This year s conference theme: Mining Geology through the value chain

Transcription

1 Benchmarking: Does it have a role in improving the performance of mining geology? AMC Consultants Pty Ltd Mark Berry, Principal Geologist This year s conference theme: Mining Geology through the value chain Do we add value and if so how? Who else knows this? How do we define and quantify the value we add? Are we adding the greatest possible value by what we are doing and how do we know this? Are our roles, responsibilities and key performance indicators directly linked to value? How do we measure our effectiveness in delivering the value we hope to add? How do we use these measures of our value to demonstrate and justify our staffing and budget needs? 9IMGC 1

2 Take the challenge? For the Chief Geologist in 30 seconds or less: Describe and quantify the value that the mining geology team adds to your company For a mining geologist in 30 seconds or less: Describe and quantify the value that you, as a mining geologist, adds to your company Quantifying value: What measures to use? Long term value (e.g. life-of-mine, 10 year, 5 year): Net present value (NPV) of new Mineral Resources discovered? NPV of Mineral Resources converted to new Ore Reserves? Incremental NPV of new resources/reserves that displace existing resources/reserves in the life-of-mine plan? Short term value (e.g. monthly, quarterly, annual): Increased revenue? Reduced cost? Increased profitability? The term Value is nebulous define and quantify it so it is useful 9IMGC 2

3 Defining value: Mining geology functions Discover, delineate and quantify Mineral Resources. Assist in converting Mineral Resources to Ore Reserves. Contribute to strategic life-of-mine planning. Contribute to short-medium term planning and optimisation. Contribute to production operations. Maintain technical databases and documentation. Non-technical activities e.g. general administration, OHS&E. These seven functions are common to all mines Mining geology functions: The early years 9IMGC 3

4 Mining geology functions: Maturity Mining geology functions: Old age 9IMGC 4

5 Defining value: Mining geology activities Collecting data Generating interpretations and estimates Applying knowledge These three activities are common to all mines Activities: Inexperienced geologists 9IMGC 5

6 Activities: Somewhat experienced geologists Activities: Experienced geologists 9IMGC 6

7 Priority #1: Define and quantify the value of mining geology to climb the hill of value Maximising the value of mining geology through the appropriate mix of functions and resources Mix of functions performed by mining geology Value of mining geology Mining geology resources (staffing and budget) An inappropriate mix of functions and resources does not maximise the value of mining geology Concept blatantly stolen from my AMC colleague: The venerable Brian Hall esquire. Attributes of successful minerals companies Sound mine planning and operational practices Appropriate equipment Appropriate staffing levels and experience Good information collection and reporting systems Good use of data analysis to guide decision making An outcome-focused continuous improvement culture 9IMGC 7

8 Benchmarking A measurement of the quality of an organisation s policies, strategies, products and programmes, and their comparison with standard measurements or similar measurements of its peers Key elements: Continuous improvement Improve efficiency and effectiveness Identify best practice to create value and enhance performance External focus Measurement based, information intensive and objective Benchmarking example: High level output 9IMGC 8

9 Benchmarking example: Value driver tree to define cost and performance metrics Difficulties in benchmarking technical services, including mining geology Limited database of existing information Few appropriate metrics developed to date that facilitate useful comparisons of different sites Perception that benchmarking is of no benefit because my mine is unique and can t be compared 9IMGC 9

10 Existing benchmarking metrics for mining geology: Are they appropriate? Physical data e.g.: Total Mineral Resources, and annual changes in resources Breakdown of Mineral Resources (Measured v Indicated v Inferred) Production reconciliation Cost data: e.g.: Staffing costs Expenditure items e.g. drilling, analytical services, consulting Productivity data e.g.: Drilling cost per metre Cost per unit of metal added to resources or reserves Examples of mining geology benchmarking metrics that could potentially be helpful FUNCTION ACTIVITY EXPERIENCE Discover, delineate & quantify resources Collect data Experienced Production management and supervision Generate estimates and interpretations Somewhat experienced Convert resources to reserves apply knowledge Inexperienced Strategic life of mine planning Short medium term planning & optimisation Maintain databases & documentation Non technical inputs 9IMGC 10

11 Case study 1: Benchmarking team functions, activities, experience FUNCTION Discover, delineate and quantify Mineral Resources. ACTIVITY Experienced staff Somewhat experienced staff Inexperienced staff Importance Time spent Importance Time spent Importance Time spent Collect data moderate 5% high 10% high 20% Generate estimates/interpretations high 10% high 10% moderate 5% apply knowledge high 15% moderate 5% low 0% Total time spent 25% 25% 25% Case study 1: Benchmarking team functions, activities, experience FUNCTION Assist in converting Mineral Resources to Ore Reserves. ACTIVITY Experienced staff Somewhat experienced staff Inexperienced staff Importance Time spent Importance Time spent Importance Time spent Collect data high <5% moderate 5% low <5% Generate estimates/interpretations high <5% moderate <5% low 0% apply knowledge high 10% moderate <5% low 0% Total time spent 15% 10% <5% 9IMGC 11

12 Case study 2: Diamond drill core logging What are the observations that must be logged? What is the relative importance of these observations e.g. weathering, oxidation, lithology, alteration, structure, mineralisation? Who should be collecting this data and why? How much time should be spent on logging? Should the process differ for resource infill v step-out v near mine exploration? Should the rate of logging be different in ore and waste? Should experienced staff log more quickly than inexperienced staff? Should experienced staff peer review the logging of lessexperienced staff? Case study 2: Benchmarking diamond drill core logging Hypothetical example Average core logging rate (minutes per 100 metres of core) Core logging observation Ore Periphery Waste Weathering <5 <5 <5 Oxidation <5 <5 <5 Lithology Alteration Structure Mineralisation Total for experienced staff Add on factor for somewhat experienced staff 15% 15% 10% Add on factor for inexperienced staff 30% 30% 20% 9IMGC 12

13 Potential applications of benchmarking to mining geology At an individual mine site: Help establish value, by measuring current functions and activities Define and measure metrics to monitor performance against goals Underpin mine-site continuous improvement At a company-wide or industry scale: Define appropriate groupings of mines where benchmarking can yield comparative results Develop generic metrics for each group of mines Collect appropriate statistics to create a benchmarking database Underpin continuous improvement Conclusions Benchmarking at individual mines can certainly improve the performance of mining geology teams but there must be: A defined and quantified value proposition for mining geology Appropriate and measureable metrics of performance A process to collect and analyse data, then act on results A culture fostering continuous improvement The broader challenge is to develop appropriate metrics to allow the collection of meaningful statistics to facilitate intra-company and/or industry benchmarking comparisons 9IMGC 13

14 AMC the business of mining Geotechnical Engineering Corporate Consultancy Business Improvement Mining Geology Coal & Energy Feasibility Studies Our Experience More than 6,500 projects across more than 92 countries 9IMGC 14