5 Strategies To Reduce Mining Operating Costs
Mining company strategies depend heavily on the current state of the market. When the market is upside, companies develop marginal high-cost, low-productivity mineral deposits, supported by high commodity prices. But when the market is down, companies respond by slashing costs — a natural response to a shifting market cycle.
It is practically impossible to control the vicissitudes of the world’s economy that lead to shifts in currencies and prices of commodities. But, miners can control the way they operate. Companies are now focusing on reducing their mining operating costs and will have to move away from reactive cost-cutting methods and create sustainable programs for cost management. Here are some strategies to consider.
Better management of budgets and risks
An independent project analysis conducted in Australia showed that almost 65% of large projects (the ones that cost more than AUD 500 million) are unable to deliver the value targeted. In order to improve outcomes, you company could:
- Make the management of the working capital more robust.
- Let the engineers, mine operators, procurement and construction management (EPCM) operators, and manufacturers know the key numbers and metrics.
- Get a clear picture of the actual expenditures, including the amount spent on every unit of production.
Better planning of mines
Before a company can start excavating, it is imperative to have a plan in place that will ensure maximum productivity in the least amount of time. In order to improve productivity, you can:
- Build a team of people experienced in mine planning to improve operations performance and keep an eye on the volume produced daily, mining locations, and the mineral content.
- Use enhanced sequencing to optimise mine sites.
- Increase cut-off grades to raise the bar on quality.
- Increase the production from mines where the cost is low and prioritize them.
- Curb capital expenditures on mines which have a lower potential for production and won’t be around for long.
Use technology to improve efficiency
When you improve productivity, you increase output for every unit of time, every unit of quality, and every unit of cost. While humans are up to the task of doing the best they can to optimize productivity, the use of technology can do away with a lot of human errors and do a lot more.
- Production visibility tools help you keep an eye on mining operations from pit to port, and can be used to get an automated visual of the whole process.
- Transform systems with latest technologies to assess the core drivers of your business, like operating times and rates.
- Unify reporting systems with a dashboard that has been created according to your needs. These dashboards can help reporting on the actual performance.
- Look out for new technologies that will help improve the productivity and help unlock deposits on sites.
To get the most out of the people who work for them, companies need to know what to exactly expect from the workforce and use the existing talent pool to make the most of what is available. To optimize the current workforce, companies can:
- Initiate various programs to engage employees, including (but not limited to) flexible rosters and training programs to help them develop their career for the long term.
- Hire the local populace and train them in important job functions.
- Help teams understand the business models that work around mines, plants, infrastructure, and sustainability. This will make them feel more invested in the company and help them perform their best.
- Create and nurture culture that encourages spending the company resources wisely.
- Embrace work practices like work clusters and cross-training to help cut costs and use resources wisely.
Bringing down mining operating costs is not very difficult. However, its sustainability is a different challenge altogether. To bring down costs so that they stay down, companies can try the following:
- Create processes and methods that improve operations that can sustain for a long time.
- Take a look at what other industries are doing and learn from them.
- Turn to Six Sigma methodologies (like shareholder value analysis) to look for gaps in efficiency of operations.
Originally published at www.rapidbizapps.com on February 16, 2017.