While mining companies react to falling commodity prices by reducing headcount, closing unprofitable operations and deferring capital expenditure to reduce cash costs, professional services firm PwC states that long-term sustainable gains in the mining industry depend on strong underlying improvements in the efficiency of operations and invested capital.

PwC global mining leader John Gravelle states that productivity has become one of the most important topics as the mining industry aims to restore and sustain shareholder value.

“One of the key components of productivity is the efficiency of equipment. Not only does equipment efficiency directly impact equipment costs, it also provides a window through which miners and investors can gain insights into the quality of the overall operation,” he adds.

Gravelle points out that there are three levers available for mining companies – mine operating strategy, data and people - that could allow them to improve productivity and, in turn, yield shareholder returns.

Further, to increase shareholder returns, mines would have to adopt one of two strategies, a volume strategy or a cost strategy. If implemented effectively, these strategies could both involve an efficient pattern of equipment use.

The volume strategy, which is favoured during periods of high commodity prices, involves a reduction in truck performance as mines increase the trucks in use to decrease loader idle time.

The cost strategy places a high focus on costs, which takes place when fewer trucks are in use on operations, which then means higher levels of loader idle time. However, cost reduction initiatives often conflict with asset optimisation. This being the case, miners need to understand their performance in the context of the operation and available equipment to determine the best-fit strategy to improve overall performance.

“Both overall loader and truck performance have been declining since 2009, which suggests that miners may not have effectively adopted either a volume or a cost strategy after the commodity boom when cost reduction initiatives were introduced across the board,” highlights Gravelle.

Secondly, many sectors have already embraced data use to drive decision-making and bring about step-changes in performance improvement, he notes, adding that the use of available data is a proven distinguishing feature of mines that achieve outstanding equipment performance. However, the mining industry has yet to fully leverage its data.

“As a result, measurement and data-management systems should be in place to accurately and consistently record all key performance indicators, including productivity, time management, fleet management and safety issues for all mining equipment. Once measured, the miner should be analysing the data for opportunities to improve on a regular basis,” Gravelle points out.

Thirdly, he indicates that the full potential of a clear mine strategy and sound data management systems will not be achieved if the mining company lacks either the right people or skills.

“Research has found that accounting for individual differences during selection and recruitment of operators can increase equipment output by up to 14%. The process of selecting, training and evaluating staff requires continued attention and investment, even during periods of cost consciousness, has the power to increase output on the mine,” he mentions.

Gravelle concludes that should mining companies formulate and deliver on a clearly articulated strategy and address these principles in their operations, mining companies will generate the superior returns they aim to deliver going forward.