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.
Appraising the Assessment and Discovery Phase of the mining lifecycle
As we continue our series where we dig deeper into the five phases of the mining lifecycle, we make an appraisal of the Assessment and Discovery phase. What are the unique challenges mining companies face during this phase, and how can technology— specifically a Mining Enterprise Resource Planning (ERP)—solve for these challenges? Below we’ve identified five of the most important ways your Mining ERP Solution adds value during the vital Discovery and Assessment phase.
The state of Discovery and Assessment
The Discovery and Assessment phase kicks off once you find something of value. Here is where your mining company determines whether it’s feasible to continue—something easier said than done. Discoveries rely on good field work, quality geoscience, fund-raising and planning to bring them to the Development stage. During the Discovery and Assessment stage, you are seeking permits, leases and licenses along with hiring additional personnel and purchasing additional tools and equipment. Financial considerations are very important in this phase as environmental impact mitigation, remediation and the actual discovery work processes are costly.
The right technology for the Discovery and Assessment phase
Moving beyond the Exploration phase in your mining operation and into the Discovery and Assessment phase means your financial and operations needs are also growing more complex. We council our mining clients to consider the long term big picture and invest in a Mining ERP Solution right from the start. However, we know that many mining companies find themselves in the Discovery and Assessment phase still relying on entry-level accounting software and beginning their search for a more capable application.
Mining is hard work, and we won’t pretend that the right Mining ERP Solution will help you strike gold, but we can say with assurance that with a robust, high-functioning ERP and business management solution working alongside you, your odds are greatly increased. Below are five of the most important ways your Mining ERP Solution adds value during the Discovery and Assessment phase.
- Payroll and human resource management
Expanded work activities take place during the Discovery and Assessment phase, with more people on the ground and more cross-departmental and cross-functional coordination required to manage the project logistically and financially. This expanded level of staffing and complexity demands a dedicated human resource management solution (HRMS), covering:
- HR administration
- Talent acquisition
- Talent management
- HR planning
- Reporting and analytics
- Project costing budget management
The Discovery and Assessment phase involves a lot of moving parts: engineering, geology and resource modeling, process planning and more. Robust budgeting and project costing capabilities are necessary to ensure the project stays on track. An ERP solution designed for the mining industry will offer the ability to:
- Manage project budgets set up by work and cost breakdown structures
- Track labor, materials, equipment costs and overhead
- Generate comprehensive reports and inquiries
- Remote site processing
Mining operations tend to take place off the beaten path, as opposed to a city’s central business district. Accurately and efficiently managing one or more remote mining sites requires a Mining ERP Solution that works in the cloud—one that requires few on-site IT resources to deploy and maintain—one that offers:
- Instant access to real-time financial and operational data
- Anywhere, anytime access from any device (with internet connection capabilities)
- Automated backups and enterprise-level security
- Protect your assets
In the early exploration phase, a small number of capital assets may be tracked in spreadsheets, but as assets and equipment investments grow during the Discovery and Assessment phase, this low-tech approach becomes untenable. Mining companies will benefit from a Mining ERP Solution that allows you to:
- Track the items and equipment you use to run your mining operation
- Prepare year-end financials, allocate costs and calculate depreciation
- Flexibly manage of capital budgeting and construction-in-progress projects
- Monitor and track asset maintenance, repair and usage
- Configurable workflows for purchasing and project expenditures
Let’s be honest—the Discovery and Assessment phase is a costly; your mining organization is going to be buying a lot of products and services. Your ability to manage and control the requisition, approval and ordering of these expenditures will have a direct impact on the bottom line. Look for a Mining ERP application that offers:
- Configurable workflows for requisition and invoice approval
- Budget tracking against purchases
- Insight and visibility into the entire procurement cycle
For mining organizations, maximizing any and all return on investment (ROI) is critical. The volatility and risk associated with the industry means expenditures must provide deep positive impact to operations to justify themselves. Investing in Mining ERP software provides payback by streamlining your operations and increasing your control over critical processes. The selection of a proven Mining ERP Solution is key to driving your mining success.
Caron Mining Solutions is a comprehensive, powerful and easy-to-use mining industry ERP solution, built on Sage ERP software, that addresses the challenges modern mining operations face. Learn more about Caron Mining Solutions here, or by contacting us here.