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Context / Scope of project
A number of Artic hard rock mines from four different organisations had been struggling with high operating costs relative to their more favourably located sister mines. They recognized the need to cut costs in order to maintain competitiveness, but were unsure where to start, recognizing that both distance and artic temperatures were key drivers of their high costs. In order to put a spotlight on the costs that were driven by their location, they decided to undertake a benchmarking study focusing on costs per ton mined. PIP was asked to undertake this benchmarking study on behalf of four arctic mines.
Client achieved:
- Built a secure site to ensure that PIP could sanitize the relevant cost data without compromising confidential information
- Developed cost value driver trees for each mine
- Tailored to the specific mine
- On a common basis to enable comparison
- Normalized the data to facilitate cross-mine comparisons
- Adjusting for distance, shipping windows, size of mine, underground/open pit, truck size, etc..
- Working with mine finance staff to ensure appropriateness of comparisons
- Developed sanitized
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What we did:
- Identified cost areas where each mine had significant opportunity for improvement in operating cost per ton (different areas for each mine)
- Isolated the impact of remoteness as a cost driver
- Shift roster systems (fly in, fly out)
- Available bulk transport windows (ice roads, limited shipping windows)
- Distance and airfreight challenges for both people and parts
- Highlighted areas for management focus and attention
- Subsequent follow up has shown that the mines used this information as a roadmap for cost reduction programs
- Focusing on those areas where the costs should be compressible
- Achieving significant reductions in costs per ton
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