Mining trends 2014 eng

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Mining trends 2014 eng

  1. 1. Removing the Barriers to Potential Mining Trends 2014 Are you ready for a seismic shift? January 2014
  2. 2. DELOITTE – Tracking the trends 2014 1.Mining productivity hits new lows 2.Market imbalances wreak commodity price havoc 3.Exploring the innovation imperative 4.Debt up, deals down and juniors fight for survival 5.Record impairments call capital allocation practices into question 6.Local community demands intensify 7.Government relations marked by rising hostility 8.Zero tolerance regulatory environments complicate compliance 9.From zero harm to zero fatalities 10.The talent gap widens into executive suites The top 10 issues mining companies will face in 2014 “It’s not a pendulum swing, it’s a seismic shift”
  3. 3. Innovate or face the Consequences! • Strategic Planning and Thinking • Asset Allocation • Government and Community Relations • Ability to secure Funding for growth Projects • Mitigate risk of Commodity Price fluctuations • Cost Management • Improved Management of People and Processes • Raise Productivity • Improve Safety • Reduce Operational Risk • Innovative Talent strategies There’s no doubt the mining industry is experiencing tremendous pressure on costs. But cost constraints often lead to innovation. Mining has grown bigger over the past 200 years – bigger plants, bigger trucks, bigger blasts. But the industry itself hasn’t evolved much. Now is the time to make fundamental and dramatic changes. Glenn Ives, Americas Mining Leader
  4. 4. Responding to the Global Challenge •Many Miners can no longer wait for Peaks in Commodity Prices to make up for questionable Business Practices •TMS has pioneered an innovative Approach to solving Problems and continues to evolve this Approach through Practice and Research •Over the last decade TMS has helped mining organizations address the challenges outlined in the 2014 Deloitte report •The challenges are not new but have been exasperated by instability in Commodity prices •The Depletion of Resources is causing Costs to rise while Productivity is falling
  5. 5. Cost Cutting ≠ Cost Management •Reactive cost cutting is not sustainable •Cost Creep tends to reset spending to historical levels •Redundancies often need to get rehired at additional costs •Focus must be on Return on Capital Employed (ROCE) and Shareholder Value •Shifting from Asset Expansion to Operational Excellence •Maximize Cash Flow from existing Assets •Improve Productivity through better Management, Systems and Technology Reducing costs over the long term requires mining companies to prepare for a hard campaign of changing the way they do work. This, in turn, should spur them to look closely at their culture to determine if that needs changing too. Andy Clay, Managing Director, Venmyn Deloitte, South Africa
  6. 6. The TMS Solution to improve Asset Performance • Cost Management to decrease all-in cost and improve cash flow • Strategic Business Planning to optimise the capital allocation for long-term benefits • Effective People Management to mitigate the long term skilled shortage • Managerial Capability and Accountability at all levels to deliver the results expected and reduce operational risk • Quality Production Management at the mine level to improve a manageability of the operations • Detailed Knowledge of the primary and Support Value Streams to optimise the value generated by the business • Capital Project Management to ensure the delivery of essential capital projects Systematic Improvement of Mine Business Effectiveness
  7. 7. Mine Effectiveness Improvement Programme •Short term Financial Performance • Improve short term Cash Flow with “quick wins” • Increase Asset Value •Sustaining Short Term gains over the Long Haul • Introduce systemic Improvements to boost Effectiveness • Cultural changes to raise Productivity and reduce Risk •Better Management for better Results • Effectively manage People, Structures and Work • Improved Decision Making reducing Operational Risk • Optimal Organisation Structures with clear Accountability from Top to Bottom • Identification and Development of High Potential to fill Talent Gaps at all Levels • Reduced Reliance on “foreign” Talent to cut Costs and improve Community Relationships
  8. 8. Multi Dimensional Nature of the Effectiveness Improvement Programme • а Mine Planning Effectiveness Mine Organisational Effectiveness Mine Technical Effectiveness Mine Economic Effectiveness Mine Long Term Effectiveness The Elements of Mine Long Term Business Effectiveness Mine Short Term Effectiveness Management Mine Long Term Effectiveness Management Ensure maximum economic return from the planning, organisational and technical systems of the mine (quick wins) - short term activities that focus on identifying the opportunities for optimising cost and increasing the value of the mines and their delivery within a short period (up to 1 year). Such initiatives do not require system / cardinal changes Ensure an availability of the mine production management system for improving the key mine effectiveness indicators on a constant basis every year to sustain the short term achievements Long term activities that focus on sustaining quick, short term results and that will require systematic / cardinal improvement of operational and management systems of the mines within the long term period (to 3-5 years)
  9. 9. Mine Effectiveness Improvement Programme Tasks: • Analyse and optimise the current initiatives in regard to improvements in the effectiveness of the mines (cost and value) • Identify the shortfalls in the current approach to manage the cost and value of the mines • Define key strategic initiatives to improve the cost and value of the mines with clear and feasible advantages of the initiatives • Train managers at all the levels of the mines on various methods to improve cost and value • Provide support to the managers in their practical application of the methods learned and achievement of feasible economic effect. • Allocate accountabilities for managing cost and value (effectiveness) among the Managers at all levels Key Mine Effectiveness Indicators Mine Planning Effectiveness Ensure effective planning of all functions of the mine at various planning horizons, starting with hourly and finishing with long term plans (life of mine) M2P for the mine > 90% in all planning horizons from hour to 3-5 years Mine Organisational Effectiveness Ensure minimum required conditions (structure, people, management) of organisational effectiveness for delivering the mine plans (short- and long-term) utilising mine employees at their full potential Mine Organisational Effectiveness Index > 90% Mine Technical Effectiveness Ensure efficient utilisation of the mine’s technical resources for an achievement of maximum return on equipment and technologies Mine Overall Equipment Efficiency Index > 45% Mine Economic Effectiveness Ensure maximum economic return from planning, organisational and technical systems of the mine General Economic Effectiveness Index > 1 Mine Long Term Effectiveness Ensure an availability of the mine production management system for improving the key mine effectiveness indicators on a constant basis every year to sustain the short term achievements Mine Production System Effectiveness Index >90% Objective: Define and deliver a set of improvement activities to optimise the cost and increase the value of the assets to achieve feasible economic effects in short- and long-term perspectives
  10. 10. Activities Feb,2014 Mar,2014 Apr,2014 May,2014 June,2014 July,2014 Aug,2014 Sept,2014 Oct,2014 Nov,2014 Dec,2014 Jan,2015 Feb,2015 Mar,2015 Apr,2015 May,2015 June,2015 July,2015 Aug,2015 Sept,2015 Oct,2015 Nov,2015 Dec,2015 Jan,2016 Feb,2016 MineShortTermEffectivenessmanagement Express analysis of the Mine Business Effectiveness based one Mine Stage 1 – Analysing and Optimising Mine Expense Profile • Analysis and identification • Implementing initiatives Stage 2 – Expert Cost & Benefit Analysis • Analysis and identification • Implementing initiatives Stage 3 – Accountable Cost & Benefit Management • Module 1 – Developing Minimum Required Conditions of Organisational Effectiveness • Module 2 – Back to Basics • Module 3 - Optimisation • Module 4 – Linking optimisation with budget • Module 5 - Implementation MineLongTermEffectivenessManagement Phase 1 – Analysing the effectiveness of the current elements of the Mine Production management System Phase 2 – Designing the improved Mine Production Management System Phase 3 – Implementing the improved Mine Production Mangement System • Short Term Initiatives to improve Mine Production Management System • Long Term Initiatives to improve Mine Production Management System Phase 4 – Audit the Effectiveness of the Mine Production Management System implemented Sample Implementation of such a Programme in one mining company • The use of highly qualified external experts for auditing the key mine systems and processes • Total value of short term cost reduction and value benefit up to $263M, including: • $89M within one year (2014) – short term initiatives and additional benefits, including $35M in the processing plants (improvements in extraction) • $76M US additional benefits (2015) • Optimising the number of employees in the underground mine (currently 850, target 450 employees) by optimising equipment and improving mine planning • Strong downward trend in both cash costs and all-in sustaining costs, which were down 17% and 7% respectively on Q2 2013 and 28% and 25% respectively on Q3 2012. • Located in Africa • 4 mines • London Stock Exchange – FTSE250 • 5 000 employees • Income - $1.087B • 600 000 ounces per year
  11. 11. Activities Feb,2014 Mar,2014 Apr,2014 May,2014 June,2014 July,2014 Aug,2014 Sept,2014 Oct,2014 Nov,2014 Dec,2014 Jan,2015 Feb,2015 Mar,2015 Apr,2015 May,2015 June,2015 July,2015 Aug,2015 Sept,2015 Oct,2015 Nov,2015 Dec,2015 Jan,2016 Feb,2016 MineShortTermEffectivenessmanagement Express analysis of the Mine Business Effectiveness based one Mine Stage 1 – Analysing and Optimising Mine Expense Profile • Analysis and identification • Implementing initiatives Stage 2 – Expert Cost & Benefit Analysis • Analysis and identification • Implementing initiatives Stage 3 – Accountable Cost & Benefit Management • Module 1 – Developing Minimum Required Conditions of Organisational Effectiveness • Module 2 – Back to Basics • Module 3 - Optimisation • Module 4 – Linking optimisation with budget • Module 5 - Implementation MineLongTermEffectivenessManagement Phase 1 – Analysing the effectiveness of the current elements of the Mine Production management System Phase 2 – Designing the improved Mine Production Management System Phase 3 – Implementing the improved Mine Production Mangement System • Short Term Initiatives to improve Mine Production Management System • Long Term Initiatives to improve Mine Production Management System Phase 4 – Audit the Effectiveness of the Mine Production Management System implemented Sample Implementation of such a Programme in one mining company • Implementing the Accountable Management System that focuses on improving people, structure and work management  Organisational structure - Significant changes to staffing structures and levels resulting in a reduction of 27% of international employees in 2013 and a reduction of 37% in contractors on site. • Improving the system of integrated planning : • Long term mine planning • Capacity planning with constraints • Short term planning and scheduling • Integration of maintenance planning • Delivery of the production plan for the first time in 3 years • Reduction in cost below the planned indicator of $925 per ounce • Located in Africa • 4 mines • London Stock Exchange – FTSE250 • 5 000 employees • Income - $1.087B • 600 000 ounces per year
  12. 12. If YOU had started last Year YOU would see the Improvement now 1.October, 2012 - the start of the analysing the current business effectiveness (operation review) 2.January, 2013 – the start of the implementation of the mine effectiveness improvement programme 3.May, 2013 – the announcement of the first results of the implementation of the programme 4.July, 2013 - the announcement of first Half year (2013) result 5.October, 2013 – the announcement of the production –financial results for the third quarter and intermediate results of the implementation of the effectiveness improvement programme (cost reduction and additional benefits generation) 2 3 4 5
  13. 13. For more Information go to www.totalmanagementsys.com or send Questions and/or Comments to: info@totalmanagementsys.com

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