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Mining Equipment Maintenance

Economy and Safety -which approach will survive the stress test and can different strategies work together? – by DMITRY PRZHEDETSKY

(The economic constraints have rekindled a century-old debate on the equipment maintenance budget.)

“Not only the economic constraints have affected many projects and, to an extent, a decision-making process, but also it has rekindled a century-old debate on the equipment maintenance budget. The discussion has never been completely off the agenda; however, the new tough economic reality has forced OEMs (Original Equipment Manufacturers); end-users and consultants to restart reviewing it more thoroughly than ever before.

In today’s terms the right equilibrium defines not only sustainability of a project, but the sustainability of entire companies, industries, and regions. Adequate maintenance practices are the key contributor to the equipment safety and should not be compromised, no matter how one optimises these practices.

The topic is so important that it would require a comprehensive analysis of opinions of all parties involved and I have interviewed my colleagues in the industry to get the picture right. These people are very experienced in their fields. For simplicity, I asked them to express their individual opinion, rather than an official point of view of the respectable companies they work (or worked) with.”

Mining Companies

For many readers, BHP Billiton would be one of the companies coming to mind in the context of diversity of operations and a strong focus on operational and maintenance strategies. Martin Meyer has been with the company for over 13 years, with total experience in the industry exceeding 30 years in various minerals and countries, such as coal, mineral sands, copper, and salt to name a few.

“In the mining industry maintenance is always subservient to productivity. Productivity has two components: throughput and $/throughput unit. While there was a strong emphasis on the reduction of the maintenance budget over the recent years, I think management realises that the productivity targets still should prevail as the number one priority, however, supported by the best maintenance practices. Those, in turn, should be based on the combined experience of the supplier and user. The objective of a piece of mining equipment is to produce at maximum output or productivity, i.e. we need to maximise the Productive Time.

Diagram 1. Time Utilisation Model.

As you can see from the Time Utilisation Model above (not to scale), maximising of the production time is achieved by minimising all other delays and downtime. Where individual elements have sufficient life cycle data, then replacement schedules and frequencies can be planned and costed. The problem comes with Unplanned Downtime (breakdown) – it is a function of unit quality, reliability and use or misuse in some cases.

Today mining companies are trying to keep an acceptable balance between these elements with the objective to optimise productive time.”

Original Equipment Manufacturers

Michael Barry of Hensley Industries has been involved in the support of mining equipment for more than 30 years, most notably with Cummins and Hitachi, and has had vast experience in addressing customers’ requests to extend the service and planned maintenance intervals. He has a strong view that the manufacturers’ recommended maintenance practices are defendable, as they are based on years of monitoring and analysis of MTTF (Mean Time to Failure) of critical components. The OEM recommended sampling, service and parts replacement intervals are the result of years of studies and supported by thorough monitoring of individual machines and components.

“Service/Maintenance component intervals recommended by manufacturers are designed to minimise the risk of unscheduled maintenance. It is a common misconception that if, upon a basic visual inspection, a part seems to have some life left, that not replacing it during scheduled maintenance would generate extra savings.

In a production environment replacement of this part outside of the scheduled maintenance hours means an acceptance of the extra risk by the client and a potential unplanned loss of production, which often exceeds the value of the “savings” perceived by thousands of dollars. The Mining Industry who is striving to reduce costs has moved to a fix as fails attitude ignoring the cost of unscheduled downtime.”

Another OEM representative, who wished to remain anonymous, has held managerial positions with some of the largest suppliers of mining equipment and has worked for both: manufacturers and users of mining equipment in roles that have included maintenance, asset, and technical management.

“Many of the maintenance budget constraints are driven by short-term cash flow requirements and will ultimately lead to higher Total Cost of Operation (TCO) when machines return to normal levels of utilisation. As many mining companies or contractors have machines that are either under-utilised or not utilised at all, many are deferring maintenance spend as they have access to exchange components or machines that are otherwise not being used.

Some are entering into agreements with mining companies where consultant’s fees are directly linked to a reduction in maintenance spending.  While intended to drive down OEM parts pricing and labour rates, it also means that more and more maintenance is being carried out using non-genuine parts and by untrained personnel.

For OEMs and mining service companies to survive in this environment and make investments in the future, such as apprentice programs, training, continuous improvement programs, and R&D becoming increasingly challenging. At the same time, more and more companies (and suppliers) are exploring how to better utilise so-called “Big Data” to make better decisions to maximise service life, minimise costs, reduce unplanned downtime and improve mine site operations.  The challenge is to use analytics effectively to make meaningful decisions based on large amounts of data.

It should be noted that analytics is not just for maintenance decisions but will also provide useful operational information.  For example, we can see how trucks are loaded, how long they queue for, what parts of the haul road cause frame stress or high levels of braking, which all assists operational improvements.

Companies with effective maintenance practices view the maintenance schedules as a guideline (not prescriptive) and recognise that life between overhaul depends on many factors including how machines are operated, the quality of haul roads, the ambient temperatures, dust levels, oil and filtration quality, altitude, and will use oil sampling, trending and history, (and machine telematics, fault codes, etc.) as well as operational requirements to determine optimum maintenance strategies.”

Asset Management Consultants and Analysts

Undoubtedly, the low commodity prices and an extremely cautious mining investment sentiment have questioned the viability of many mining projects and, in turn, the value of the benchmarking based preventative equipment maintenance.

The approach varied from sending “internal memos limiting an hourly maintenance cost” to the deployment of asset management software. Indeed, mining and management consultancies have not left the problem unnoticed and began offering various solutions, sometimes brought into mining from other industries.

David Coyle, from Capability Partners, with nearly 30 years of engineering and asset management experience, has brought into asset management the best of military discipline and resourcefulness. That includes an ability to conceptualise adoption of useful asset management practices from other industries to mining.

“The value in preparing Defensible Budgets can be realised when applied to a number of credible scenarios for the client.  These scenarios reflect the agreed Vision for the client’s Enterprise.

Such scenarios could include the following:

  • Scenario 1. Change Budget (reduced OPEX) – identify possible options and discuss/agree with stakeholders to deliver the “Desired balance of Cost, Risk and Performance” based upon, for example:

o    Extending the frequency of maintenance tasks for those tasks that have the least impact on mission needs (without compromising personnel safety); and/or

o    Deferring and/or cancelling maintenance tasks (without compromising personnel safety).

  • Scenario 2. Change mission/performance – identify budget options and discuss/agree with stakeholders to deliver the “Desired balance of Cost, Risk, and Performance” based upon modelling of each mission in terms of:

o    What physical assets and systems are needed; and

o    What each system then must achieve in terms of (Availability, Reliability and Supportability and safety)

  • Scenario 3. Maintenance Period Cancellation – This is very similar to Scenario 1. Identify options and discuss/agree with stakeholders to deliver the “Desired balance of Cost, Risk, and Performance” based upon cancellation of the maintenance tasks associated with the maintenance period.

The importance of time determines the ability and agility of the client’s Materiel System to influence the performance of the assets through the decisions, actions, and behaviours.  An organisation’s asset management culture can be a gauge of how an organisation influences their asset’s performance over time.

Diagram 2. Level of control provided by the client’s Asset Management System

(AMS = Asset Management System, P = Performance, C = Cost and R = Risk)

“Out-of-Control is clearly a state that should not be entertained.  At the other extreme, “Exercising Control” may require a significant amount of effort and resources which might make it prohibitive to reach and maintain at this level. “

 

Whose approach will survive the stress test and can different strategies work together?

Having written dozens of articles for the Australian and international mining media I don’t recall a situation where I had to conclude an article with an open-ended question, not only to the readers but, to some extent, asking it myself. As someone who has spent two decades developing and implementing mining equipment, I should take the Benchmarking Approach and see any deviations from it as potentially risky. On the other hand, having been advising on equipment performance and maintenance optimisation for another decade, I must be able to reflect, at least partially, the budget constraints of clients and justify if the Defensible Maintenance Budget (or any other similar) concept which could be viable or must be discarded and why.

Firstly, it is important to understand that modern mining operations are very diverse. Projects and companies are facing far greater challenges than just justifying the equipment maintenance budgets. Operating Cost, where the maintenance budget belongs, despite alternative views that some of it falls under Sustaining Capital, is only a part of the more complex equilibrium. In simple terms, any cost cuts passed a critical threshold may result in:

  • Reduction of revenue (e.g. a poorer quality final product due to under-performance of some equipment)
  • Increased Capital Cost (due to a shorter life of equipment)
  • Increase in other expenditures (e.g. excessive wear of certain components which would not have been affected if proper maintenance has been carried out on other components; excessive wear of other types of equipment involved in the cycle due to product inconsistency)
  • Lower reliability of equipment due to non-genuine parts and substandard service
  • Higher exposure to unplanned maintenance, hence production loss.
  • OH&S and environmental risks.

Secondly, some factors could be very project-specific and cannot be immediately classified or evaluated (e.g. different chemical components of the minerals; seasonal and regional factors; etc.)

Thirdly, a site-based maintenance optimisation must be based on the ability of all parties to customise their approach and to ascertain and measure all inputs and then to model and correct, as needed, the outputs. Many mine sites have been doing this exceptionally well and have achieved substantial results in terms of equipment performance, reliability and longevity. In this case, the definition of the “defensible budget” may take a different meaning, as it would more relate to defending and occasionally adjusting the existing practices and budgets, rather than altering them substantially.

However, it well may be worth for the management of these “exemplary” sites to analyse some extra parameters. For example, how the premium a site pays for achieving 85% availability of equipment affects ROI (Return on Investment), comparing to, say, 82%? Would the bottom-line of the company be better to target lower availability, and dare I say, lower productive time as well, in exchange for tangible cash savings? Or can the lower availability be adopted without reducing the actual productivity, simply through better utilisation of the available time?

Again, any decision here must be a part of a Real Options analysis and modelling, as it is only a part of the equilibrium. Typically, in times of an economic downturn, other alternatives become more affordable. For example, several factors need to be frequently re-assessed to monitor and optimise the project NPV (Net Present Value).

It is also important to analyse all possible constraints, which may not necessarily relate to asset management or engineering practices. I have seen situations where the annual maintenance cost of an old machine exceeded 60-70% of the capital cost of the new replacement but was more desirable due to certain approval processes within that company.

Also, a tough competition amongst OEMs would have adjusted (if any) irregularities of the recommended service and maintenance intervals.

It is paramount that no elements of the Occupational Health and Safety practices are compromised, and the adopted maintenance practices are in line with the OEMs recommendations. This is also important from compliance with the existing regulations and from the public liability points of view, as, for example, Western Australia’s “Management of mobile equipment maintenance audit – guide” clearly states in the Paragraph 2.3.: “The maintenance program is developed in accordance with the recommendations of the equipment manufacturer.” It may be advisable to verify it with regulators how any deliberate deviations from the OEMs recommendations would be considered by the authorities from the OH&S point of view prior to the adoption of such.

The Operating and Maintenance Practices is one of the key Modifying Factors, which define the success of a project. At the same time, they can be interpreted as a derivative from other inputs, almost creating a circular reference. E.g. fallen commodity prices may reduce the life of the deposit, hence eliminating a necessity to achieve the budgeted operating hours from the capital equipment and, as a result, potentially enabling the operator to cut costs of some maintenance essentials. This, in theory, may contribute to the higher profitability and extension of the LOM (Life of Mine.) It would, however, undermine the ability of the owner to extend the life of the equipment if the market conditions improve. Equally, it reduces the residual value of the existing equipment in case the project (or individual items) will need to be refinanced or sold.

Above all, neither of the expressed above opinions eliminates the potential to reduce the equipment maintenance budget when the methodology suits a particular project, nor the strategies are mutually exclusive. With the remote diagnostics and automation taking the industry by storm we may soon see systems incorporating the best of both worlds, some form of the Real-Time Optimisation. The definition of the Predictive Maintenance may soon go hand in hand with the Predictive Budgeting.

 

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