines’ equipment performance has reduced over time, apart from spluttered expressions of disbelief from some you would certainly get the issue of mining complexity fairly high in the excuses.  This is because site people use this excuse almost universally when asked why their performance has reduced.  It seems logical that mines dig the easiest / most profitable areas first and conditions do generally become more difficult over time.

When executive management starts holding site people accountable for the equipment performance it is interesting to see what happens.  It usually goes something like this;

1. Dry up the source of the bad news – ie. stop benchmarking.  “We know we are 40% below best practice so why keep telling Executive Management”.
2. Advise management that reducing performance is a function of complexity of the mine. “We know it is getting worse and we know it must be the increasingly complex mine we are running.”
3. Create a picture of how complexity reduces digging hours or increases cycle times, etc.

However, should equipment achieve less output as the mine becomes more complex?  This really is a perfect example of not letting the truth get in the way of a good story.  We have looked at this issue from multiple angles and we can’t find any evidence to support this notion that complexity reduces the performance of a particular piece of equipment.  Even for trucks if you use an appropriate measure of truck performance there is no consistent reduction in performance.  Of course as a mine gets deeper and more complex, more equipment may be needed.  This is a completely different issue.

So let’s look at the truth. 

The absolute key to the performance of any piece of equipment is payload.  I can’t find any logical explanation as to why complexity should consistently impact payload.  The only possible impact could be in bench heights and/or pit layout.  However, if superintendents and engineers do their job there is rarely a reason not to set the pit up to ensure optimised payload.  The differences in payload (eg. The difference between dragline best practice and average is 17% and other equipment is similar) are inevitably caused by other factors.  The most common and most distressing is mines telling operators not to fill up the bucket or truck body and kicking the operator when they do!!!  For heaven’s sake the operator’s job is to fill up the bucket and he/she should be encouraged to do this to the best of their ability every time.  If it is overloaded then don’t blame the operator; this is a management failure.

OK so it can’t be payload.  Is digging time related to complexity?  The key area that gets blamed is operational delays and most specifically waiting on equipment or blast.  We have tracked operational delays and we know that when productivity drops, about 40% of the drop can be linked to operational delays but only about 6% is linked to waiting on something.  So really it has little to do with waiting on equipment or blast.  Yes there is a relationship between complexity and operational delays but the major loss in productivity is found elsewhere.

Often the major contributor to a loss in productivity over time is availability.  What happens is that there are two key relationships.  Complexity increases with time and availability tends to reduce with time.  The truth is the two relationships are only linked in a very minor way.  So is it equipment getting older and harder to keep going?  Maybe, but old equipment does get replaced and the trend does continue.

It is my theory that the corporatisation of the mine site is to blame for the increase in operating delays; the reduction in availability; and consequent reduction in productivity.  It is the focus on process and not the result which is primarily to blame.  Managers are often judged on how they do their job, not the end result, and a declining result can be hidden behind exceptional processes.  Because most managers have little real management expertise they embrace the processes which are encouraged by corporatisation.  Six Sigma or Lean are great because they provide the manager with a focus on process.

A bit of a wake-up call here.  Commodity prices (maybe with the exception of silver and gold) are going to decline.  You won’t be able to keep making money without focusing on the real reason you are in business.  You need more of your commodity going out the gate at a lower cost, not a new business improvement process every week or month. 

Graham Lumley 

BE(Min)Hons, MBA, DBA, FAUSIMM(CP), MMICA, MAICD, RPEQ

Recognising Innovation

Australians on the whole are not overly innovative and regularly fall below average in measures of innovativeness across countries around the world.  There is little doubt that this contributes to poor equipment performance.  I noted a little while back where Dr Peter Lilley of CSIRO was lamenting the lack of “transformational” R&D.  I was staggered (although maybe I shouldn’t have been) that the Minerals Down Under group has a budget of $100+ million per year for R&D.  Think about that for a minute.  Over $100 million per year and they can’t come up with some workable transformational ideas?  You have got to be kidding.

A project which my company undertook was one of the outstanding engineering projects which won Engineers Australia State awards and competed for National Awards in Canberra recently.  What a privilege to be amongst some truly transformational engineering.  Our project – Optidrag, had a budget of $276,000 (thank-you to ACARP).  Now Optidrag really is transformational and is being embraced by a number of the major mining companies.

I am sure this industry suffers a serious case of Myopia when it comes to innovation.  Here you have a project which is one of the outstanding engineering projects in Australia in 2009, as judged by Engineers Australia, and the Australasian Institute of Mining and Metallurgy rejected it as being unsuitable for one of their Mining Conferences.  Quite apart from the fact that it is my project and I was prepared to fly across the country to present it in Perth, how can a project recognised by the pre-eminent professional engineers association in Australia as one of the outstanding engineering outcomes in 2009 be not recognised by my esteemed colleagues in the mining industry? 

Sour grapes?  You are joking.  I got to sit in Parliament House in Canberra with the engineers who were recognised as having the most outstanding projects in Australia in 2009.  I happily saved my money and did not attend the conference in Perth but I am distressed for the industry I work in.  I side with Dr Peter Lilley in so far as believing this industry needs transformational change.  However, I believe it is needed in R&D, technology and attitudes.

The biggest problem with research and development in Australia is they are too focussed on the process rather than the outcome.  Tick the boxes, get your government money and if it costs more than budget or you don’t get an outcome then so be it.  Move on to the next project.  Compare that with the private sector.  We are currently developing a new product.  Exciting and terrifying at the same time.  We went to Westpac, cap in hand and asked them to finance a shoestring budget.  They took mortgages over our properties, a fixed and floating charge over the business, personal guarantees by the owners of the company (my wife and I) and security on our souls in case we decide to depart this world (watch out - banks have contacts in high and low places, although not too many above).  If we can’t produce a product when the money runs out we are screwed.  If the product fails to sell we are screwed.  Despite our patent protection, if a big company steals the idea, I can’t afford to fight it for 10 years in the courts – we are screwed.  If a Rio or BHP fund it they will rightly tie it up so not only does nobody else get it, we also can’t do any further work on it.  The research organisations haven’t delivered and small people have incentive not to be innovative.

Transformational changes in technology don’t come along too often.  You can think about draglines, hydraulic shovels, etc as being major advances but they are few and far between.  The thing which concerns me is that sometimes ideas are not advanced for the wrong reasons.  Politics in our large mining companies and our research institutions ensure some truly transformational ideas will never see the light of day.  Consider the following.  After presenting Rio Tinto's automation work to the Austmine conference in Brisbane last May, Rio Tinto's head of Innovation, John McGagh, was asked how we, as small, dynamic innovators could get our products in front of Rio Tinto.  His response was distressing. "Rio have people and resources working in this area.  If you have something of value to us, we will find you."  I really don't know where to go with that.  I suppose it is the golden rule; He who has the gold makes the rules.

I have said much in recent weeks about transformational changes in attitudes towards productivity.  Productivity is largely about attitude.  I fear for Rio's investment in automation for this very reason.  Attitude is the key input into the differences between best practice operations and the other 90%.  Some have given up and accept mediocrity or pay contractors to be mediocre or make huge investments in technology.  Some mines and contractors have grabbed the opportunity and have moved to fill the gap between average and best practice performance.  They are the companies you really want to work for and with.

Graham Lumley 

BE(Min)Hons, MBA, DBA, FAUSIMM(CP), MMICA, MAICD, RPEQ

A Productivity Attitude

The primary aim of these articles is to get members of the mining community to think about productivity.  Productivity is about attitude.  Much can be learnt about the theory behind operating different pieces of equipment and improving productivity but if the mine does not have a ‘culture of productivity’ then achieving best practice is virtually impossible.  Being innovative helps but just doing the simple  things well is a really good start.

The profitability of many mines is highly leveraged against the productivity of the major earthmoving equipment and thus significant management effort should be focussed on getting the most out of this equipment.  Unfortunately exactly what this entails is not always well understood and often other activities are given preference sometimes to the detriment of equipment productivity.  The actions of mine planning, blasting, scheduling, maintenance and man management all play a significant role in production but need to have a common productivity focus or else they can negatively impact the equipment performance.

Figure 1

Figure 1 is the way many mines are run.  The processes in running the mine and the requirements of the corporate entity simply work against getting optimal performance.  In addition, people with an innovative attitude soon get put in their place and drowned within the bureaucracy.  People on these mines are too concerned with ticking career boxes and making sure the processes are all in place, but when it comes to doing something there is always a good reason not to.

Figure 2

The productive mine (Figure 2) shows a different flow of “impacts”.  We now make the equipment productivity central to the mine’s performance, (which is exactly where it should be…surely).  People and personalities become less important and the requirement for equipment productivity becomes of primary importance.

The equipment productivity is now “driving” other aspects of the mine operation.  It is no longer acceptable for mine planning to impact productivity negatively; they know what is expected of the equipment and they produce plans which help the equipment achieve it.  Blasting, scheduling, maintenance, management, etc. are all the same.  The mine has an expectation of performance (which I believe should be dictated by what best practice machines achieve) and every role within the mine should be singularly focussed on helping the mine achieve the required productivity.  We have inevitably found that this is the way which mines achieving best practice operate.

There is a saying along the lines, “the best things in life are free”.  I find it hard to forget as I had to debate this in Year 10 English.  I now prefer to say that the best productivity improvements are free (or nearly free).  Productivity is about people and attitude and it costs no extra for a mine to have a “productivity attitude”.

I have referred previously to Robe River Mine and the upheavals which took place in 1986 under the guidance of Charles Copeman.  At the end of the resources boom which commenced in 1977/78, mining companies were starting to tighten their belts.  Unfortunately this belt-tightening was resisted by workforces which had become accustomed to getting things their own way.  This attitude was promoted by management which made money despite themselves.  Robe River was the first to face the prospects of an extended “difficult” period by attempting to change the attitude of the mine.  I suspect Charles Copeman knew where it would lead as changing a culture is not an easy thing to achieve.  When change did not come Copeman sacked the management team and installed “his” team of people with the attitude he wanted.  Copeman recognised that change had to start at the top and work its way down.  Sure, it did eventually work its way through and the workforce was sacked and then selectively reemployed some on significantly different working conditions, but the important lesson to learn here is that the change started with management.

This was the start of the depressed period I call the “Downsizing Period”.  It ran from about 1986 – 2001.  I remember one day going on to a mine site (1996 I think) I often visited which had a big sign out the front.  Employee numbers usually ranged from 380 – 400.  This day, the number was 196.  I had to look at it a couple of times but it made an indelible impression on me.

The mining industry has now entered the next difficult period.  Forget the super-cycle or a quick rebound.  The largest economy in the world is bankrupt as is the Eurozone and demand for goods will remain depressed so demand for commodities will remain depressed.  I believe this period will run at least 12 more years (probably longer).  Most mines are now like the proverbial stone which has had the blood ringed from it when it comes to people.  You just can’t keep cutting people and keep the mine going.  Once Executive Management and Boards of Directors realise that prices are coming down they will have no option if they want to stay in business but to chase improvements in equipment productivity.  I wonder if they will follow Charles Copeman’s lead and start with mine managers who accept mediocre or average performance (in this case of their equipment)?  Most operators’ jobs are safe because most of them actually want to do a better job and just need management to help them achieve it.

Graham Lumley 

BE(Min)Hons, MBA, DBA, FAUSIMM(CP), MMICA, MAICD, RPEQ

When to spend on innovation

I have introduced a number of broad-based productivity issues over the last few blogs.  We will get on to some more specific issues but in this piece I want to introduce another broad issue.  What is the best time to invest in productivity enhancement?

The two key areas to productivity enhancement are during the R&D / equipment selection phase and during the post-commissioning phase.  That is, get the right equipment and optimise its use.

To understand the interaction between mining and knowledge I will return to the presentation by Jari Kuusisto presented to the Smart Innovation Festival in Brisbane in May 2008.  Kuusisto presented the curve of ROR vs Product Life Cycle.  I have added the risk and cost benefit to this to provide the following plot.

The product life cycle can be described from the mine or the supplier’s perspective.  In the plot here it is viewed from the mine’s perspective.  The mine follows a process of Correct Selection – Order placement – Commissioning – Equipment Enhancement.

The rate of return on money invested is highest during the development / selection stage of the product and during the after-sales service / equipment enhancement phase.  However, the risk on the investment is highest early in the process and reduces further after the product has been delivered.   When these two plots are combined it can be easily seen that the cost-benefit (return / risk) is moderate at the start of the process (during R&D / selection) and highest after delivery/commissioning (during the process of “asset optimisation” or “capacity utilisation”).  It is no coincidence that the application of knowledge is needed most during these two sections.  It can therefore be deduced that the input of knowledge is related to cost benefit.  It is also interesting to note that the highest cost benefit occurs when the knowledge is applied in the after-delivery phase of equipment optimisation which is largely process related.

If one looks at this from the perspective of a supplier the product life cycle  becomes: R&D, Collect Orders – Commissioning – After Sales Service.  Interestingly, the plot follows exactly the same form.  For the equipment supplier their greatest return comes in after-sales service.  This is a really interesting observation because during the boom I had an almost impossible job getting suppliers to listen to anything to do with knowledge and after-sales support.  Suppliers apparently were able to sell all their equipment and the concept of using after-sales service and knowledge as a means of helping mines use their equipment better and as a point of strategic advantage wasn’t considered.  This has clearly changed.  I have had a number of companies approach us about using the data and knowledge as a key element in their marketing strategy.  During the boom nobody seemed to care that there was one brand of truck which was 84% more efficient than the worst.  Funny isn’t it?  During the boom if it had wheels and carried dirt it was good enough.  Now a lot of mining people don’t seem to want to take the risk that they will buy the worst truck and some suppliers seem motivated to use data to help them be as good as their equipment allows them to be on the mine sites.

It seems prudent for suppliers to understand the words of S. Downton on ecustomerworld.com,

Delivering high levels of customer satisfaction through a well-managed service operation can increase loyalty, and thereby sales, by as much as 8 times - greatly enhancing the value of the business. Successful manufactures increasingly focus on their customers' total lifecycle by investing in their service management business to maximise the value captured throughout the product lifecycle. This means that the product sale is only a small part of the overall value during the complete product lifecycle and is only the start of the customer relationship.

Support for my belief that the world of suppliers has changed came late last year when we found a bucket manual which I had written for a mine to optimise the performance of the bucket they had just purchased, had been blatantly plagiarised by the OEM and presented to other mines purchasing their product under their name and logo.  This supplier has seen the value of knowledge (particularly linking the knowledge to the company) and has seen it as providing strategic advantage for them.

Graham Lumley 

BE(Min)Hons, MBA, DBA, FAUSIMM(CP), MMICA, MAICD, RPEQ