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Rims Metals and Mining Session

This presentation was used as a base for a talk resented at RIMS Conference in Vancouver, May 2011, Metals and Mining Session. Recent world-wide events have shown

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Rims Metals and Mining Session

  1. 1. Infrastructure/Logistical Networks Risks: What can Be Done? How Can it Be Done? Why Should it Be Done?A presentation at RIMS 2011, Vancouver May 2nd 2011By F. Oboni, C. Oboni, Oboni Riskope Associates Inc.(c) Oboni Riskope Associates Inc., 2011Riskope International SA © 2009 1April 20, 2011 Slide # 1
  2. 2. Cardio-vascular accidents(stroke) have become one of the major causes of death. A cardio vascular accident occurs when blood flow is interrupted to part of the brain (our very own IT system…), a problem occurs in the heart...Riskope International SA © 2009 2April 20, 2011 Slide # 2
  3. 3. Consider the heart as your extractive facility, and the circulatory system as your transportation/logistic network. You probably have learned to take good care of your heart and your blood vessels: is the mining industry doing the same for its “circulatory” system?Riskope International SA © 2009 3April 20, 2011 Slide # 3
  4. 4. For years we have taken care of civil systems’digestive/waste “organs”. In the mining world these are:process, tailings, dumps, contamination....Riskope International SA © 2009 4April 20, 2011 Slide # 4
  5. 5. Then large companies have asked us to review “supply chains” (e.g water, electricity, gas, acid etc.), but never used to ask about “moving products away”.The progression generally was:Tailings, Slopes, Access Road.We generally had to insist toinclude for example:Concentrate pipelines,Wharves, Ship-loaders,IT systems...Riskope International SA © 2009 5April 20, 2011 Slide # 5
  6. 6. Other industries/organizations wereahead of miners.For example:The Olympics in Torino wereconcerned by their road network (inand out of the venues),CCC (jewels, perfumes) was alsovery concerned about moving theirproducts out, as they have veryprecise schedules, and have “AliBaba caverns” in seismic areas.Riskope International SA © 2009 6April 20, 2011 Slide # 6
  7. 7. CCC Japan asked Riskope in 1998 (three years after Kobe earthquake) to perform a Logistic Platform Disaster Recovery and Business Resumption Plan Review.Riskope International SA © 2009 7April 20, 2011 Slide # 7
  8. 8. some of Riskopes notes were: -The plan is expecting a disaster to hit only during regular business hours! -The plan relies on a rosy scenario whereby major Highways, RR infrastructure and power supply (actually they had auxiliary power, but the tanks were empty...)!! would be running! -IT Servers were not mirrored by hardware located in a safer region! We sincerely hope they corrected their plans...these common errors have proven critical 13 years later...Riskope International SA © 2009 8April 20, 2011 Slide # 8
  9. 9. Remarkably not one of Riskope’s notes requireddetailed knowledge of seismology.People claiming one cannot anticipate an Earthquake/Terrorist attack/Failure scenario (or any other hazard)because they do not know enough details of possiblehazards are missing the point:Disruptive events can be anticipated and planned insustainable ways by performing sensible risk analyses.Detailed knowledge is needed, but at a later stage.Riskope International SA © 2009 9April 20, 2011 Slide # 9
  10. 10. You do not go to the doctor and ask him about thegenetic structure of a virus or a disease. You ask himhow it might affect YOUR life (scenarios), then youponder if the “cost of vaccination” vs “reward” is worthtime and effort, AND, the chance of secondary effects.Riskope International SA © 2009 10April 20, 2011 Slide # 10
  11. 11. Mining “circulatory” systems encompass ingress and egress, likethe human one arteries and veins, all the way from the heart to theend user!Miners seemed to privilege ingress studies, but to neglect egressstudies, contrary to other industries.Modern transportation systems require effective risk managementdecision tools to: -help ensure critical transportation operations reliability -ranking emergency alternatives -allocating mitigative resourcesRiskope International SA © 2009 11April 20, 2011 Slide # 11
  12. 12. Transportation, loading/unloading contracts with thirdparties have the effect to make companies feel“comfortable” that the other parties are taking care oftheir risks....YETwhen reality kicks in, severe disruptions result frommajor snowstorms, avalanches, volcanoes or defectivevalves, gearboxes!!Lets look at some examples:Riskope International SA © 2009 12April 20, 2011 Slide # 12
  13. 13. Winter 2010-2011Riskope International SA © 2009 13April 20, 2011 Slide # 13
  14. 14. Volcano (Island, 2010)Riskope International SA © 2009 14April 20, 2011 Slide # 14
  15. 15. Production of iron ore, uranium and alumina have allbeen disrupted in the first three months of 2011 byCyclone YasiRiskope International SA © 2009 15April 20, 2011 Slide # 15
  16. 16. A gearbox in the loading equipment failed on Jan. xx, atwhich time YYY estimated it could take up to twoweeks to fix thedamaged partsleaving the ZZZterminaloperating atabout halfcapacity.Riskope International SA © 2009 16April 20, 2011 Slide # 16
  17. 17. This 2010 ship loader collapse still requiresemergency (and costly) truck transfers to a wharf500km away….Riskope International SA © 2009 17April 20, 2011 Slide # 17
  18. 18. Examples of hazards capable of generating egress disruptions: -Earthquakes -Hurricanes, cyclones and floods -Man-made and Natural slopes, rock-falls -Traffic and trackage, strikes -Fires of forests, railroad assets, -Dust, nuclear fall out, terrorism and organized criminality... -IT failures, .... -Maintenance, human error…!!Riskope International SA © 2009 18April 20, 2011 Slide # 18
  19. 19. Once the system potentially hit by disruptive event(s) is studied, risks are ranked and checked towards tolerability criteria. it is then possible to effectively allocate mitigative resources, select alternative routes etc. ($). Not the other way around! Without clear understanding of tolerability, you will waste your money!Riskope International SA © 2009 19April 20, 2011 Slide # 19
  20. 20. Budgets available for risk analysis and risk-based planning of hazard protection measures for transport routes and infrastructure is generally limited because of the false sense of comfort brought by third parties contracts.Riskope International SA © 2009 20April 20, 2011 Slide # 20
  21. 21. Important definitions like, for example,Force Majeure,are taken as granted boiler plate solutions, in the totalmisunderstanding of what they do mean, and what theywill mean the day reality kicks-in.All this while many people are starting to ask moregeneral questions, such as for example: was Katrinareally a natural disaster, or was it man-made, or man-induced and to what extent?Riskope International SA © 2009 21April 20, 2011 Slide # 21
  22. 22. On Jan 13 the FT published a short article explaining thhow snow proofing UKs airports may force passengersto pay higher fares if winters turn “permanently” colder.Riskope International SA © 2009 22April 20, 2011 Slide # 22
  23. 23. Reportedly the “Arctic weather conditions” before Christmascost 37.7MUS$ in one week.BAA said airlines “shared responsibility for the disruption asthey had agreed to a recovery plan that failed to account fordeep snow”.Airlines needed to renegotiate the emergency plan, whichcould lead to an increase in operating fees...Needless to say BAA was heavily criticized for thedisruption.Riskope International SA © 2009 23April 20, 2011 Slide # 23
  24. 24. Foreseeability, a key parameter in FM, indeed requiresthe definition of a threshold likelihood: for example atornado in Salt Lake city was unforeseeable, byscientific consensus, until one happened in 1999?!Riskope International SA © 2009 24April 20, 2011 Slide # 24
  25. 25. The optimization of Force Majeure formulation, whenrenegotiating contracts in the future, or for newcontracts, constitutes an important proactive mitigativemeasure with very large ROI (Return On Investment).Riskope International SA © 2009 25April 20, 2011 Slide # 25
  26. 26. There are numerous areas where optimization can takeplace, for example under the form of a more detailedexplanation of terms, definition of threshold values,definition of considered mitigative levels,“common practices”or “best practices”,negligence.Riskope International SA © 2009 26April 20, 2011 Slide # 26
  27. 27. Going back to our clairvoyant and planning oriented clients, their business areas range from: Torino 2006 Winter Olympic Games Military Food Jewellers, and lately, Mining etc.Riskope International SA © 2009 27April 20, 2011 Slide # 27
  28. 28. Modern transportation systems are complex andtherefore require effective risk management decisiontools.These help to:-rank alternatives, (literally hundreds)-allocate resources, (how much is reasonable!?)-avoid alternatives with major side-effectsthe reason is in the following slideRiskope International SA © 2009 28April 20, 2011 Slide # 28
  29. 29. As someone has said:“The time to look for the emergency aisles and wherethe exits are located is before takeoff, not after thewings fall off the plane”.We must always have a plan in place to deal withunanticipated events,a “just-in-case things head south” plan.Riskope International SA © 2009 29April 20, 2011 Slide # 29
  30. 30. Ideally, one puts this plan together when you areobjective and unemotional and calmly contemplative —not when things are figuratively and literally meltingdown.Or in the aftermath of an accident! “The Problem is when we don’t know what we don’t know we don’t know.”Riskope International SA © 2009 30April 20, 2011 Slide # 30
  31. 31. An ingress-egress study covers:The links between two or more geographic pointsallowing transit of goods, energy, information orpeople by means of discrete traffic (roads, railroads)or continuous flow (pipelines, channels, cables, fibre-optics) linear facilities LF.LF are running in increasingly more congestedtransportation corridors and are becoming absolutelycritical to our society...remember the Cardio-vascularanalogy?Riskope International SA © 2009 31April 20, 2011 Slide # 31
  32. 32. Certain equipment, such a specialized ore ship loaders can takeup to one year to replace.Restoration time for port facilities, can be very long anddaunting....its like being on a waiting list for a cardiac operation!Finally, the destruction or damage of the IT assets (for exampleNetwork Management Center) could also cripple the egress froma mine,and thats exactly why a European army has contracted us todeliver a consistent and rational Risk approach (not an ITapproach! An information RM approach) for a whole country.Riskope International SA © 2009 32April 20, 2011 Slide # 32
  33. 33. Although managers try to avoid “complex mathematics”, hard numbers are crucial indifferentiating risks incurred, sometimes by hundreds of components of a similar system (which can be anything, from a road homogeneous segment to a valve, a tank along a pipeline) leading to the need for QRAs.Riskope International SA © 2009 33April 20, 2011 Slide # 33
  34. 34. CS1: Seismic BIRiskope International SA © 2009 34April 20, 2011 Slide # 34
  35. 35. Riskope International SA © 2009 35April 20, 2011 Slide # 35
  36. 36. Conclusion was to propose a B2B strategy whereby theclient would actually team-up with RR and buyreplacement bridges. Insurance could be reduced andserviceability ensured in a far better way.Riskope International SA © 2009 36April 20, 2011 Slide # 36
  37. 37. CS2: Multimodal/ multihazard logistical transportationnetwork Production End Ships to W zzzT Possible mitigation Centre X User A Routes Export XX B % pr od uc RR tio n Tunnels and Loading Bridges Tunnels and Wharves End Bridges User C Tunnels and Ships to W zzzT Bridges Production Centre Unloader YRiskope International SA © 2009 37April 20, 2011 Slide # 37
  38. 38. Insurance can be cut in half. Authorizations andagreements should be passed in view of possible futureoccurrences.Riskope International SA © 2009 38April 20, 2011 Slide # 38
  39. 39. CS3: Mine’s personnel shuttling: Air plane vs busesRisk assessments can be used to help decide whethera different transportation system would be better thanan existing one.Several levels of analysis are possible, the top oneincluding CDA-ESM, an alternative comparison toolwhich allows considering risks and avoids all the pitfallsof NPV.Riskope International SA © 2009 39April 20, 2011 Slide # 39
  40. 40. Riskope International SA © 2009 40April 20, 2011 Slide # 40
  41. 41. Infrastructure/Logistical Networks Risks:What can Be Done? Once the system potentially hit by disruptive event(s) is studied evaluating the limits of Force Majeure events, risks are ranked and checked towards tolerability criteria.How Can it be done?Alternatives, emergencies routes are studied and ranked, including side effects.Force Majeure clause from 3rd parties contracts should be (re)-negotiated andsustainable solutions designed.Why Should it Be Done? -help ensure critical transportation operations reliability -rank emergency alternatives -allocate mitigative resources -faster understanding on the situation in case of a crisis situation regarding 3rd partiesRiskope International SA © 2009 41April 20, 2011 Slide # 41
  42. 42. The benefits Create the basis to avoid a slide into a crisis, by proactively controlling the situation. Mind your heart and your circulatory system!Riskope International SA © 2009 42April 20, 2011 Slide # 42