Bill Sugden - Ausenco Rylson - Optimising returns at the end of mine life – an MMG Case Study

BMH Conference, Perth | June 2015 | 1

Optimising returnsat the end of mine life

MMG Case Study

B I L L S U G D E N I J U N E 2 0 1 5


O U R G O L D E N R U L E S O F S A F E T Y

How can we demonstrate

living ‘Safety in all we do’,

‘Respect the environment’ and

following the Golden Rules

of Safety as individuals in

our everyday life?

HSEC moment

http://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://pixshark.com/walk-sign.htm&ei=xEs0Vc65NaawmwWjrIGoBg&bvm=bv.91071109,d.dGY&psig=AFQjCNFu6PUTY2BYuhrkizZXp6RQbmF_Nw&ust=1429576936676112

http://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://pixshark.com/walk-sign.htm&ei=xEs0Vc65NaawmwWjrIGoBg&bvm=bv.91071109,d.dGY&psig=AFQjCNFu6PUTY2BYuhrkizZXp6RQbmF_Nw&ust=1429576936676112


1

2

3

5

6

7

4 8

Ausenco

MMG Century Mine

Motivation

Our Process

Results

Questions

Close

Agenda

Introduction


A U S E N C O I S A G L O B A L , D I V E R S I F I E D

E N G I N E E R I N G A N D P R O G R A M M A N A G E M E N T

C O M PA N Y P R O V I D I N G S E RV I C E S A C R O S S T H E

E N E R G Y A N D R E S O U R C E S S E C TO R S .


31 offices, 19 countriesAsia

Beijing, China

Jakarta, Indonesia

Mumbai, India

Kuala Lumpur, Malaysia

Australia/

South Pacific

Apia, Samoa

Brisbane, Australia

Honiara, Solomon Islands

Nuku’alofa, Tonga

Perth, Australia

Port Moresby, PNG

Port Vila, Vanuatu

Sunshine Coast, Australia

Suva, Fiji

Middle East

Jeddah, Saudi Arabia

North America

Burlington, Canada

Calgary, Canada

Halifax, Canada

Concord, USA

Denver, USA

Houston, USA

Montréal, Canada

Reno, USA

Toronto, Canada

Vancouver, Canada

South America

Belo Horizonte, Brazil

Lima, Peru

Mendoza, Argentina

Salta, Argentina

San Juan, Argentina

Santiago, Chile

Africa

Johannesburg,

South Africa


Highlights

O U R C L A I M S T O F A M E

Track record offit-for-purposeProcess plantsthat exceed nameplate

One of the largest in-house team of experts

in minerals processing in

the world

Delivered the largest

greenfield copper

concentrator in Africa lump sum

PHU KHAM Set the

benchmark for low-cost plants

that perform

P O R T S A N D

T E R M I N A L S

Involved in the design of over

400 ports globally

Exceptional capability in

bulk materials handling

S L U R R Y P I P E L I N E S

Involved in more than 75% of the world’s long distance slurry pipelines

S E P O N M I N E

First acid milling hard rock

grinding circuit in world

C O N S T A N C I A

Delivering the first large-scale

copper concentrate at high altitude in

Peru

O P E R A T I O N S &

M A I N T E N A N C E

Leaders in

physical asset

management

and reliability


• Australia’s largest, and the World's

3rd largest, open cut zinc mine

• Located at Lawn Hill, 250km from

Mount Isa in north-west Queensland

• Conventional open cut mining,

grinding and flotation methods to

produce zinc and lead concentrate

• Product slurry is transferred 304km by

underground pipeline to Karumba

Port on the lower Gulf of Carpentaria

• Shipped to smelters in Australia,

Europe and Asia

• Began operations in 1999 and the

last production from the open cut

is expected to occur in Q3 of 2015

MMG Century MineI N T R O D U C T I O N


• Closure was planned 2 years ago

with requirement for minimisation

of operating costs without risking

asset reliability – must deliver plan

• Century engaged Ausenco Rylson for

Cost-Reliability Optimisation in 2013

• Performance based contract – must

deliver at least 10% savings in site

maintenance costs, or no fee

MMG Century MineM O T I V A T I O N


Industry driversM O T I V A T I O N

Aberdeen Group Research 2012

Two Research Papers delivered in 2012 by Aberdeen Group:

1. Asset Management, Building the Business Case

2. Operation Risk Management.


• Initiatives forecast a reduction in the

Life Cycle Plan Costs of $38 million

over the period

• Equivalent to a reduction of 17%

• This was a full ‘At Risk’ contract;

payment on outcome only.

MMG Century Mine – Forecast ResultsO U R P R O C E S S

LCP costs (AM&MM) OCT 13 – DEC 15

Optimised LCP Costs (AM&MM) OCT 13 – DEC 15

Cost reduction initiatives


• Project Initiation – set key targets for

costs, reliability and trade productivity

• Capability Mapping – baseline the

‘current state’ cost performance and

maintenance strategy

• Gap Analysis – identify cost reduction

initiatives with detailed processes and

methodologies to achieve

• Optimisation – analytics and

modelling of changes to deliver

savings against added business risk

• Implementation – rolling out and

bedding in the changes, coupled with

mentoring, training and guidance

Key PhasesO U R P R O C E S S


People Process Tactics Systems

Where do we focus?O U R P R O C E S S

Understanding Process Definition Definition Suitability

Competencies Understanding Validation Configuration

Structure Training Optimisation Competency

Training Communication Innovation Training

Communication Measurement Implementation Communication

Measurement Measurement Measurement


• Internally developed Enterprise Asset

Management (EAM) solution designed to

deliver a holistic view of the asset over the

asset lifecycle

• Ensures the organisation can deliver the

business requirement at optimum cost and risk.

• Developed based on accepted industry

standards including PAS 55 and ISO55000

Asset Management standards; as well as the

SAE JA-1011 RCM standard'

• Focuses at the activity level to ensure that

optimisations will provide a sustainable benefit

to the business

IP: Rylson8O U R P R O C E S S


RoadmapO U R P R O C E S S

Operating

Strategy

CAPEX Forecasts


Criticality analysisO U R P R O C E S S

• Understand the criticality of

an asset to the business

• Given business context and

operating strategy


Plant hierarchyO U R P R O C E S S

• Captures to

maintainable item

level

• Last replace dates

are captured from

the CMMS

• Forecast forward

costs from last

replace date


Maintenance strategy developmentO U R P R O C E S S

• Wizards assist with applying structured

Reliability Centred Maintenance

(RCM) approach to maintenance

strategy development.

• Risk based tools allow the user to

optimise task frequencies


Risk based task analysisO U R P R O C E S S

• Condition based tasks utilise a criticality

based optimisation wizard

• Fixed Time replacement tasks utilise

Glasser’s Graphs (optimal replacement age)

• Fault Finding Tasks utilise a consequence

based analysis of multiple failures


Task resourcesO U R P R O C E S S

• Full integration

with the materials

catalog and labour

tables to ensure

material costs are

always current

• Ability to specify

labour productivity

to ensure labour

forecasts are

always accurate


Work packagesO U R P R O C E S S

• Package tasks

by route, labour,

constraints or

frequency

• Output is fully

customisable

with routing and

grouping ability

as standard


Life cycle performance modellingO U R P R O C E S S

• Full RAM

modelling

capability

• Breakdown to the

Maintainable Item


OpexO U R P R O C E S S

• Full suite of

reports and

charts available

to analyse

Opex budgets

over the life of

the Asset or

Business


Spare analysisO U R P R O C E S S

• Optimise Critical

Spares holding

based on risk

based analysis

• Utilises the

inputs from the

maintenance

strategy to

determine the

probability of

failure

• Recommends

optimum holding

and time to hold


Total cost of ownershipO U R P R O C E S S

• Determine the Total Cost of Ownership of the Asset over the Asset Lifecycle

• Optimise the Economic Life of the Asset from the EAC curve

• Determine the replacement drivers


Dynamic shutdown schedulerO U R P R O C E S S


Labour modellingO U R P R O C E S S

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

1 2 3 4 5 6 7 8 9 10 11

FTE

-Fu

ll Ti

me

Eq

uiv

ale

nt

Years

FTE - Life of Asset

Contractor

Lube Tech

Auto Electrician

Tyre Fitter

Boilermaker

Fitter


Materials modellingO U R P R O C E S S

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

1 2 3 4 5 6 7 8 9 10 11

Co

st A

U$

Years

Material Costs Per Expense Element

2431 - Maint Materials - Mechanical

2404 - Hydraulic Components

0000 - Non Selected

2010 - Pipes Valves & Accessories

2422 - Lubricants

2408 - Transmissions & Drivelines

2461 - Maintenance Materials - Other, inc Consumables

2451 - Maintenance Materials - Electrical

2421 - Maintenance Materials - Preventative


Full life cycle cost modellingO U R P R O C E S S

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

1 2 3 4 5 6 7 8 9 10 11

Co

st A

U$

Years

OPEX - Life of Asset

Secondary Maintenance

Tyre Allowance ($/hr)

Diesel

Primary Maintenance

Cumulative Cost Average


Risk modellingO U R P R O C E S S

Increased Risk Cost Reduction

0-10% $ 3,231,58010%-20% $ 1,429,326

20%-30% $ 1,244,324

30%-40% $ 129,015

50%+ $ 24,648

Grand Total $ 6,058,895


OffsetO U R P R O C E S S

• Offset condition

based tasks

where data

support it

• Optimise Opex

budgets based

on Risk


• Increasing Labour productivity

will yield cost savings with

labour reductions

• Recommendation is a staged

labour reduction against the

mine plan

Labour profileO U R P R O C E S S


ImplementO U R P R O C E S S

• Rolling out and

bedding in changes

• Mentoring

• Training

• Guidance


Cost profileR E S U L T S

Original

Optimised


• Lifecycle Optimisation of all Process Plant and Mining Assets

• Introduction of innovation around the use of already available data

• Initiatives represent a reduction in Life Cycle Plan Costs that is approaching $40 million ‘banked’ over the period

• Equivalent to a reduction of 17%

• This was a full ‘At Risk’ contract; payment on outcome only.

MMG Century Mine – Benefit SummaryR E S U L T S

LCP costs (AM&MM) OCT 13 – DEC 15

Optimised LCP Costs (AM&MM) OCT 13 – DEC 15

Cost reduction initiatives


Questions?


Thank-you

Bill Sugden

Regional Manager

E: [email protected]

M: +61 458 432 008