PricewaterhouseCoopers’ research shows that operating critical machinery more efficiently also makes significant inroads into boosting productivity.

By Kathryn Edwards, The ASIA Miner

AUSTRALIAN mining productivity in relation to the actual output of mining equipment on site is down, and in many cases more than its peers, according to Dr Graham Lumley, PricewaterhouseCoopers (PwC) Mining Intelligence and Benchmarking director.

Graham Lumley presented his research into performance trends and international comparisons in mining productivity at this year’s International Mining and Resources Conference in Melbourne. Although his research showed a long-term increase in the aggregate output of the Australian mining industry – rising by 4.2% on average – the output does not follow the increase in investment in capacity at 17%.

“You can see this incredible investment in capacity which hasn’t created a significant increase in output, or not as much of an input in output,” Graham Lumley said. “And so immediately when you see something like that a few red flags start going off, and you start saying, ‘Well, you know what is going on’.”

PwC conducted detailed analysis of 20 years of operating performance data from 136 open cut mines and 4760 pieces of equipment globally. Findings from the research of data commonly used to measure productivity have revealed the mining industry wrongly equates enhanced productivity with cost cutting and increased volumes. The research proves operating critical machinery more efficiently also makes significant inroads into boosting productivity.

Graham Lumley said Australia’s biggest challenge was that the country was below most of its peers in terms of mining productivity and mining equipment, only marginally ahead of Africa. “However you see it, it’s something we can’t ignore,” he said. “It’s something we have to take on board as an industry and Australia really does have to turn this around to try and be competitive in the world mining industry.

“If you look back in 2009/10 the mines were increasing output. If you’re increasing output you expect your loaders to be improving. But the loaders haven’t, [data shows] the loaders were going backwards in 2010. The mines are still increasing output even now when the prices are down, they’re trying to compensate that by pushing more volume out. But the productivity of loaders is still going down.”

The research also pointed out how poorly-operated trucks on mine sites are driving up costs. “We’ve got most of our mining companies saying, ‘We’re saving costs, we’ve cut $50 million out’. And yet the productivity of probably the most cost intensive part of the mine site is still going down,” Graham Lumley said. “Now productivity is going to be the driver behind your costs, and yet we’re still seeing the productivity of that driver of costs going down. So I’ve actually coined it ‘cutting costs with a high cost strategy’. The high cost strategy is running your trucks poorly.”

He said the key differentiators of performance on mine sites were strategy, how data was used, and the people. “With data management, there is a direct correlation between the way mines use data and their performance that I’ve seen time and time and time again. “There is a direct relationship between those that use the data well and those that perform well.

“Productivity is actually about people – that’s what it comes down to. Those declines are about what we’re doing. Improvements in technology haven’t caused a decline in output. The improvements in technology are ongoing. They will happen, but the actions of the people are happening in parallel. And that’s what we’ve got to get our heads around.

“Whenever you read something that says, ‘we need new technology to turn around productivity’. No we don’t – we need the people and the way the people are acting to turn around productivity. The technology is working in parallel and mining companies themselves are doing a fantastic job in providing that technology. But that is not to turn this productivity problem around. The people will have to turn it around.”

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