The widely publicised reduction in mining productivity both on a volume and cost basis during the mining boom, coupled with the lower commodity prices and reduced investor confidence in recent years, resulted in most miners focussing on increasing their competitiveness through cost-cutting measures and increasing operational productivity.
In many cases, the business improvement initiatives miners implemented didn’t fully deliver the desired outcomes. Typically this was due to the failure of the proposed interventions to achieve a close alignment between operational performance and strategic intent. Such an outcome often requires a fundamental change to the mining strategy and / or the operations, which is beyond the scope and capability of many business improvement projects.
Here are eight key points that should be considered before embarking on a business improvement project include:
- It is not possible to extract maximum value from a mineral asset by implementing a suboptimal strategy. Profitability can often be increased by adopting an alternative mining strategy, especially in periods of low commodity prices. Consequently a review of the both the appropriateness and effectiveness of the strategy should be included in the project.
- The root cause of low performance ‘at the face’ is often due to one, or a combination of, an inappropriate strategy, poor alignment between the strategy and the operation, or inadequate technical knowledge and understanding. While organizational, work practices and cultural considerations are also important and must be considered, the issues associated with the aforementioned aspects must be addressed to achieve the best overall outcome.
- Most of the business improvement methods used in the minerals industry have been developed for use in a manufacturing environment. While many of these techniques such as Lean Six Sigma can be very effective, due regard must be given to the unique technical and operational challenges that are inherent in the way most mines operate, otherwise they are likely to fail to deliver the optimal outcome.
- The impacts of any proposed localized or tactical intervention on the overall process or strategy should be well understood before being implemented to avoid shifting the problem elsewhere, or worse, departing further from the strategic intent.
- Any interventions that reduce technical capability and/or information, while potentially attractive in the short term, may impede longer-term performance by reducing the operation’s ability to manage inherent risks (e.g. geometry of the orebody) and increase variability, ultimately resulting in lower productivity and increased costs.
- Most costs are associated with having and maintaining capacity at the mine, so right-sizing the various components of the operation and managing bottlenecks is important to achieving consistently high performance and sustainable cost reductions.
- The team leading the business improvement project must have the necessary expertise to understand the unique issues the mining operation faces, and possess adequate knowledge of best practices and the ability to develop innovative but practical solutions that, when implemented, will result in superior performance.
- Consideration should be given to ensuring that the knowledge gained during the project stays at the mine site (and isn’t lost through personnel turnover) and the implementation plan has adequately considered change management aspects and systems design so that the improvements are sustained.
AMC’s business improvement services have delivered successful outcomes to our clients on more than 200 projects worldwide. Our tailored approach combines extensive practical mining experience with proven proprietary business improvement techniques and information. Our services extend from strategy reviews and optimization through to comprehensive operational improvement assessments and implementation support, and incorporate the full range of management, technical, operational and organizational aspects. For more information, please refer to our Improve solutions or contact your local AMC office.
Director / General Manager Melbourne