How to Reclaiming Efficiency and Lowering Costs in Mining

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Here are some strategies to consider, from Deloitte’s “Mining spotlight on sliding productivity and spiraling costs.”

  1. Strengthen Mine Planning
    To improve sector productivity, companies can:

    • Refocus on high-quality production by increasing cut off grades.
    • Reduce capital expenditures in properties with lower production potential and shorter mine lives.
    • Consider the benefits (and potential risks) of reducing reserves.
    • Optimize mine sites through enhanced sequencing.
    • Ramp up production from lower cost mines and prioritize lower cost projects.
    • Attract and retain experienced mine planners capable of improving operational performance and tracking daily adherence to production volumes, mining locations, and mineral content.
  2. Improve Budget and Risk Management
    Independent project analysis in Australia shows that approximately 65% of mega-projects in excess of AU$500 million fail to deliver targeted value. To improve project outcomes, mining organizations can:

    • Establish a clear line of sight on actual expenditures, including costs per unit of production.
    • Share key metrics with engineering, procurement and construction management (EPCM) operators, mine operators and manufacturers.
    • Strengthen working capital management.
  3. Get Serious About Workforce Planning
    To maximize workforce productivity, companies must properly define their workforce assumptions and improve management across the talent lifecycle.

    • Strengthen the owner’s team by clarifying the business model governing mines, plants, infrastructure, and sustainability.
    • Foster a culture that discourages rampant spending.
    • Keep employees engaged through programs such as flexible rosters, training, and long-term career development.
    • Have a system for identifying global resource requirements.
    • Adopt less cost-intensive work practices, such as work clusters, cross-training, and automation.
    • Train local populations in key job functions.
  4. Improve Efficiency through Technology
    Productivity is about maximizing throughput per unit of time, per unit of quality and per unit of cost. Mining companies may wish to apply a better use of technology to achieve these goals:

    • Seek out innovative technologies capable of unlocking deposits and improving productivity on the mine site.
    • Use system transformation to address core business drivers, such as operating time and rate.
    • Replace disjointed reporting systems with streamlined management dashboards that report on actual operational performance.
    • Use production visibility tools to get an automated visual of mining operations from pit to port.
  5. Pursue Operational Excellence
    To bring costs down in a sustainable way, mining companies can:

    • Re-evaluate their operating models to ensure they have the management and reporting systems necessary to build a cost management culture.
    • Adopt Lean/Six Sigma methodologies and techniques such as shareholder value analysis to identify and close operational efficiency gaps.
    • Look to lessons that can be learned from other industries, e.g. process manufacturing.
    • Instill a culture of sustainable operational improvement.
  6. Invest in Analytic
    It is impossible to reduce the costs of safety, maintenance, and other cost-intensive programs on a sustainable basis simply by examining component costs. Using analytics, companies can:

    • Assess the costs of entire processes to uncover the underlying cost base and identify exceptions and outliers.
    • Improve decision-making and asset performance by measuring both financial and non-financial indicators that affect overall profitability.
    • Transport data from a wide range of disparate sources to deliver on-demand reports, enabling miners to improve asset utilization and reliability, minimize downtime, streamline mine planning and optimize fleet resources.
    • Use emerging metrics to manage operational costs, such as measuring the mineral content of each shovel load to determine whether or not it is below cut off grades.
  7. Rationalize the Supply Chain
    To reduce costs, companies frequently ask suppliers for steep—and often unsustainable—cost concessions. Rather than pushing the service sector to the wall, companies can:

    • Establish global sourcing contracts.
    • Build partnerships with those suppliers who have delivered demonstrable value.
    • Renegotiate with major suppliers to win price concessions.
    • Streamline supply chains by integrating processes with key input producers.
  8. Right-size Capital Projects
    To get capital costs under control, miners can:

    • Transition to quick-start modular plants and projects that can be expanded as industry fundamentals improve.
    • Put marginal mines into care and maintenance.
    • More appropriately scale operations to suit individual projects.
    • Build stronger funding practices by better understanding the difference between a project’s value and the price the market sets.


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