Project Management Software Designed for Mine Site Optimization
Metals and mining expenditures for capital projects reached more than US $140 billion in 2012, and will top out at nearly US $1.5 trillion during the period from 2011 to 2025, according to Accenture research estimates. Even with the current downturn in commodity prices, long-term demand for minerals and metals, driven by economic growth and social development throughout the world, continues to spur investment in the mining industry.
With $100 billion to $200 billion in annual spending, the impact of project overruns for individual companies and the industry as a whole is massive.
“The potential savings and returns through effective management and delivery of a capital project investment can be huge,” said Jose J. Suarez, managing director for Accenture’s North American Mining industry group and the research lead. “Keeping on budget and within planned timelines across a portfolio of multi-year projects can save millions for a company – in today’s environment strong project management can be an important competitive advantage.”
The progress of a project cannot be accurately measured if proper data standards are not established at the outset and integration between the information systems of functional areas and service providers is not promoted throughout the project’s life cycle, according to Accenture’s report.
Project controls discipline – from project portfolio management and capital program management, through budgeting, forecasting, and performance reporting – is crucial to keeping mining operations efficient and using advanced project management software is an important part of the equation.
“It’s incredibly important,” says Javier Sloninsky, CEO and managing director of EcoSys, a provider of EcoSys EPC, a web-based project cost controls solution for companies. “It was reported last year that global mining net profits declined by almost 50 percent.”
Mining companies used to simply increase production volumes in order keep profits up, but now, with lower commodity prices and rising costs, this approach is falling short.
To help adjust to market conditions, executives, project controllers, cost analysts, and those responsible for monitoring and improving project performance need to be able to answer fundamental questions quickly and easily. The questions are: What is the current budget? How much has been spent? Why has the forecast changed? Are we performing efficiently?
Unfortunately, in most cases, finding the answers is daunting and difficult. Why?
Organizations have lacked the proper tools. Finance and ERP systems have proven cumbersome and too rigid for project planning and cost controls since they focus on accounting needs. Scheduling systems lack the necessary focus on costs and historical data. Even companies delivering megaprojects still rely heavily on Excel spreadsheets and manual, disconnected processes for project budgeting, forecasting, and performance measurement.
These manual processes for data control and cost reporting are time consuming, subject to errors, and leave little time for analysis or making recommendations.
Leadership at mining companies needs to put a greater emphasis on improving efficiencies and managing productivity. Project management software, and project controls in particular, is key to achieving these objectives.
“In many respects, project management is an art form,” Sloninsky says. “The software adds the science to the discipline. It gives stakeholders visibility into project performance more quickly. With stronger management and reporting systems, those responsible for project delivery can be more agile and proactive than in the past.”
Recognizing that huge capital expenses are incurred before a mine starts even producing anything; these costs can depress an organizations financials for a long time. As a result, there’s certainly a growing awareness of the need for project controls and the systems that support these processes.
“We’ve seen our customers really embrace new systems that give them a competitive edge in efficiencies and improving margins,” says Sloninsky. “That said, there’s a lot of different levels of maturity within mining and there’s plenty of room for improvement all across the industry – from the majors to smaller operators.”
The most obvious is the increase in efficiency that comes from integrating data and automating reports that were once manual. The real cost savings come from seeing performance metrics in real time and using that to develop better forecasts. Then, companies can quickly drill-down in the details to isolate problems, and take corrective action before a small issue escalates into a massive cost overrun.
This system eliminates potential errors, improves speed with less labor, and creates tremendous benefits to cost, according to Sloninsky.
An easy to follow Internet-based software platform designed to provide detailed project management controls will dramatically increase efficiency and decrease downtime. The most effective project management software should have virtually no limits on the number of transactions, projects, hierarchy structures, levels, and can accommodate the largest projects and organizations within a single central database accessed via a standard web browser.
An advanced project management software system provides web-based spreadsheets and forms, while providing the enterprise-level business rules and security missing from less sophisticated systems or Excel.
The system should present users with an intuitive interface that feels familiar, making them highly productive from the moment they begin using it. In addition, it should be able to be managed by non-technical resources, allowing trained users to create new reports, views, and dashboards without IT involvement.
The integration of data, bringing together information on cost, schedule, timesheets, and commitments – provides a much stronger view of a project. Further integration with engineering and visualization systems will only help communication and collaboration going forward.
“There have been great strides in the project management software world,” says Sloninsky. “We’re seeing the greater use of mobile devices, to access dashboards remotely, and report status from the field. The best project controls platforms are also improving user experience, where an emphasis on ease-of-use and tailorable environments are driving high levels of user adoption.”
Tahoe Resources Inc., a Reno, Nev.-based silver exploration and mining company, uses a project controls platform that includes a central repository to aggregate data for cost reporting and provides budget change management to help develop its silver mine in Southeast Guatemala.
Due to the mine’s finite lifespan and large capital expenses prior to silver production, finding a means of effective cost controls became a necessity. EcoSys provides Tahoe Resources with a single system to support budgeting, change management, commitments tracking, reconciliation of actuals, performance measurement and forecasting. The project management system allows program managers and project controllers to manage earned value and facilitates time-phasing of costs over the lifespan of the project.
“Tahoe Resources’s Escobal project needed a system to support cost control best practices ‘out of the box’ but with the flexibility to meet its specific requirements,” said Christen Bergerud, executive VP at EcoSys. “[This software] provides a scalable cost controls system that is able to support multiple projects and currencies, and that can provide full visibility into project performance and automated report generation.”
What’s Next for Project Management?
The growing use of these systems for a view of the entire enterprise is what’s next, according to Sloninsky.
Mining companies have developed enormous project pipelines, and many of them may underperform because of they are focusing on just individual project performance, and not managing the whole project portfolio.
A holistic view of the portfolio, with better means to evaluate which projects to pursue and which to cancel to achieve strategic and financial objectives, and then balance resources against the demand of each to drive successful execution, is perhaps the most valuable development of these systems, according to Sloninsky.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”