Even the world’s most technologically sophisticated mining companies are coming to understand that people, equipped with the right information, hold the keys to success.
In Nunavut, Canada, about 2,600 kilometers (1,616 miles) northwest of Toronto, a massive hauling truck broke down recently at the Meadowbank gold mine, threatening to cut production by 5%, which could have cost the company millions of dollars.
But the mining company, Agnico Eagle, recently incorporated new mine planning and ore production software.
Instead of spending several weeks planning using old tools, the company simulated various life-of-mine plans, tested their impacts on production and shifted operations in just days.
“Having tools like these provides a smooth workflow that allows you to look at various options and evaluate several differences in designs,” said Eric Ramsay, senior mine geologist with Agnico Eagle.
A growing chorus of industry leaders is calling for more mining companies to invest in lean business processes, as Agnico Eagle has. The industry’s future, these leaders say, depends on how well mining companies coordinate dynamic information across complex operations.
“Lean” refers to a manufacturing process Toyota refined in the 1970s and ’80s and that spread worldwide to transform modern manufacturing operations. Lean embraces simple concepts that never stop evolving, largely because they depend on every employee having just the right information at just the right time to function at peak efficiency.
“It is important for mining companies and practitioners of lean to make a clear distinction between lean thinking and automation,” said Paul Smith, director of Shinka Management, an Australian consulting firm that helps mining companies develop lean business practices. “Lean manufacturing has traditionally shunned expensive, high-tech solutions to process management, instead opting for low- or no-cost improvements wherever possible.”
Mining is a volatile business that traditionally operates on boom-or-bust cycles subject to the swings of nature, local politics and share prices. New technology improves production, but industry experts agree it’s not enough. Not just operational practices, but also business models, must be lean to eliminate waste, smooth out the peaks and valleys of production, avoid accidents and adjust to the always-present unforeseen.
“Open pit is easier to automate, but the underground mine is like a mini-city,” said Mike MacFarlane, a 35-year mining industry veteran who, as a consultant, urges companies to think differently. “Every day the road changes; all kinds of complex decisions have to be made along the way. The biggest lever point is engagement with employees.”
“EVERY DAY THE ROAD CHANGES; ALL KINDS OF COMPLEX DECISIONS HAVE TO BE MADE ALONG THE WAY.”ENGINEER AND MINING INDUSTRY CONSULTANT
Therein lies the opportunity, and it’s not just earth-moving operations that must be managed. Governments and communities must also be engaged. In 2014, in a presentation to socially responsible investment analysts, Mark Cutifani, CEO of London-based Anglo American, one of the world’s largest mining companies, said that “approximately US$25 billion of mining projects are delayed or on hold due to sustainability and stakeholder issues.”
Cutifani co-chairs a working group of the Kellogg Innovation Network (KIN) that is trying to change the way mining companies think about how their businesses operate in a larger ecosystem of ecological, business and cultural interests.
“The industry is constrained by conventional thinking,” Cutifani said in a white paper that came out of KIN deliberations. “We need to do this outside of the normal industry structure by drawing ideas and experience from outside of the industry. We want to lead the industry and set the pace for change.”
Some companies are already working to retool their business models. British-Australian multinational metals and mining giant Rio Tinto Group, for example, launched an industry-first operation at its new Analytics Excellence Centre in Pune, India, to analyze massive volumes of research, productivity and sensor-collected data from the company’s fixed and mobile equipment, aiming to predict and prevent downtime and improve safety and productivity.
“The centre will help us pinpoint with incredible accuracy the operating performance of our equipment,” said Greg Lilleyman, Rio Tinto’s chief executive of technology and innovation. Rio Tinto is headed by Sam Walsh, a former auto industry executive and passionate lean business proponent who is focused on mining big data to squeeze greater profits from the business and using computer simulations to predict and plan its future.
At the Meadowbank open-pit gold mine in northern Canada, which has recorded 1.2 million ounces of proven and probable reserves since it opened in 2010, Agnico Eagle is demonstrating Walsh’s point. The mine has saved US$1.4 million and increased output by 70,000 troy ounces in recent months, just by managing information more smoothly to achieve efficient dump design.
It’s exactly the kind of outcome Taiichi Ohno, the Japanese industrial engineer and father of lean manufacturing, envisioned in the late 1940s as he observed that communicating information correctly was key to the smooth operation of modern supermarkets in the United States.
Ohno took his ideas back to Toyota and changed the world. Armed with the same concepts and new information tools, the mining industry today has a similar opportunity to transform itself for the future.