Mainpac advises Australian mining companies to lock in operational improvements to meet current market challenges.
While the mining boom transitions from an investment and construction phase to a production and export phase, the Australian mining industry faces numerous market and internal pressures. High exchange rates, falling productivity, lower commodity prices, high labour costs and decreasing returns, have all converged to generate a near-perfect storm.
During the early 2000s when the focus was squarely on increasing production, inflation grew unchecked, productivity fell and poor capital disciplines crept into the sector. When prices softened in 2012 amidst escalating costs, the impact on bottom lines was significant.
High costs will continue to take a toll on miners until there is a sustained shift towards the optimisation of asset performance, operating costs and capital allocation.
Cost reduction of any kind will be appreciated by the market, but companies that improve their long-term value by embedding sustainable improvements will be around for the long haul, or will be acquired at a good price.
Improvements in automation and digitisation provide miners with the opportunity to better monitor and analyse processes. With greater visibility on operations, miners can glean a deeper understanding of process and productivity weak spots, and have an opportunity to make improvements.
There are significant gains to be made through the implementation of strategic asset management practices such as reliability centred maintenance, capital planning, condition-based monitoring, and data quality management.
Leading mining companies already acknowledge that maintenance software systems contribute to increased productivity and profitability through improving equipment reliability, optimising maintenance costs and inventories.
Not only do maintenance systems reduce the drain of technical know-how due to staff turnover, these codified improvements benefit current production. Operational improvements captured within a maintenance system are also transferrable to the next mining venture, helping to ensure that new projects operate with similar reliability and efficiency.
The transferability of maintenance improvements also increases the value of the business as it increases productivity and reliability.
Existing mining operations can survive the downturn by investing in an asset management system that captures and leverages lessons learnt, as well as implement and commit to continuous improvement programs, and automate and optimise processes and practices.