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Q&A: How to integrate innovation, cross-functional data use and performance in mining operations

Data analytics, innovation and improving the performance of existing assets were all hot topics at Austmine 2015 in Brisbane in May 2015. In light of th...

|Jun 20|magazine27 min read

Data analytics, innovation and improving the performance of existing assets were all hot topics at Austmine 2015 in Brisbane in May 2015. In light of this, Austmine caught up with Patrick Smith, Managing Director at AMC Consultants. Patrick has 30 years' consultancy and operational experience and at AMC he has worked on mining studies, technical reviews, and valuations for projects in Australia, Africa, Asia, Europe, and the Americas. 

AMC’s focus with regards to existing mining operations is improving performance levels in order to achieve optimum output. Is there any low hanging fruit left within mines for owners to significantly improve productivity or efficiency levels, considering the push for this over the last 24 months?

The short answer is yes! Whilst there has been a strong push on harvesting low hanging fruit at mining operations over the last two to three years, this has principally been focused on reducing costs and to a lesser extent on increasing efficiency. We’ve observed many miners improving their efficiency by looking at how they’ve done things in the past and then deciding how to improve upon their historical mine site performance.

The largest mining houses with many operations will conduct internal benchmarking across a number of different sites and operations (typically of the same resource). The smaller mining companies with only one or two mining operations often have limited opportunities to internally benchmark.

For any company, the main place to improve levels of productivity and efficiency is to get their business improvement teams to benchmark current results against other equivalent operations. Where are you currently compared to best practice? And then, what can you do about it?

We work with our clients to do just this, across open pit and underground operations, predominantly from a mining perspective, but also in geology and processing. We have more than 20 years of mine productivity and cost data that we’ve been collecting on dedicated benchmarking jobs, plus 30 years of data from various consulting jobs that weren’t specifically benchmarking. All of this data is of course confidential and used anonymously for comparison purposes.

Operational Health Checks (OHC) are a key part of this process. We have been doing a lot of these recently for mining operations. One or two consultants (typically an engineer and a geologist) go to a mine site and develop a quick snapshot in a couple of days. The objective is to identify gaps in the mining value chain, and particularly gaps at the interfaces between the main areas of geology, mining, metallurgy and processing. Once these gaps are identified, the company can then address the gap independently, or alternatively AMC will work with the company and together implement the improvements.

How important is it for mining companies to be able to cross reference data from different departments within the operation? What tangible benefits does this allow to the business and performance levels?

Very important! If information sharing within a company is rudimentary to adequate, the job gets done, things happen, but key opportunities are missed. Frequently the organization becomes reactive in its operational management and decision-making. However, if information sharing is fully integrated into the business, we see knowledge from the work being done at exploration and feasibility stages flow effortlessly into geology, mining, operations and planning, and into processing and therefore shipping, and final product and sales. This flow through of knowledge allows people in the business to consistently make the best decisions.

For example, consider the knowledge a geologist will have about the material type – hardness, grade, recovery levels, benefits of blending, etc. Passing this information on to mining engineers means they can include this data into their mine plans and processing schedules so the entire value chain is working as a whole.

What we have nowadays are combined practices that the mining sector has held quite separate in the past. We have a few terms for this combined approach, including Geometallurgy, GeoMinMet, or GeoMet. This approach brings together these disparate functions, or schools of thought, and means that miners are now producing models of the orebody that include all of the known geological, mining and metallurgical parameters. Decisions are being made on more than just the metallurgical grade of the ore. This inevitably has a positive flow-on effect for the wider business and generally results in development of better strategic, as well as tactical, plans.

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This approach is of course the end goal, but it is something that takes time to develop (both in terms of the systems you must have in place, but also training and cultivating your people to thinking that way). An organization that has fully achieved, or is heading towards, this level of integration can be at risk of going backwards if they lose the key people and their corporate knowledge. This is a very real challenge right now. We see many companies looking to save money by reducing personnel numbers. What frequently happens, however, is that the short-term cost savings of fewer are far outweighed by the lost productivity, efficiency, and metallurgical and mining recoveries.

Part of AMC’s expertise is in resource reporting standards. How have the changes to the JORC Code that came into effect on December 1, 2014 affected mining and exploration companies?

In December 2014 the new JORC Code (2012) came into full effect after a period of progressive implementation. In my opinion, the biggest impact has been on the requirements for reporting estimates of Ore Reserves, rather than Mineral Resources. Previously, the JORC Code was less prescriptive on the level of study required to report Ore Reserves. However, this reporting must now be based on either a pre-feasibility or feasibility study. In essence, a greater level of investigation and confidence is required to support the Ore Reserves estimate. This obviously has a lesser impact on operating mines and more impact upon on exploration companies, who are ready to take their projects forward and convert Mineral Resources to Ore Reserves.

This additional level of information of course has a knock-on effect on the documentation and requirements for Table 1 of the Code. Table 1 includes detailed descriptions across a whole suite of parameters that are relevant to the reserve, resource or exploration results to be read by any investors or other interested parties. Each Competent Person who’s producing a Table 1 and the associated report needs to document the important information in a concise way that will help investors and other parties make an informed decision.

Lastly, JORC 2012 introduced a concept of “if not, why not”. This also relates to Table 1 of the Code, where you are required to either explain all relevant criteria in Table 1, or if you have no comment to make, you must explain why you are not making a comment. For example, many mining and processing operations will produce tailings. These tailings have to go somewhere, either into a tailings dam, pit void, or another approved repository. Therefore your report must either acknowledge the tailings and how they will be disposed, or your report must detail why you are not commenting on this. This aspect is intended ensure the reader is not misled through the omission of information.

Innovation is critical to the future of the wider Australian mining industry; how does AMC incorporate innovation into your service offering and day to day approach to clients, as well as internal processes?

The mining industry generally, but especially in Australia, has often had a philosophy that companies want to be first to be second. They’d prefer their competitor to go out and be the leader in developing new technology and go through the substantial pain of innovation. Then they can come in as second or third, once the worst bugs have been worked out, and realize similar benefits as the leader, but with less pain, cost and frustration.

The mining industry is conservative; we at AMC see that often with the client’s objectives at feasibility study stage. When projects are seeking investment from the bank, innovation is not high on the client’s list; reliability and dependability are at the top of the list. The industry as a whole has a focus on consistency with established businesses with innovation coming with slow progressive implementation and making minor tweaks.

AMC has a focus on innovation. AMC is most involved in innovation when we help mining companies from a business improvement review standpoint, identifying what and where clients could do something better, and then continue working with them into the implementation stages. Innovation frequently becomes a key objective for the entire project team when implementing business improvements.

With regard to our own internal drive for innovation, AMC is 30+ years old now, and is an organization that’s always evolving. However, we have just come out of a decade of very fast growth, through the last boom. Admittedly, some of our systems and processes are still playing catch up! When we look internally at how we are personally applying business improvement and innovation, we spend a lot of time asking the following:

• How are we doing something?

• Why are we doing it that way?

• How well documented is it?

• How individual-dependent is this process or system?

• What do we want it to look like in the future?

• How will we get there?

Some AMC employees have been here for 20 to 25 years now, inevitably some of these key individuals will retire (at some point!). Our future planning surrounds how we will continue to best manage the company and our service delivery, ensuring a consistent approach to all of our clients. Many of our most experienced consultants have worked for years with their clients, and bring their own individual and innovative approach to projects. With this in mind, we are currently developing systems that not only support consultant transition and ensure consistency of service, but also complement and support innovation.

Does AMC do a lot of work overseas and what is your history of exporting services from Australia?

AMC has been doing work for mining clients overseas, exporting mining consulting services, since they started three decades ago. In the earlier years many of these clients were the overseas operations of Australian companies and progressively this transitioned to overseas operations of overseas companies. With offices in Australia, Canada, and the UK (and soon also in Singapore) the company is increasingly international with a majority of work being outside of Australia. The recent mining slowdown has reinforced AMC’s focus on growth into their emerging markets, broadening the client base beyond their more established markets such as Australia and Canada. 

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