The Mining Company’s Business Case for Asset Management
5 benefits of better asset management
Mining companies typically spend between 30 to 50 percent of total operating costs on mining equipment management and maintenance. Any operational element responsible for such a substantial cost share warrants your attention. By improving asset management and maintenance, mining companies can lower costs and risks while boosting productivity and safety. Here are five benefits of better asset management.
1.Reduced maintenance spend
The most obvious way that better asset management can benefit a mining operation is by reducing the amount you spend on maintenance. Preventative maintenance is a proven method of reducing maintenance spend — emergency maintenance is 3-9 times the cost of planned maintenance. In addition to reduced maintenance costs, preventative maintenance leads to decreased downtime, increased equipment life expectancy, a lower risk of unplanned maintenance, and improved equipment efficiency.
Without a preventative maintenance plan in place, the likelihood of unplanned maintenance increases. When equipment breaks down, it can result in unexpected downtime and significant production losses. It will also force your staff to spend valuable time responding to the equipment failures. In addition, any replacement parts not in your inventory must be shipped in quickly, creating further time delays and expense.
2. Increased utilization rates
Through careful and consistent asset tracking and maintenance, mining operations can enjoy better utilization rates across multiple mining sites.
Equipment or asset utilization is simply the measurement of the use and performance of your mining machinery. The primary metrics surrounding utilization rate calculation might include ignition on/off times, engine hours, and fuel use. More sophisticated metrics might include GPS-based location or sensor data such as weight scales. By collecting data such as an asset’s location, how long its engine has been running, whether core maintenance functions have been performed builds a picture of utilization that can be measured and ultimately optimized.
3. Reduction in business risk
One key to managing asset risk is having a strategy in place to prevent or reduce losses in the event of an equipment failure. Equipment asset management applications can help you establish standardized processes to identify, quantify, and prioritize asset failure risks, including asset downtime, regulatory compliance, and environmental and safety concerns.
In addition to providing you with visibility into the risks, an effective asset maintenance plan can also deliver the structure to establish controls and mitigation strategies to reduce the impact of these risks.
4. Improved access to maintenance and spend data
You can’t manage what you can’t measure. Many mining companies lack the information required to drive more value from their assets.
By providing detailed metrics surrounding your mining assets and equipment, mine asset and maintenance solutions provide the data necessary to make strategic decisions about when to retire old equipment, purchase additional pieces, or relocate assets to a more strategic location. Research giant McKinsey is bullish on the value of maintenance data as well, asserting that by 2025, data used to improve equipment maintenance may result in 5-10% reduction in maintenance costs.
5. Improvements in working capital
As capital for both investments and operational purposes becomes harder to come by, increasing the productivity and longevity of existing assets gains importance. As we’ve shown in the points above, effective asset management goes a long way toward increasing productivity and lowering costs, thereby contributing to your mining company’s working capital.
Maximizing mining assets is often seen as a trade-off between maintenance and operations, with few links to financial performance. However, when you remember that you spend 30-50 percent of your total operating costs on equipment maintenance and management, all operating expense reductions become significant benefits.
Better asset management and equipment maintenance is a winning strategy for mining companies. We partner with three of the preeminent equipment and asset management solution providers in the industry to deliver this functionality as part of Caron Mining Solutions powered by Sage. Regardless of your organization’s size, we’ve got a mining asset and equipment management solution for you.