Managing your assets

Paul Boughton

Anton Booyzen outlines the benefits effective asset management within a mining environment

The best-maintained VW Golf will never become a Rolls Royce.  If you want to drive a Rolls Royce, you simply have to buy one. This same principle can be applied to all assets, including mines and mining assets.

A common objective of asset management is to minimise the whole life cost of assets, but there may be other critical factors that have to be considered, such as risk or business continuity. In the current economic climate, implementing a ‘Rolls Royce’ mine would be very difficult to justify from a pure business perspective, however spending more in the mine’s initial development phases may be hugely beneficial over the full life cycle.

ISO 55000 defines an asset as ‘an item, thing or entity that has potential or actual value to an organisation’. Asset management in turn is the ‘co-ordinated activity of an organisation to realise value from assets’. It involves the balancing of costs, opportunities and risks against desired performance. This balancing act needs to be applied over the full life cycle of an asset.

In general, the expenditure required over the life cycle of a mine can be indicated in the Influencing Life Cycle Cost graph.

The red curve, ‘% Expenditure’ shows the typical cumulative expenditure over the life of the mine. There is a certain level and tempo of expenditure during the concept and design phases of the mine that increases significantly once the implementation and construction starts. Thereafter, the level of expenditure drops to cater for operating and maintaining the infrastructure as well as for the continued expansion. At the end of the life of the mine, expenditure once again increases to accommodate for mine closure and rehabilitation.

The green curve, ‘% Opportunity to Influence the Life Cycle Cost’, indicates how the ability to influence the full life cycle cost (or whole life cost) of the mine decreases rapidly during the concept and design phases and through the implementation phase. 

The purple dashes ‘% Locked in (Embedded) cost’ show that the major portion of the full life cycle cost of the mine is already determined in the design phase of the mine. Once the mine is fully constructed, the options to influence the total production cost become very limited. 

Even though cost savings are not as dramatic when recognised Asset Management practices are implemented in the later life cycle stages, these savings can still be significant. Effective asset management practices can limit both the number and extent of plant or mine shutdowns, and increase productivity, by ensuring the availability of critical equipment and spares as well as enabling the availability of specialist resources and a sufficiently trained workforce.

More important than cost savings, however, can be the elimination of risk. The premise behind all asset management standards is that decisions need to be risk based or informed by risk. Safety risk, in particular, can be substantially reduced by ensuring all critical equipment is identified and managed accordingly. The mining optimisation techniques used by the Royal HaskoningDHV Mining Division ensures that clients can achieve the optimal balance of risk, cost and output.

End of life in the mining industry, or mine closure, can become a regulatory nightmare if solid asset management principles have not been followed during the operating life of the mine. Non-conformity with regard to mine closure usually means a deviation from legal requirements.

Royal HaskoningDHV is an international engineering consultancy firm with headquarters in Amersfoort, Netherlands. It has assisted many clients with concept studies, feasibility studies, due diligence studies, and mine planning and design, to ensure that the embedded costs are controlled at an early stage.

Royal HaskoningDHV utilises a whole life cycle approach from project inception, leading to most of the potential deviations being identified, costed and provided for at an early stage.

Implementing an effective asset management can enhance bottom line profitability, but it cannot transform a VWGolf into a Rolls Royce.

Anton Booyzen isProject Development Manager Mining and Capacitation, Royal HaskoningDHV.

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