A well-run mining operation understands the various operational-risks and aims to minimise them through carefully planned maintenance strategies. There are, however, systematic behaviours that can decrease efficiency through a lack of understanding of interdependencies between ore type, throughput and equipment reliability. Volatility in the commodity pricing and supply-chain disruptions caused by current unprecedented circumstance can further diminish the benefits of a well-run lean operation.
How can we rethink the maintenance objective in such unprecedented circumstances, while maintaining a profitable business?
In operations, equipment or system availability is a key performance indicator (KPI) widely used by decision makers to narrow their focus for improvement.
When availability becomes the sole focus of the maintenance department and an operation’s MTTR (Mean Time to Repair) KPI, work quality may be sacrificed. Unexpected equipment failure caused by the poor quality of work can result in increased risk to safety, loss in production revenue, increased downtime, and higher repair costs due to the use of emergency freight, tooling labour, etc.
Unplanned equipment downtime can be managed through understanding the risk to the overall system and by applying mitigating strategies that increase equipment reliability. Incorporating the overall operating cost implications (due to the unplanned downtimes) enables a sharpened focus on high-quality work, resulting in stabilised performance.
Table 1 presents three scenarios based on the production objective – throughput.
- An equipment’s higher reliability and availability objective sacrifice the throughput, resulting in a high inventory of spare parts incurring minimal risk to the overall supply chain.
- Targeting a higher throughput sacrifices reliability and resulting availability.
- Once a state of stable throughput and reliable operation is achieved, the next step is cost reduction through risk management of the maintenance program.
The value-driver is therefore in operation, seeking the balance between increasing throughput and reducing costs by adjusting inventory levels or other procurement costs.
In lean operations, inventory-holdings (spare parts) become a trade-off between internal cost reduction and external supply risk. Confidence in the supplier’s ability to deliver on time can allow a program to reduce inhouse stock, at the expense of increased dependency on external resources.
But when an unexpected external event occurs, such as the COVID-19 pandemic, potential supply chain disruptions can impact a mining operation. Ultimately, the success of a well-run operation is driven by understanding the risks (external and internal), managing costs and building trust with suppliers who can deliver.
Adjusting strategy to deliver value
Changing commodity prices drive production outcomes. For example, higher throughputs deliver more metal for the market, but come at a cost.
In a fixed maintenance strategy, operating above the design rate risks putting equipment in a state of stress that may not be sustainable (shown in Figure 1). This action should only be attempted after the appropriate assessments and considerations are made and the risk is fully understood.
Shifting to a flexible maintenance strategy means adjusting to the changing commodity pricing and production outcome. A full understanding of risk mitigation is required to determine how far to push the equipment in a price sensitive time but also how to protect and refurbish the equipment in times of lower demand. Operations focusing on what is controllable, understand that critical assets cannot run lean on spare parts and certain stock levels must be maintained to confidently meet production demands.
Figure 1 – Adapting to changing commodity pricing
Thriving in uncertain times
Operations that recognise opportunity and act dynamically, taking a long-term view and adjusting strategy during a period of uncertainty, will not just survive but thrive in the new market.
Ultimately, a successful value-driven mining operation balances risk and operational outcome.
Reach out to Eoin Brennan for more information.