Bridging the Production Gap

Emerging from the global financial crisis, the mining industry needs to boost production to meet the increased demand for raw materials. With demand for raw materials likely to grow as demand drivers reassert themselves, the mining industry will need to lift production as soon as possible to satisfy the demand from resurgent BRIC economies. The industry can do this in two ways – find new deposits and build new mines, and / or make current operations more efficient. Our point of view is that making efficiencies in current operations makes sense anyway, it helps to bridge the production gap in the short term, and when new operations come on-line, they will benefit from the efficiencies already realised in current operations.
These efficiencies include more effective inward and outbound supply chain, improved maintenance outcomes leading to higher equipment work rates, faster integration of new acquisitions and faster commissioning of new assets, and the more effective use of operational data from advanced techniques of analytics. These techniques will provide the industry with higher production at lower cost, better safety outcomes, decreased inventory, better talent retention, and increased NPV on new assets.
We already see evidence that the industry outlook is improving. LIBOR rates have fallen and credit is freeing up, and China continues to forcast high levels of growth (approximately 8%). Longer term predictions for the mining industry are moderate (~ 3%), but this should drive larger long term growth in mining economies like Australia. We are planning against and average growth rate of over 8% in our business.
Moving out of reduced production and into a new boom, the industry will face a number of challenges to meet the demand of the emerging BRIC economies. To maximise their opportunities in the short term, the industry needs to remediate production inefficiencies in their current operations.
We call this short term investment in current operations ‘bridging the production gap”. The industry must invest in more efficient current operations to raise output in the short term while increasing the benchmark for new operations in the future. Investment in new operations, while necessary for long term productivity, delivers fewer production tonnes per investment dollar because new infrastructure must also be established.
The mining industry will need to rapidly increase production to address a number of challenges such as Infrastructure constraints that are restricting the ability to export material, remediate a long term underinvestment in up to date technologies, maintaining a focus on safety outcomes, protecting and augmenting the talent pool in the face of aging workforces and a call for new working styles, improving strategic asset management outcomes to deliver higher equipment work rates, and responding to a myriad of compliance requirements in economic and sustainability terms.
All of these challenges can be met, in whole or in part, by the innovative use of Information Technologies, some new and untried, but mostly those already well understood in other industries. Wherein the mining industry can make better use of the data at hand, IT can help.