• How planning decisions can impact mining profits

Workers at coal storage facility, mining industry.
How planning decisions can impact mining profits

Market changes in the mining industry have caused a shift in supply chain management, but some companies have been slow to address the new realities. Fortunately, new methodologies enable planning teams to make the right decision at the right time and correct problems before they can impact production.

Today’s prevailing mining business philosophy has transformed from “produce at any cost” to “produce only what’s profitable.” According to a 2013 study by PricewaterhouseCoopers, the world’s top mining companies now focus on managing productivity and improving efficiencies rather than maximizing value solely through increased production volume.

The challenge of “variability”The nature of the mining industry requires that planning teams allow for a wide range of variables when scheduling and planning for each stage of mining operations. These variables include:

Consumer demand Shipping and loading schedules Complex processing and transport functions Regulatory complianceGeological models vs. actuals gap Energy efficiencyEquipment availability and capacityWeather eventsPressures of a changing political climate

In traditional operations, mining companies have relied on disparate systems for planning and scheduling activities. Planning teams tend to use separate systems for each function, working with one set of assumptions and parameters that produce only a single plan. The systems often operate as silos, making it difficult to consolidate information. Thus, planners can’t see the big picture, which can make them “fire-fighting” problem solvers rather than problem preventers. As a result, inefficiencies in the early extraction stage can affect processes further down the line, leading to higher costs and a waste of resources.

A streamlined planning methodologyToday’s technology can standardize the approach to planning and scheduling across mining supply chain functions and time horizons, facilitating accurate modelling and optimization. With integrated planning, miners can track decisions throughout a supply chain to predict the impact on shipments or demand.

Graphic 1: An integrated model enables planning teams to manage a fluid environment where short-term decisions affect long-term profitability

Integrated models map the complexity of a supply chain and make it easier to spot the impact of a decision on other processes. Planners can better analyze availability, performance, and equipment capacities, and apply them to a forward-looking calendar.

Consider this example: A mine extraction sequence change might affect a shipment that’s still 10 days away, but the planning team must make an extraction decision within the next 24 hours. Two separate teams manage the planning and scheduling. Unless they view the same information in an integrated supply chain representation, the result could be the wrong product arriving at the right place at the wrong time. With an integrated system, however, these planning teams would be able to make successful, coordinated decisions based on one version of the truth

Graphic 2: Typical integration of planning horizons for a mining company

Mining environments are becoming increasingly dynamic, which places more pressure on planning teams to react quickly to changing conditions. Given that variability will forever exist for mining companies in the resource-to-market supply chain, mining companies can embrace it, understand it, and account for it by using tools and technology that enable better modelling and decision making.

Schneider Electric offers a guide to planning support tools for mining operations
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