From 2003 to 2013 during Australia’s mining boom, the sector spent years investing in new assets to meet growing demand. At its peak, mining alone increased spend from two per cent of GDP to eight per cent1. Now that the boom has tapered off, miners are grappling with increasing utilisation of expensive equipment lying idle.
Business strategies are changing, and the focus is shifting away from continuous growth to maximising operational performance and cost efficiencies.
Asset Management as a Strategic Lever
Asset management is relatively mature in sectors such as utilities, transport and increasingly across education and health. However, there is a tendency in mining to view asset management with a narrow focus on maintenance programs during operations.
“When asking clients at the C-suite level if asset management was important to them, the common response I receive is that asset management only becomes important at times in the cycle when commodity prices are low, and the focus is on ‘sweating the assets’” says Alana Newbrook, Section Executive for Resources at WSP.
“This is understandable since mine maintenance and services are responsible for between 40 to 70 per cent of the operating cost of a surface mine, and between 20 to 50 per cent of the cost of an underground mine.
“Yet asset management can do so much more than improving productivity when times are tough. It can also:
- Manage risks across their organisation and operations and further strengthen safety on site
- Reduce the whole of life ownership costs of the assets
- Align performance outcomes with both current and future strategic objectives
- Utilise data to improve investment decision making resulting in a more balanced risk portfolio.”
Why is this Important to the Resources Sector?
Mining investment is projected to increase in the 2019 to 2021 timeframe. Improving market conditions are a result of increasing commodity prices and demand for emerging mineral products such as lithium for electric vehicles and battery technology.
“Mining companies continue to invest in innovation, driven by a focus on improved capital allocation for renewing and sustaining assets,” says Alana. “Brownfield expansions, cost efficiency projects, sustaining capital projects and closures remain a priority as operators continue to look to reduce costs.”
Deloitte Australia’s ‘Tracking the Trends 2019’ report recommends that, “Mining companies need to consider a range of measures to make the most of this period of growth, including focusing on the role of individual assets in their portfolio, re-imagining the path to value creation, finding balance between risk and return, and understanding how their company can differentiate itself in the eyes of its stakeholders."
Driving Decisions from the Top
Managing risk and improving cost and performance outcomes are important to any business. Expanding these factors into asset management and integrating them into how decisions are made across an entire organisation, will improve resilience and create a competitive advantage.
A renewed focus on asset management beyond the operational level at both a tactical and strategic level will support the resources sector, so they are better equipped to manage market volatility from geopolitical uncertainty and industry disruption. Asset management coupled with data supports leaders of organisations with their decision-making process and enables them to reshape strategy.
Boards and senior executives need to be talking about developing their portfolio of quality assets while keeping costs down. To improve safety and support initiatives, strategic asset management is a key enabler to framing these discussions. What does this look like?
Organisational strategy and objectives need to drive the decision-making framework around asset management, as shown below:
Data on operations and performance is assessed against the financial KPIs, risk appetite and the project management framework. This should then feed into the planning cycle to produce the strategic investment priorities which reflect the outcomes that asset management should produce, rather than the methods for achieving them.
“When it comes to managing projects and the constraints of scope, time and cost, the resources sector is mature,” adds Alana. “Our next challenge is to broaden this sophistication into asset management and to begin thinking of the trade-offs in risk, cost and performance.”
Sustaining the Assets of the Future
Currently, asset management is being broken into individual business units such as capital planning, reliability and maintenance, supply chain and operations—all of which requires making decisions based on the objectives of the current lifecycle phase. Asset Lifecycle Management (ALM) provides a centralised source of asset information from which all decisions can be made.
“Centralised digital data management was flagged by survey respondents as becoming a profound driver of asset management value in the years ahead and a key enabler of realising these benefits,” says Alana.
“ALM is an improved way of managing a portfolio of assets across the whole enterprise. New technology and data capture have made ALM a viable reality for mining companies to realise bottom line benefits.”
According to BDO’s Energy 2020 Vision: The Near Future of Mining2, companies will increase discretionary spending on technology to protect assets, increase efficiency, and increase mines' safety to align themselves with industry standards. Currently, global miners are implementing asset management improvements on the fixed plan side through automation (79 per cent), cloud computing/computing power (71 per cent), big data/predictive analytics (46 per cent), IoT (29 per cent) and AI/machine learning (29 per cent).
In the future, the biggest drivers of asset management improvements are seen to be digital twin modelling, simulation and optimisation, predictive analytics, BIM and AI/machine learning to drive fixed asset management in the mining industry.
With digital asset management, both users and owners alike can compile all their operating manuals, 3D models and drawings, maintenance reports, inspection data, work orders and much more into one connected data environment.
All of this can all be linked with the asset’s digital twin allowing for better digital asset visualisation and the creation of a powerful suite of tools providing teams with improved digital visualisation for predicting useful asset life, detecting potential weak points and faults, planning, training and digital prototyping of new ideas and upgrades before they are constructed.
Where We’ve Done It Well
Working closely with clients, our team has experience in providing detailed inspections of fixed structural assets and developing structural integrity inspection programs as part of our service. We’ve recently completed a program for a leading mining company with extensive operations where we are utilising on-site tablet functionality and in-house software to deliver standardised high-quality reports of the current asset status.
Along with core inspection equipment such as high-quality cameras and hand-held tablet PCs, we have also used drones to inspect detailed parts of previously difficult to reach structures which had limited or unsafe access. Data captured from these detailed inspections have enabled clients to visualise and assess all of their assets and successfully plan for remediation works to mitigate existing risks, leading to improved safety and reliability.
Talk to WSP to Progress Your Asset Management Opportunities
We play a leading role in the development and growth of asset management practices across the globe. We operate from boots in the field to decision-making with the board. Our global team has a unique combination of multi-disciplinary experts required to plan, design, build, operate, maintain and dispose of your infrastructure assets.
Locally, our Resources team has been a fixture in creative and sustaining engineering solutions for over 40 years. This depth of knowledge, problem-solving ability and appreciation of risk, coupled with our strategic advisory capability means we know how to work alongside you to solve your problems.
Working collaboratively with all members of the business, we first determine your goals and business objectives and therefore what information and data will be required to achieve and measure success and savings. Through this approach, we help you create real impacts on your business through less downtime and greater availability, higher yield and better efficiency.
WSP partners with clients to determine the right solutions that fit their needs, now and into the future. We can work together to determine the best asset management and data management strategy to allow you achieve your goals.
For more information, contact Alana Newbrook.
1 Reserve Bank of Australia, 2014
2 BDO Global, 2018