Optimization and Context: Feasibility and Optimization Data – Part 2

SOURCE: Kay Sever | April 30, 2022

Context is defined as “the circumstances that form the setting for an event, statement or idea”. In 2022, we will be exploring the context surrounding optimization in business… 1) what we believe and have been taught about success in business and 2) how these beliefs have influenced our perspectives on the “who, what, when and how” of optimization and the gains we are able to achieve and sustain. 

To illustrate the power of context on business success, this month we will continue to examine the commonalities between feasibility studies and optimization. Raising awareness about these similarities widens perspectives about optimization and overlooked opportunities to maximize ROI over LOM.      

When a deposit is identified by geologists, core samples and satellite imaging help define the properties, shape and outer boundaries of the orebody. If the initial data looks promising, a feasibility study is performed by a cross-functional team to determine if the deposit can be economically mined. Ore grades, other ore characteristics, overburden depths, the geography of the area, permit concerns, logistics factors, cost profiles, and commodity price forecasts are all considered to determine if the projected income will cover the projected LOM costs of surface or underground mining.

Feasibility data linked to mineable ore characteristics is a different kind of data than performance data linked to ongoing operations. Why do I say that? Performance data is linked to activity… volumes moved or used, processing speed, wait times, etc. Feasibility data defines opportunity… ore grades, ore body dimensions, depth of overburden, limits, etc. These numbers are used to value the “whole opportunity” available to the developer of an orebody… value that is tapped at start-up and “value in reserve” that can be tapped in the future. Life of mine (LOM) profit potential is assessed based on this dataset. 

New mining projects would never move from the feasibility phase to the development phase if the characteristics, dimensional limits and reserves of the orebody were not first defined in the feasibility study. Operators must first know the profit potential of the orebody before they can create annual production schedules that determine the rate that resources will be extracted over LOM.

“Whole Opportunity” Data and Optimization

When companies decide to pursue optimization, they are often in operating mode AND already focused on productivity and performance data. To achieve optimization, equipment is modified or purchased to yield desired run-rates and eliminate bottlenecks at certain points in the production value stream. This goal and focus is a very important part of the optimization process; however, achieving and sustaining optimization over the long term also requires a broader perspective of the entire profit-generating landscape of a mine site. It requires data that defines the “whole opportunity” for optimization!

The exercise of developing a “whole opportunity” dataset is analogous to the exercise of identifying the dimensions, outer limits and profit potential of an orebody. A “whole opportunity” data set quantifies “what’s possible” without the impact of barriers, limiting factors or conditions that can sabotage your optimization efforts.

Expanding the scope of optimization to include “whole opportunity” data means that you not only are focused on optimizing equipment performance, but that you can now understand, measure and act to eliminate conditions within the organization that negatively impact equipment productivity and cost… factors that invisibly reduces the bottom line, almost like a second income stream that’s always in the red… a stream of losses that exists but is not measured or reported because the general ledger was not designed for that purpose.  

The PERFECT Optimization Opportunity

New operations have a one-time opportunity to position the site to achieve “best-possible” performance starting on Day Oneof production. It is possible to choose a “whole opportunity” optimization focus and make that focus the way business is done over LOM. This means that a management team has not only acquired equipment with an intent of optimizing run-rates over LOM, but that they have also taken steps to eliminate optimization barriers pre-start-up and have metrics in place to 1) identify new barriers as they arise and 2) potential profit dollars at risk in the future. 

Building a “whole opportunity” data set linked to optimization barriers and limiting factors is not hard work; it is very “common sense” work that will have a huge payback over LOM. This dataset helps you quantify and capture the dollars you are leaving on the table AFTER investing in new equipment for the purpose of optimization. With metrics linked to your management team’s desire to achieve “best possible”performance,

1) Your leadership team and the workforce will know how close they are to achieving that goal.

2) You can have meaningful and constructive conversations about what’s holding you back.

3) You can finally reach consensus on problems that were difficult to discuss and solve in the past.

4) You can shift to a collaborative culture that sustains an optimization focus over the long-term.  

That’s when “full optimization” across a site can be achieved and sustained!

Thought for the month: If you understand what’s missing and take action to remove barriers that are holding you back, you can be confident that you are not just “getting better”… you are “getting it all”!  

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Kay Sever Author
P.O. Box 337 Gilbert, AZ USA 85299-0337

Kay has worked side by side with corporate and production sites in a management/leadership/consulting role for 35+ years. She helps management teams improve performance, profit, culture and change, but does it in a way that connects people and the corporate culture to their hidden potential. Kay helps companies move “beyond improvement” to a state of “sustained optimization”. With her guidance and the MiningOpportunity system, management teams can measure the losses caused by weaknesses in their current culture, shift to a Loss Reduction Culture to reduce the losses, and “manage” the gains from the new culture as a second income stream.