How to Implement Lean Principles in the Mining Industry
Faced with fluctuating demand, cyclical pricing and a decrease in the profitability of the mining industry, operating an efficient and streamlined business is critical to any mining operation. Thus, despite its inherent complexities mining firms have been integrating the lean principles of the manufacturing industry into their own operations.
Rooted in the automotive industry and derived from the Toyota Production System, lean best practice has over the past 30 years been applied to great effect in almost every facet of the manufacturing sector. And it is now, with the ever-increasing pressure on the bottom line, that mining firms are looking to reap the rewards of lean processes.
In recent years, some of the most industries most influential executives have spoken out about the benefits of lean and similar continuous improvement strategies. In 2008, Rio Tinto’s CEO Sam Walsh gave a speech stating Six Sigma “is a very fundamental change in the way that we structure our work, actively engaging, actively involving, actively communicating with our people.
“It's not the senior management that implement the sort of significant improvement on the ground it's actually every single person working within Rio Tinto.”
It is fair to suggest that initiatives to come out of business improvement programs include minimised shutdowns, increased production and increased chances of reaching annual targets.
Clearly, there are plenty of various opportunities for mining companies to benefit from lean best practice, however implementation will not always yield immediate results. The important fact to remember when putting these business improvement processes in place is that they do not come overnight and successful implementation requires the participation of the whole organisation.
But why should the mining industry adopt lean principles into their business process? How can they do this effectively?
A study conducted, titled ‘Implementing Lean Principles in Mining Industry Issues and Challenges’ states that lean processes can significantly help mining companies eliminate waste and improve processes because of a shared common view with the automotive sector. According to the study >>>
- Both rely if effective business processes;
- Both rely on efficiency within the value stream;
- Both strive to maximise operational efficiency;
- Both rely on an extensive supply chain;
- Both sectors have a ruthless focus on safety.
These similarities bring an opportunity to successfully apply lean principles into the mining industry.
Why and how should mining companies incorporate lean into their business processes and what benefit will it bring to the industry?
1. Identify value
Critically, the starting point for lean thinking is value. Think of it like this: everything that doesn’t add value to the end product is waste and your customer is not willing to pay for it. Waste needs to be eliminated to make value flow. There are seven types of commonly identified waste >>>
- Over production
Strive to eliminate these forms of waste from your value chain.
2. Map your value stream and update it
Your value stream is the entire business process from thought to completion; it’s the end-to-end process that ultimately delivers value to your customer. In order to make your mine lean it’s important to map every single process (no matter how small or seemingly insignificant) and streamline it. Waste can be easily identified this way and removed from the process, saving you precious time and money. Once again this needs to be a continuously reviewed process.
3. Empower your employees
Lean is the ceaseless elimination of waste and therefore effective implementation relies heavily on the engagement not only of workplace leaders, but of individual employees as well. In order to achieve success its important to ask employees to set agreed standards for their work and empower them to improve their own standards continuously.
Although it can be a tough change to make, managers need to allow personnel on the shop floor to solve problems and make operational decisions. After all those on the ground will be far better placed to make suggestions and waste elimination and process improvement. A mining manager’s role should be that of a mentor, who will provide the necessary tools and resources for continuous improvement. In order to make this a successful as possible, mining companies should consider educating its people about effective problem solving.
As part of empowering your employees, its vital you provide a visual representation of key product performance date, which will empower employees even at the lowest level to make operational decisions based on data and key findings.
It is important for mining companies to delve deep into their operations if lean is going to be successful. For example, down time and repairs on vehicles needs to be monitored and scheduled effectively for minimal impact. Companies also need to be aware that human talent holds 70 percent of the improvement potential within the mining industry, so a large emphasis needs to be placed on training and employee empowerment.
There are some elements of a mine that cannot be controlled, making lean processes harder to implement. Take as an example a manufacturing plant – rules such as 5S and visual factory can be well executed – meaning cleanliness, organisation and accessibility of the workplace can be easily organised. This is much more of a challenge in the mining industry and will take a lot more time to organise.
Lean principles have the potential to be successfully applied in the mining industry, however there are challenges that need to be considered and overcome. Think of lean not just as a change of process but also a change in company culture. It is a slow process and one that will require total devotion. Applied correctly, lean principles could have some seriously positive impacts on your business.
Mining Profile: Gary Nagle, CEO, Glencore
Gary Nagle has spent his career in mining, across two decades, with Glencore – the Anglo-Swiss metals and mining company with a diverse global portfolio. Nagle is a one company man who has experienced the journey of the resources industry from boots on the ground to the boardroom. He will succeed Ivan Glasenberg as Glencore’s CEO in July 2021
Gary Nagle was born in South Africa in 1975 where he earned degrees in commerce and accounting from the University of Witwatersrand, before qualifying as a chartered accountant in 1999. Nagle joined Glencore in 2000 as an asset manager in the coal department. His rise was swift; by 2007 he was named chief executive of the company’s Colombian coal operation, Prodeco.
Following the acquisition of Xstrata in 2013, Nagle moved to run the company’s South Africa-focused alloy assets, before being named head of the company’s global coal assets portfolio in 2018
Building his career by rising through the ranks of Glencore’s coal department Nagles was considered the most likely to succeed Glasenberg due to his asset-focus; mining accounts for a growing share of Glencore’s revenue as it moves away from its origins as a pure trader.
Glencore’s Chairman, Tony Hayward, commented on the appointment: “Gary Nagle has held senior roles in coal and ferroalloys in Colombia, South Africa and Australia. He has been on the Board’s radar for more than several years and was selected following a succession process overseen by the Board. We are confident that he has the right skill set and qualities to lead the Glencore of tomorrow.”
Ivan Glasenberg is retiring from his role as CEO after nearly 20 years at the helm of Glencore which saw him complete one of the largest mining mergers in history, with Xstrata. Looking back on his time at Glencore, the world’s largest commodities trader, Glasenberg reflected: “I am proud of the great company that we have built. Together, we have created one of the world’s largest diversified miners and marketers of commodities. Today, our diversified portfolio uniquely positions us to play an essential role in the global transition to a low-carbon economy.”
Glencore has announced plans to reach net-zero emissions by 2050 by reducing its direct and indirect carbon footprint by 40% by 2035.
Glasenberg has served as mentor to Nagle who has followed a similar career path at Glencore rising to the role of CEO via heading up the company’s global coal business.
“I have worked with Gary since he joined the company twenty years ago,” recalled Glasenberg. “I have always regarded it as a critical part of my job to develop the next generation of leadership at Glencore and I am proud of the strong leadership team that we developed from which we were able to select Gary. I am confident that his leadership, along with the support of the management team, will enable Glencore to take advantage of the opportunities that lie ahead and be a strong custodian for my shareholding in the company.”
Looking ahead to the challenges awaiting him, Nagle was full of optimism: “I am grateful for the trust placed in me by the Board and honoured to be appointed CEO at such an exciting time for Glencore. We will continue to deliver value to our shareholders, while operating safely and responsibly.”
Nagle will relocate from Australia to Switzerland to take up his new role.