Infrastructure, Energy & MaterialsJanuary 26, 2018

Achieving Small-scale Mining Efficiency

In a recent article “Small doesn’t mean unprofitable: Unlocking new value from…
Avatar Mark Bese

In a recent article “Small doesn’t mean unprofitable: Unlocking new value from small-to-medium metal and mining projects”, McKinsey writes that while most mining companies are able to sufficiently manage large-scale capital projects, they apply less rigor to those of small and medium scale (values of less than $50 million). The result is that these projects deliver lower investor returns.

With smaller projects, mining companies deal with problems that include senior management given the herculean task of reviewing hundreds of approvals each year. Other issues affecting the success of smaller projects include: insufficient risk assessment; poor tracking of real-time progress into projects; and no feedback loops that would allow learning to be gathered and applied in the future.

To address these challenges, McKinsey recommends that companies follow best practices by:

  • Aligning capital strategy and allocation with corporate strategy;
  • Optimizing portfolios;
  • Streamlining project concept and design;
  • Implementing lean project governance;
  • Implementing effective procurement and contractor-management processes;
  • And instituting sustainable organizational enablers.

In streamline project concept and design, McKinsey argues that the business case for each project must be realistic and robust. Does it solve a real problem and is it based on complete, error-free data?  In stating that projects should also be optimized for cost and value over their life span, they argue that projects should be examined to see if they can be done with less capital through simplification or lower cost sourcing? They also ask if a project can be made to generate revenue faster by reducing construction or ramp-up time.  With regard to procurement they state that mining companies fail to integrate procurement into the front-end of a project life-cycle.

Dassault Systèmes’ 3DEXPERIENCE platform can addresses all of these challenges and the recommendations McKinsey makes Its collaborative backbone, integrates modeling, engineering, simulation, and information intelligence applications and the data they produce. This ensures all project data is up to date and correct and that all participants are connected.

With the 3DEXPERIENCE platform, companies create project work environments incorporating built-in governance based on best practice workflows. This allows for consistency in corporate planning processes. In addition, dashboards span project spaces and consolidate projects into a consistent line of sight, allowing executives and others to monitor progress and ensure they align with corporate objectives.

A key piece of the puzzle is the optimization of projects. Modeling and simulation enables economic and engineering what-if scenarios to be explored to find optimal projects to be selected and outcomes optimized in the virtual world before they are undertaken in the real one. This can include examinations of economic criteria and also simulation of construction alternatives to achieve the most efficient means of developing and assembly.

Connecting procurement and external contractors directly to the platform so that everyone involved in a project, from analysis, through conception, development and construction better ensures it is kept on track. Engineering changes and impacts are known to everyone, including the way they will affect timelines, from design through construction and assembly. As engineering progress is directly connected to procurement and construction progress, adjustments can be made rapidly, keeping costs under control.

By connecting people, data, and the applications through a collaborative platform, mining companies can bring consistency to how the select, optimize, and govern their projects. Through these platforms they can improve economic results by leveraging best practices and to keep projects on track.

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