Mining sector seeks solutions from other industries

Jul 31, 2014  |  Branco Kuznar  |  news, change, mining | 0 Comments

Mining firms must transform in order to survive and they have begun to take inspiration from factory floors.

Through cost-cutting exercises or point solutions many companies have sacrificed productivity in exchange for growth and revenue, and the result hasn't been ideal, according to consulting firm EY. While there are some economists who believe that action is not needed for the mining sector to recover, EY suggests that broad foundational changes are required to ensure that the industry remains viable.

Mining firms must transform in order to survive and they have begun to take inspiration from factory floors.

As mining companies wait for commodity prices to recover, they have lied in wait, conserving cash, according to The Wall Street Journal. This is a stark difference from decades previous when billions were invested into acquisitions and new projects.

In 2011 the commodity prices began to drop, and with it the fiscal boldness of some companies. In response to the changes, staff were laid off, pits were shut down and assets were sold so that firms could survive.

With these cuts productivity dropped significantly, noted EY. Since 2011, in Australia, there has been a 50 percent decline in productivity and in the United States coal production has fallen 30 percent between 2009 and 2012.

Over time as the issues the mining industry faces persist, the changes needed have made their way to upper management. Cost-reduction won't be enough to save mining companies, EY noted, and bigger changes are needed.

Stealing without shame is the new plan
Now these companies are investing in technologies utilized by different industries in order to affect positive change in the mining industry. Mining firm Rio Tinto has operations in Kennecott, Utah, home of one of the largest copper mines in the world.

"We're certainly looking outside of our own industry, and shamelessly stealing and implementing ideas where it is possible," said Lucas Dow, president of the BMA coal alliance in Australia.

Rio Tinto recently acquired a massive machine from food processor Tomra Systems that the firm hopes will reduce the number of rocks it needs to crush in order to locate copper. The technology had previously been used to sort through products such as scallops and rice grains.

The aerospace, automotive, food and military industries have all been explored by leaders in the mining sector in a search for more efficient operational models. Dow has turned to Toyota in order to improve his own company's efficiency. Toyota revolutionized its own production line, and lean manufacturing as a whole, to enhance its productivity.

One thing that impressed Dow about the company was the communication between staff and management. He encouraged feedback from his own workers - ideas that have already led to changes. One employee suggested that the mine set up pit stops along the 12-mile site to improve fueling methods for the dump trucks that move up to 300 tons at a time.

Operational changes throughout the mining process are being made as the mining sector learns more from industries that have already struck efficiency gold. Fortescue Metals Group hopes to raise its output by 13 percent through production improvements. For example, the company took advantage of a modular building style utilized by oil-and-gas businesses in order to save time and money in the construction of its newest processing plant.

EY suggested that firms make massive changes to the way that they operate. These include the reassessment of mining methods, changes to mining plans and equipment alterations, all of which seem to be ideas that companies have taken to heart.

As mines make massive changes to the way that they operate in the wake of recovering commodity prices, increased productivity remains the goal in the industry's fight to remain effective.

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