Asset management is key to improving performance

Changing market conditions, an uncertain global economy, and shareholder demands are driving mining companies worldwide to find ways to improve existing assets. The Quebec mining and metals industry is no exception. In many respects, it faces the same pressures and economic forces we are seeing in all natural resource economies, whether in Australia, South Africa or South America.

The top business risks facing the mining industry have changed dramatically since the economic supercycle of 2008. Productivity and access to capital now rank as the highest risks. In the new mining paradigm, the need to improve operational performance has taken on a much greater importance and sense of urgency.  For companies in Quebec and elsewhere, the focus now is not on size, but on cost reduction and optimizing processes and efficiencies. Companies need to have the right people, partners and technologies in place to make this transition successfully.

A key aspect of improving operational performance is effective asset management. This requires an organisation-wide approach, drawing on every aspect of the business, from financial management, to operations, technology, engineering, and maintenance. It involves finding the right compromise between competing interests:  investments to optimize assets versus conserving capital; workforce reductions versus preserving intellectual capital; and short-term benefits versus long-term sustainability. The goal in each case is to determine the optimal combination.

Companies need to invest in and apply new innovative technologies that capture high-level knowledge to debottleneck operations and create greater efficiencies. This means eliminating silos in decision-making processes and taking into account an operation’s entire supply chain. An example is the application of dynamic simulation. Through simulation testing, a mine’s planning schedule and decision-making can be connected right down to the details of rail shipments, vehicle movements and shift changes on site. This targeted information can then be extracted to improve overall supply chain efficiency.

Many engineering and professional services firms tend to focus predominantly on project management and administration. But the scope of today’s challenges requires bold, imaginative thinking if we are to improve existing sites and take advantage of the opportunities associated with developing new capital projects. The ability to tap into resources located in remote sites and regions such as Northern Quebec presents additional challenges. These include a lack of infrastructure, longer logistics chains, rigorous regulatory conditions, more difficult access to financing, rising community expectations and lower product pricing forecasts.

As an industry, we must continue to build on our project construction management capabilities, while investing in specialized engineering and technical skills that give companies a competitive edge. Ultimately, we need to change the way we look at project engineering, and sharpen our focus on operational performance, use of assets and enhanced capabilities to meet the business and sustainability goals of our clients.

Some Quebec projects have risen to the challenge and are setting industry standards. Rio Tinto’s (RTA) AP60 project, named 2014 Project of the Year by the Project Management Institute, located in Jonquiere, Quebec, is the first plant of its kind in the world and will produce 40 per cent more aluminum per cell than the previous generation of AP technology. The $1.3 billion project, which was executed under an engineering, procurement and construction management (EPCM) contracting model, was completed within budget and one month ahead of schedule. The project established a new benchmark for efficient aluminum production, and achieved a new industry standard for safety performance.

Market and economic conditions are always changing. What won’t change is the industry’s need to adapt, innovate, and find solutions. Right now, this means stretching existing assets, modifying processes, and applying technological advances to improve operational performance.  It also demands greater alignment and collaboration among mining companies, engineering firms, communities and stakeholders to achieve sustainable outcomes and superior results. These efforts will allow us to maintain Canada’s leadership in the mining sector today, and prepare us to seize opportunities at the next upturn.

Rob Metka is Global Managing Director, Minerals, Hatch.