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How to do more with less

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World Coal,

Shawn Lyndon, Ventyx – an ABB company, explains how the mining industry can turn “do more with less” from an empty slogan to an actual business strategy.

Mining has been synonymous with riches since the beginning of recorded history. That reputation certainly held true during the first decade of the 21st Century, when the industry soared. But today, mining is just the latest of once-impregnable industries to be shaken by the realities of doing business in a globalised, connected world. Costs of extraction, production and transportation are up, prices are soft, demand is fickle and stock values have swooned. As The Wall Street Journal said in a recent report on an erstwhile Australian boomtown, now wilting in a coal mining bust: “the party is starting to end.”

Industry analysts see the current challenges as structural, not just cyclical. As PwC global mining leader, Tim Goldsmith, said in its last review of trends in the global mining industry: “The mining industry is facing a confidence crisis”. What’s happening right now in mining “is not a pendulum swing, it’s a seismic shift,” concluded Deloitte in its Tracking the Trends 2014.

Mining in a new world: the “do-more-with-less” imperative

Most industry experts agree that the time-honored historic solution – hurriedly finding more stuff to mine – won’t work anymore. As with most industries, mining today is all about increasing the productivity of existing assets and boosting efficiency to reduce operating costs: the dreaded “do-more-with-less” imperative.

However, this once-chilling maxim is actually good news: being forced to do more with less offers mining an opportunity to leap into a new age of innovation that promises even richer levels of success and prosperity. Leveraging existing and emerging technologies, there’s a way to turn “do more with less” from an empty – and dispiriting slogan – into a real-world mining business strategy.

Let’s start with the industry’s biggest cost, maintenance, which accounts for 30% to 50% of total operating expenses (OPEX), according to Mining Global – although I’ve seen mines where maintenance costs ran as high as 70% of total OPEX. How do the vast majority of mining companies currently try to hold down the cost of maintenance? By using a time-honored array of disparate, siloed operational systems, which generate tonnes of data that’s rarely integrated, analysed and refined into actionable intelligence to answer maintenance question No. 1: What’s the business cost/benefit of fixing or replacing an asset now, or waiting until later?

That question is getting potentially easier to answer as more and more data flows from connected devices reporting to operational systems in real time – the internet of things (IoT). The potential to answer becomes an actual answer by combining data from these operational systems with information technology’s business intelligence, analytics and financial information.

IT/OT integration in mining

Take a haul truck: combining operational technology (OT) data beaming from that truck’s connected sensors with information technology (IT) can answer such fundamental, business-critical questions as: “What’s the economic impact of one cylinder on that truck not working?” “Would it cost more to fix it or replace it?” “Should we fix or replace now, or wait?” “What does this flow of information say about our entire maintenance strategy?”

Experienced mining hands may snort at the concept of integrating OT with IT. In many companies, the operations folks and the IT folks don’t even like each other because they’re in a constant struggle for ownership, which is obviously self-destructive. One sterling exception is Cliffs Natural Resources, the international mining company, that has a staff position called “senior director of IT/OT.” Cliffs is currently piloting integrated IT/OT for predictive maintenance on its haul trucks, with hopes of extending the solution to such other key assets as conveyers, shovels, drills, crushers and sag mills.

“It’s pretty simple,” says John Tish, Cliffs IT/OT guru. “Commodity prices are going down and expenses are going up. The only way we can remain successful and competitive is by bringing together in real time vast amounts of analysed, asset-related data to reduce our operational and maintenance costs, while providing greater reliability and production output.”

Mining is 20 – 30 years behind: it needs to catch up

With the rise of the IoT, IT/OT integration is moving swiftly ahead in many industries as a way to, yes, do more with less. Will mining embrace it as well? That’s a crucial question, since mining has historically been a late mover. As Mark Cutifani, CEO of Anglo American, told The Australian newspaper not long ago, “[Mining] is some 20 to 30 years behind other more progressive sectors in terms of business practices.”

My view: mining doesn’t have a choice. The industry must evolve permanently from a focus on getting more out of the ground to a focus on efficiency, ROI and maximising the health and productivity of existing assets. Miners who don’t embrace the benefits of IT/OT integration may not be around very long.

The author is senior vice president and general manager of asset health solutions at Ventyx, an ABB company. Edited by

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