There are signs of distress across the mining industry: Continued deterioration in commodity prices is undermining cash flows and putting pressure on the serviceability of existing commitments. Some are of the opinion that the drop in commodity prices we are currently experiencing is not a pendulum swing but a seismic shift and that companies who don’t respond appropriately risk their profitability as well as their long-term survival.
“There’s no doubt the mining industry is experiencing tremendous pressure on costs. But cost constraints often lead to innovation. Mining has grown bigger over the past 200 years – bigger plants, bigger trucks, bigger blasts. But the industry itself hasn’t evolved much. Now is the time to make fundamental and dramatic changes.”
The dangers of reactive cost-cutting
In an older report Forbes warns that it would be short-sighted of mining companies to respond to the commodity slump by retraining their focus on capital prudence, cost discipline, portfolio simplification and non-core asset divestment to improve ROI. From a long-term perspective we can see that reactive cost-cutting is rarely sufficient or sustainable:
- Shrinking the talent pool while commodities are down means that companies will be scrambling to recruit new teams when the market recovers.
- Cost-cutting measures such as reducing travel or tightening cash management tend to creep back into the costs over time.
- Reducing funding approvals for projects related to maintenance and safety puts the wellbeing of employees and the future profitability and efficiency of operations at risk: “Reactive maintenance is five times more expensive than preventive maintenance and 10 times more costly than predictive asset management” Lima, Zöhner, Oladzadeh on transforming mining maintenance and advanced service solutions for mining and mineral processing.
Asset monitoring for long-term cost-cutting
The best solution for sustainable and efficient cost-cutting is to build a culture of cost management by re-evaluating operating models to ensure the necessary management and reporting systems are in place. Deloitte advises various strategies for implementing sustainable cost management program to become the lowest-quartile-cost producers. Three of these strategies can be implemented by means of an efficient asset monitoring system:
Pursue operational excellence
By implementing an efficient asset monitoring system cost reduction diagnostic can be used to help mining companies identify key cost levers they can pull to improve productivity and optimize return on capital. “To ensure the changes “stick,” they must track and monitor costs by adopting appropriate operating models and reporting systems and potentially changing their internal cultures to drive continuous improvement.”
Improve efficiencies through technology
With real-time information on the location and production of mining machinery available management can identify inefficiencies, track productivity levels, streamline processes and re-plan based on actual performance and conditions.
Use analytics to uncover true cost drivers
“It is impossible to reduce the costs of safety, maintenance and other cost-intensive programs on a sustainable basis simply by examining component costs.” Instead, the analytics made available through real-time asset monitoring technology allows companies to assess the costs of entire processes and to improve decision making and asset performance by measuring both financial and non-financial indicators that affect overall profitability. “By combining analytics with the right performance indicators, companies can identify and realize enormous savings.”
Real-Time asset monitoring for cutting costs and improving performance
Here are a few points to ponder. If you answer NO to any one of them then you have scope to improve your existing business challenges:
- Do you know where your assets are and who is using them? Can you identify operators that are abusing equipment?
- Has your requested material arrived at the workplace?
- Is each of your machines and vehicles being used optimally and efficiently?
- Can we forecast and schedule services according to maintenance plans?
- Can we do accurate component replacement forecasting for budgeting purposes?
- Do you know and understand the main causes for downtime of your machines, vehicles and plants?
- Are you managing damage reports properly?
- Can you truly and correctly claim warranties from your suppliers with sufficient evidence?
- Do you maintain assets i.e. conveyor belt systems in accordance with Act 29? How do you maintain the records?
Minelert MachineEYE, Minelert eLogger and Minelert Asset Locator System (ALS) solutions enable the monitoring of all machines, vehicles, loco’s, material cars, safety devices and any other assets throughout the mining operation. When monitoring and managing these assets you will not only increase productivity and cut costs; the system will also enable you to create a safer working environment for your people.
Vehicle Management Solution (VMS) solutions make use of an integrated suite of software and hardware components. It allows for real-time monitoring and management of primary production equipment and related product flow. Once the vehicle unit (VU) is installed on a vehicle, the unit will constantly monitor and log data in real-time from a variety of sources on the vehicle. This includes data from the strategically placed location tags for determining the position of the vehicle.
In a nutshell:
The implementation of real-time asset monitoring systems is a long-term cost-cutting strategy that can assist mine managers with keeping operations afloat in the economic climate currently faced by the mining industry.
Alignment with a maintenance strategy is achieved with less effort to ensure assets are serviced as it is supposed to. Automated reporting/alarms/notifications warn the Supervisor or Maintenance Manager of assets not performing according to requirements meaning downtime can be planned and scheduled thus reducing unwanted breakdowns tremendously.
By monitoring major assets in real-time easily drives costs down to compensate for fluctuating commodity prices worldwide.