Differences in output between makes and models – it does matter
May 16 - 22, 2012
MAY 14: I DON’T get Christmas cards from the suppliers of opencut mining equipment. You see, we know more about how productive their equipment is than what they do and if I was in their shoes I would also feel threatened. The value associated with the purchase of a new piece of equipment should include a dollar amount ascribed to its output, not just what it costs in capital or in operating. A true ‘life cycle cost’ must include opportunity costs including additional (or less) material moved.
Productivity and safety – can you have your cake and eat it?
May 2 - 8, 2012
MY recent two weeks in Bora Bora are now a distant memory as mining issues now cloud my reality. One I have been working through has been the whole issue of productivity and safety. We have massive ‘improvements’ to safety systems and processes thrust down our throats but are they really delivering improved safety? And what is the impact on productivity?
The lucky country, for now
April 18 - 24, 2012
I HAVE just returned from two weeks in the ‘Pearl of the Pacific’, Bora Bora. When one is used to dirty mines and remote locations this place really is one of the most beautiful in the world. My mind drifted a few times to Mining Intelligence and when my phone started to ring (yes they do have mobile phones in Tahiti) and the email went off with BMA’s announced closure of Norwich Park mine it did arouse my curiosity.
How much longer will we be the ‘Lucky Country’?
March 21 - 27, 2012
LAST week I looked in a little detail at why the Australian Bureau of Statistics is showing the Australian mining industry is running at productivity levels 40% below 2000-01 – at levels equal to 1986-7. That 40% total decline is quite significant because it mirrors the drop in equipment performance across the industry. To quote American humourist Artemus Ward, “Why is this thus?”, and, “What is the reason for this thusness?”.
Why do mines perform poorly? Because they can
March 14 - 20, 2012
FREQUENT readers of this column will know of my frustration at below-par performance at many of our mines. I have a saying: “You can’t sell efficiency to a manager who is making a lot of money”. Now while I accept this is a generalisation, ‘good times’ promote less focus on what is really important in maximising returns to our shareholders.
Molycorp case highlights planning risk
February 29 - March 6, 2012
I SPENT the eight previous columns slandering the mine development industry and after a few weeks break I was going to take aim at some other group providing sub-optimal input to our industry. However, there has been a significant development in the area of below-forecast outcomes from half way around the world.
ASIC, I fear it is now up to you
February 1 - 7, 2012
I HAVE used a series of these columns to emphasise my concerns about the veracity of the approach used in many mine developments. The data I have suggests that 80% of opencut mining projects will use forecast equipment rates more than 20% higher than the median for the particular machines in their plans and studies. Most (if not all) mine people and planners believe their mine can operate at or above the 75th percentile but in reality, only one in four does. It is a little obvious where problems are coming from I think.
Rational planning rationale would be radical
January 25 - 31, 2012
IN PREVIOUS columns I stated that many mine developments are proceeding based on doubtful engineering and reform is needed. It is a macro issue but comprises a series of micro problems. The use of accurate equipment rates in mine plans is certainly one of these micro areas.
'tis the season (still) to be wary
December 15 - 21, 2011
I HAVE previously suggested the mine development process can be represented by the following Machiavellian formula: (Underestimated costs) + (Overstated benefits) = (Project Approval). The principles-based JORC Code and a lack of prescription of the process through the various feasibility studies support this outcome. As the industry tightened up the resource definitions and standards through the JORC code during the 1990s through to 2004, the deception didn’t stop. It just shifted.
Charting an optimistic path to disappointment
December 1 - 7, 2011
I WANTED to start this week with a case study I have used in the past. It is a perfect example as to how the mine planning process can go pear-shaped. In this case the mine was saved by the increasing price of copper. I seriously question the way this world-class deposit turned their resources to reserves and the feasibility studies which were run in parallel and fed off this information. It is not something this industry should be proud of.
Why JORC can be code for failure
December 1 - 7, 2011
IF YOU haven’t worked out by now, I have an issue with sections of the mining industry (from deposit discovery to mine start) and the quality of what is being produced by way of the definition of what is in the ground and the way a range of feasibility studies are being conducted. It seems like many have more focus on maintaining their pipeline of work rather than ascribing accurate, economic assessments of the deposits they are planning. The Machiavellian formula, ‘Underestimated costs + overstated benefits = next stage mine planning study’, is pretty accurate for many.
Survival of the unfit
November 24 - 30, 2011
IN MY past two columns I proposed that cost and time allowances are rarely met in our industry’s mine plans and returns on investment are lower than predicted in 80-90% of developments. It seems like reverse-Darwinism applies here – we often get survival of the unfittest in the multi-stage development and approval process to get a mine up and running. It is the shareholders and financiers who are getting burnt and more needs to be done about it.
‘Experts’ economical with ore reserve truth
November 17 - 23, 2011
IN MY last column I proposed that in the multi-stage development and approval process to get a mine up and running, accurate forecasts may be counterproductive, whereas biased forecasts may be effective in competing for funds and securing the go-ahead. This week I am going into this in a little more detail.
Coming clean – do ‘planners lie with numbers’?
November 10 - 16, 2011
THE first recorded questioning of the ethics in mining or project development was penned in 1556 by Agricola. He wrote, “A prudent owner, before he buys shares, ought to go to the mine and carefully examine the nature of the vein, for it is very important that he should be on his guard lest fraudulent sellers of shares should deceive him”. So is this still relevant advice? You better believe it is.
Profit and performance: digging up the dirt
October 27 - November 2, 2011
REPEATING what I said last time, I am sure that fat profits make many mining industry participants lazy; mines, head offices and boards of directors included. Fat profits also make mining analysts and shareholders lazy. We as an industry are not achieving the returns we should – far from it. The boom has rewarded people who should be held accountable for blowing away millions of dollars of potential wealth for shareholders.
The separation of profit from performance
October 20 - 26, 2011
I HAVE spent considerable time trying to work out why the mining industry not only achieves such poor equipment productivity but why we are prepared to accept it. I am sure that fat profits make many mining industry participants lazy. Fat profits also make analysts and shareholders lazy. Who doesn’t like a big dividend; particularly when it is up from last year? Boards like paying them and shareholders like receiving them. But we as an industry are not achieving the returns we should; far from it. Worse still, many executives in our biggest and best mining companies just don’t believe we are as poor as I say.
Moneyball and Moneymine: is there any difference between baseball and mining?
October 13 - 19, 2011
LAST week I quoted Carly Fiorina, the ex-CEO of Hewlett Packard, who said, “without the numbers you’re just another person with an opinion”. This week I am borrowing from Tom Davenport. Davenport holds the president’s chair in information technology and management at Babson College in the US. He says that the newly released baseball movie Moneyball has important lessons for every business about the value of analytics. So what does baseball have to offer our mines? Well, quite a lot by my reading of it.
Being analytic
October 6 - 12, 2011
CARLY Fiorina, the ex-CEO of Hewlett Packard, said: “Without the numbers you’re just another person with an opinion”. ‘The numbers’ reveal the health of your mining operation. They demonstrate the areas where you are doing well and those that need attention. So what are ‘the numbers’ and why do so many of our mines and head offices not care enough to extract the real value from them?
Skill development vs training
September 22 - 28, 2011
IF THERE is one topic which polarises opinion in the mining industry more than most others it is the way operator training is delivered. Few doubt the wisdom in ensuring an operator is competent before letting them loose on the equipment. Further to that I have data which proves the value of skill development. However, there is a chasm between skill development and what is passed off as training in many of our mines.
Mining outcomes, and incomes
September 15 - 21, 2011
R&D in the mining industry is too often tied up in politics and self-interest. I was rereading a 2009 column I wrote for HighGrade about the Overburden Slusher (http://www.bosmin.com/OS/os2.htm) and how this highly prospective technology was “not pursued” in the late 80s for political reasons. But it is not just R&D where mining politicians overwhelm technicians. I remember being instructed to change the technical outcomes of a particular study because “the commercial needs were more important than the technical needs”.
