Industry Q&A: The Importance of Connecting your Mine Planning with your Long Term Business Goals
Although 2016 seems to be becoming a year of cautious optimism in the mining industry, miners are remaining focused on improving their operational efficiencies where ever possible. Austmine caught up with John Battista, General Manager of Minemax to understand how miners should be working to close gaps between strategic and operational decision making to help achieve their long term goals.
Mine planning and scheduling is a fundamental part of any mine’s operations. In a market where all the focus is on operational optimisation, where do you see clients making the greatest improvements, whether in efficiency, productivity, or throughput?
For any mining company to make a significant improvement in their overall performance, they must go back to the primary purpose of their business, which for any mining business should be to sustainably deliver maximum value to their stakeholders. The inclusion of sustainability in that concept is important, as if you can deliver value to stakeholders in abundance this year, but none the following year, this is clearly not a sustainable model for your business. It’s also important to note here that “stakeholders” incorporates several groups, including shareholders, communities and governments at different levels. Recently, with more of an emphasis than ever on social license to operate, communities and local governments are very important stakeholders.
Miners have essentially two things to offer stakeholders in terms of value:
1. The potential value of the natural resources in the ground that they have been (or believe they will be) granted the legal right to extract
2. The promise to sustainably create value from those resources
Delivering the maximum value for a miner starts from board level with strategic analysis and the provision of a direction for the business. This direction and strategy needs to be re-visited regularly, however, to ensure ongoing and increasing value.
That board strategy then determines the long-term, life of asset plan the business has for operations; from there you have smaller, tactical levels of planning, from five year plans, down to two years, quarterly, monthly, weekly and of course, daily dig plans. All of these different plans need to be aligned with that initial strategic plan, with some allowances made as you learn more about the orebody. This will ensure the business can extract maximum value and deliver on their “promise”.
The greatest improvements that can be made in efficiency and productivity are in driving people to make sure that the strategic plan delivers maximum value and that the tactical mine plans that you produce today, or next month, are better aligned with the long term strategy of the business. I see a lot of opportunity for improvement in this approach of aligning your tactical plans with the strategic.
Right now in our industry there is a lot of focus on improving productivity and efficiency. However, sometimes a long term, value-maximising strategy will not always agree with these traditional productivity and efficiency measures in the short term. For example, utilisation is maximising the use of assets, typically meaning hours on equipment per year. This is usually defined as something that’s good, and of course it is worth pursuing if the strategic plan says that’s the way to maximise value. But if having your equipment running at full utilisation doesn’t align with the long term strategy of the business, then by definition it can’t be adding value.
I don’t think simply “productivity” or “increased efficiency” should be the primary goal of any mining business. Their primary goal should first and foremost be sustainable delivery of maximum value to their stakeholders.
How much potential operational improvement or value is lost through poor communications or data transfer inter-departmentally? What can be done by miners to prevent this occurring?
I don’t believe that electronic data transfer is necessarily the issue here. A lot of value can be lost however, through poor communication and bad knowledge transfer. The best plans in the world are useless unless they can be effectively communicated by those who plan to those who execute. Assuming that is happening, the plans are still useless if they’re not then executed accurately; this is critically important. There are generally two reasons why plans aren’t executed accurately if the communication channels are operating well: they can’t be executed (not practically achievable) or simply because they are not followed (operational discipline issue).
In my experience I’ve always found at the shorter end of the planning continuum (from 3 months all the way through to daily), it works best where you have active involvement by those responsible for executing in the creation of the plan itself. If you don’t have that, the executors have no ownership. A great example of this working was at a mine I worked at once where we started to bring in a pit supervisor every month for one day to work alongside the mine planning engineer, in order to devise the next month’s detailed mining plan. This approach ensured alignment between the two departments (planning and production) helped to create a supportive, collaborative and positive working environment, which drove the desired results.
Whilst Minemax is predominantly a software company, you also have training and consulting elements to your business. Where do you weigh in on the people vs. technology debate about what is most important for Australia’s mining sector to remain competitive and sustainable moving forward?
As Minemax is predominantly a software business, it’s important to clarify that the training and consulting work that we do is squarely focused on assisting our clients in using our software to help add value to their business.
When it comes to people vs. technology, it’s not necessarily one or the other; it’s vital there is a focus on both. Adding value in a business is about improving the lives of people, whether the employees or the external stakeholders. All the wonderful technology in the world isn’t of use unless it contributes to making people’s lives better.
It’s also important to note that it is people who drive the development of new technology! Technology doesn’t drive itself (just yet) and I think that will be the case for the foreseeable future.
When we relate this specifically to the mining industry, this isn’t just an issue for Australia, but globally for the sector. Australia needs to stay at the forefront in terms of using technology to improve people’s lives. Just consider how much of the world’s leading mining software has been written, or technologies developed by Australian companies! BHP Billiton (as then Broken Hill Proprietary Company) and the invention of the flotation process back in 1902 demonstrates how historically Australia have always been leaders. In terms of technology, we need to make sure we remain the leaders, and I think that some of the current Federal Government initiatives around the “innovation economy” are certainly a step in the right direction to achieving this. In summary, we shouldn’t be talking about people vs. technology; it’s people driving technology.