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It's time for mining companies to lock in operational improvements

Supplier: Mainpac By: Mike Vanderlaan
15 May, 2014

There's no doubt the Australian mining industry is facing significant and numerous challenges.

While the mining boom transitions from an investment and construction phase, to a production and export phase, Australian miners face numerous market and internal pressures.

High exchange rates, falling productivity, lower commodity prices, high labour costs (as much as double the global average), and falling returns, have all converged to generate a near-perfect storm.

During the early 2000s when the focus was squarely on increasing production, inflation grew unchecked, productivity fell and poor capital disciplines crept into the sector.

As Ernst and Young highlighted in its 2013-2014 report on business risks facing mining and metals, when prices softened in 2012 amidst escalating costs, the impact on bottom lines was significant.

High costs will continue to take a toll on miners until there is a sustained shift towards the optimisation of asset performance, operating costs and capital allocation.

Any cost reduction is good of course – and certainly rewarded by the market – but it will be those companies that improve their long-term value by embedding sustainable improvements that will be around for the long haul, or snapped up at a good price.

Increased automation and digitisation provides miners with the opportunity to better monitor and analyse processes. With greater visibility on operations, miners can glean a deeper understanding of process and productivity weak spots, and thereby have an opportunity to make improvements.

There are significant gains to be made through the implementation of strategic asset management practices like reliability centred maintenance, capital planning, condition-based monitoring, and data quality management.

Leading mining companies already acknowledge that maintenance software systems contribute to increased productivity and profitability through improving equipment reliability, optimising maintenance costs and inventories. But it doesn't stop there.

Not only do maintenance systems reduce the drain of technical know-how due to staff turn-over, these codified improvements benefit current production. Operational improvements captured within a maintenance system are also transferrable to the next mining venture, thereby helping to ensure that new projects operate with similar reliability and efficiency.

The transferability of maintenance improvements also increases the value of the business as it increases productivity and reliability.

So what can existing mining operations do to survive the downturn?

Invest in an asset management system that captures and leverages lessons learnt, implement and commit to continuous improvement programs, automate and optimise processes and practices.

What is your business doing to improve your maintenance or asset management practices?

How do you capture lessons learnt?