Productivity is regaining ground as a popular business strategy to enhance value after being sidelined in favour of revenue maximisation during the commodity price boom. But what does productivity actually mean? Is it more than just a buzzword? And is it the answer to the industry’s post-boom blues?
The productivity challenge in mining
Productivity is commonly defined as a ratio between output volume and the volume of inputs (OECD, nd) or a measure of using resources efficiently to produce outputs (Productivity Commission, 2015). This metric is widely used across the global mining industry. However, on a volume and cost basis, mining productivity has been falling since 2000 (Mitchell and Steen, 2017), largely due to:
- lower ore grades at greater depth
- increased costs (such as labour, energy, water, land access and equipment costs)
- a focus on revenue maximisation.
Given the challenges facing industry – declining grades; deeper, more metallurgically-demanding orebodies; remote locations with infrastructure challenges; energy availability and cost; and land and water access issues – this trend is likely to continue.
Value is key for mining investors, boards, executives, shareholders and stakeholders. Productivity targets should be framed across whole-of-business value objectives. Value objectives may include net present value (NPV) as a proxy for shareholder value, combined with other metrics to align with a company’s strategic goals and mission (King, 2015). According to Gerald Whittle, CEO of Whittle Consulting, there is much value still to be leveraged in a majority of mining projects: ‘If you focus productivity on non-bottleneck steps in mining or processing, you may indeed lose value’. Declining productivity is a critical issue, and proactive change is needed to sustain value. This means turning around productivity through rigorous improvement and adoption of innovative approaches to mining and processing. A refocus on productivity that enhances operating margins and delivers value is needed.
Improvement options now and innovation opportunities for the future
The Coalition for Energy Efficient Comminution (CEEC) argues that adopting dual productivity strategies – incremental changes (improvement) as well as step-change (innovation) – can deliver real improvements to the bottom line; and leading mining and METS companies are getting on board.
A key target for productivity improvements in hard rock mines is the energy-intensive comminution circuit. Often the constraint to production in the mining process, energy required for comminution can account for up to half of a site’s operational costs and around three per cent of global electrical energy consumption. Nevertheless, there are proven, low-cost and low-capex strategies that can be employed to improve energy efficiency and increase productivity. For example, Newmont has implemented practical changes to a wide range of grinding circuits across 12 global operations, significantly improving performance. This work illustrates the value of a rigorous approach to optimising operations, for which Newmont’s Giblett and Hart were awarded the 2017 CEEC Medal for operations.
Mine to mill is another strategy that can drive productivity improvements of ten to 30 per cent (Cameron, Drinkwater and Pease, 2017; Flannery, 2017). Widely adopted in the 1990s, mine to mill is a systems approach to process optimisation. Rather than focusing on individual processes, mine to mill considers the process chain from resource through to product. Examples include preconcentration to reject coarse waste and advanced blasting, which can improve rock breakage ahead of crushing and grinding (Cameron, Drinkwater and Pease, 2017). This is best supported with the right KPIs that enhance value across organisational teams.
The Antamina comminution circuit optimisation and improvement project in Peru illustrates how these approaches can deliver even greater improvement. Antamina produces copper and zinc. Collaboration between the mine staff and Metso boosted throughput from the semi-autogenous grinding (SAG) mill by 45 per cent, from 2750 t/h to more than 4400 t/h; this was followed by a further ten per cent improvement (Rybinski et al, 2011; Valery and Rybinski, 2012). Energy savings of 25 per cent (kWh/t specific energy) were achieved (Valery and Rybinski, 2012). Rybinski and three colleagues in Compania Minera Antamina SA, and four Metso colleagues, were awarded the CEEC Medal in 2012 for this work. Success breeds success – six years later, Antamina is continuing to find even more improvement opportunities.
In the June edition of the AusIMM Bulletin, one of the CEEC Medal winners, Hatch Global Director for Consulting and Technology, Walter Valery, told CEEC CEO Alison Keogh that bringing disparate tactical options together would maximise return. ‘When we consider the whole flowsheet we start to see the entire realm of possibilities and opportunities: high intensity blasting; early waste-rejection; high-pressure grinding rolls, vertical roller mills and stirred milling technology; coarser primary separation and less fine grinding. Taken in part, there’s improvement. Taken together, there can be transformation.’ Moreover, when linked to the life-of-mine plan, more valuable ore can be processed more often. This boosts productivity that is squarely aimed at value creation.
In addition to significant benefits from incremental change, operators and researchers seek step-changes in productivity. Exciting advances are now emerging, and we all benefit by collaborating across countries and commodities. For example, the Canada Mining Innovation Council (CMIC) is inspiring step-change among its members. In August 2017, Goldcorp’s Simon Hille, CMIC’s Process and Energy Chair and CEEC Director, announced that CMIC was setting a ten-year target of 50 per cent reduction in energy, water and operational footprints (Hille, 2017), and CMIC is providing strategies to support this transition.
Other industry leaders are encouraging mining personnel to challenge the ‘designs they love’ and be open to new ideas. One of the keynote speakers at CEEC’s Mining and Energy Innovation Forum in Santiago, Chile, in October told delegates that the way the industry had approached mining and processing would fundamentally change during their professional lifetimes. Leaders encouraged all to embrace change and innovative practices, which was viewed as vital for our industry’s future and integral to step-change improvements in productivity. This was echoed in the Santiago forum by Suzanne Lynch-Watson, Metso Global Consulting and Labs Manager: ‘Not only can we improve efficiency and productivity now, but we face a challenge and an exciting opportunity to accelerate step-change to meet world demand sustainably in the future.’
Part of CEEC’s series of worldwide events, the Santiago forum attracted around 50 delegates. Mining leaders, industry experts, researchers and CEEC sponsors (such as Anglo American, Goldcorp, Metso, Hatch, Ausenco, Eriez and Donhad) participated in a highly interactive, half-day forum in the lead up to the Procemin-Geomet conference. Delegates discussed how Chilean sites could deliver value through energy and water efficiency, and strategies to improve energy efficiency, reduce costs and increase productivity and profit. Such collaborative forums accelerate sharing of insights into energy- and water-efficient case studies, as well as support for emerging technologies that promise innovative, quantum changes in productivity. Delegate feedback confirmed the forum was an excellent opportunity to share insights and practical solutions to site-based challenges.
Stay at the cutting edge – join the CEEC network
CEEC is helping the industry stay informed about incremental and step-change improvement opportunities by connecting mining operations with best practice and advances in minerals processing. CEEC facilitates information sharing across its global network via:
- global workshops and forums
- a database of the latest research on efficient mineral processing and comminution practices, including hundreds of papers and 50+ case studies
- a webinar series to be launched in 2018
- a global research portal, linking mining and METS companies with institutes active in mineral processing research
- free resources and benchmarking tools (energy curves) available at www.ceecthefuture.org.
- Be inspired – join the CEEC network via LinkedIn and our mailing list. Talk to CEO Alison Keogh about sponsorship opportunities to show your support and leadership.
The authors thank Joe Pease and Phil Bangerter for reviewing this article, and CEEC’s sponsors, who enable CEEC’s work and make this contribution possible: Anglo American, Antofagasta Minerals, Ausenco, Barrick Gold, Bechtel, CITIC-HIC, CRC ORE, Donhad, Eriez, FL Smidth, Freeport McMoran, Gekko Systems, Glencore Technology, Goldcorp, Hatch, Metso, New Gold Inc, Orica, OZ Minerals, PETRA Data Science, Sandvik, Steinert, TOMS Institute and Weir Minerals. CEEC facilities and other in-kind support is provided by AMIRA International, the AusIMM, Austmine, IMARC, MEI and UQ Sustainable Minerals Institute.
Cameron P, Drinkwater D and Pease J, 2017. The ABC of Mine to Mill and metal price cycles [online], AusIMM Bulletin. Available from: https://www.ausimmbulletin.com/feature/mill-operations-the-abc-of-mine-to-mill-and-metal-price-cycles/.
Flannery J, 2017. A rare challenge, Mining Magazine, p. 13. Retrieved from: www.MiningMagazine.com.
Hille S, 2017. Enabling innovation: Innovating to zero, roadmap to the future, COM 2017 with World Gold Conference. Vancouver, Canada.
Keogh A, 2017. Tackling challenges to unlock smart comminution [online], AusIMM Bulletin. Available from: https://www.ausimmbulletin.com/feature/tackling-challenges-unlock-value-smart-comminution/.
King B, 2015. Improving project value through effective cost management [online], AusIMM Bulletin. Available from: https://www.ausimmbulletin.com/opinion/improving-project-value-through-effective-cost-management/.
Mitchell P and Steen J, 2017. Productivity in Mining: A Case for Broad Transformation [online], EY. Available from: http://www.ey.com/Publication/vwLUAssets/EY-Productivity-in-mining/$FILE/EY-Productivity-in-mining.pdf.
OECD, (nd). Defining and measuring productivity [online]. Available from: https://www.oecd.org/std/productivity-stats/40526851.pdf.
Productivity Commission, 2015. What is productivity and how is it measured? [online], PC News. Available from: https://www.pc.gov.au/news-media/pc-news/previous-editions/pc-news-may-2015/productivity-and-how-measured/productivity-and-how-measured-pc-news-201505.pdf.
Rybinski E, Ghersi J, Davila F, Linareas J, Valery W, Valle R and Dikmen S, 2011. Optimisation and continuous improvement of Antamina comminution circuit, in Proceedings SAG.
Valery W and Rybinksi E, 2012. Optimisation process at Antamina boosts production and energy efficiency: Helping a large copper/zinc mine meet the economic challenge of processing harder ore types [online], Engineering and Mining Journal. Available from www.e-mj.com/features/2373-.