Owner Mining

Owner Mining Implementation – A Case Study

Direct Mining Services recently (2012 2H) assisted a client to transition its open pit mining operations from a Contractor run to an Owner Mining Operation, assisting with the sourcing of mining equipment as well as the implementation of the required management systems. From initial engagement of DMS to commence equipment sourcing to the actual transition to an Owner run mining operation was only eight months with the relative ease in sourcing and relocating the required equipment exceeding the initial expectations of all involved.

The following is a summary of the project, including a number of observations with respect to the overall process:

Objective:

  1. To replace the current earthmoving contractor and subcontractor’s equipment at the end of contract, with an owner miner fleet of used equipment to result in a reduced operating costs and or increased production/availability.
  2. Use equipment purchase guidelines of mining fleet and ancillary equipment to meet the capital, production, delivery and maintenance levels to an acceptable level for the project team and be at a maximum half-life or less age.

Summary

The decision was made on the 100ton truck class for the haul truck fleet; this prime purchase would determine the size, type and make-up of the loading and ancillary equipment. A check of the current Australian used haul truck market indicated that units in this class were available for sale and within three months a fleet of ten trucks were purchased and mobilised to site.

Within a further four months, hydraulic excavators, grader, dozers water truck, wheel loaders and other ancillary equipment was purchased and delivered to site, plus a truck tyre contract was successfully negotiated with a manufacturer for supply of steel radial truck tyres.

All machines delivered to site were fitted with mine site required safety options (i.e. fire suppression, auto lube, ground level fast fuel fill, air con cab, etc.

Haul trucks Dozers and excavators were at mid-life SMHrs, Wheel loaders were near new at less than 10% of service life, and all other equipment at mid-life or less.

The total fleet purchase was achieved within the required budget and in most cases funded out of existing cash flows and at a significant discount in both time to deliver and capital cost to new equipment.

 

 General Observations

The range of used equipment available for sale varied greatly and the prices asked, in most cases, did not reflect the true condition of the machine. (I.e. a number of sources were found to have incorrect or very little maintenance information or machine history on machines they purported to have for sale).  A number of imported machines were not spec’d to meet Australian mining conditions (i.e. High temperature cooling not fitted, do not meet Australian standards, incorrect options fitted).

However sources were located that had machines available for sale that represented a reasonable price with acceptable quality.

Both overseas sources and local Australian sources were considered for machine purchases, it was found that the risks and cost associated with importing machines could not be justified when compared to available local machines.

 

Process Applied

  • Prepare list of equipment type, size and options
  • Prepare list of suitable used equipment
  • Short list equipment that is worth further investigation.
  • Carry out visual machine inspection on Short List.
  • Each proposed item of used equipment to be identified to enable the project team to decide which of the available items of used equipment best meets the production, maintenance and operating cost requirements. List all:

~        Attachments and options fitted details of repairs and maintenance carried out.

~        Oil analysis report

~        Component life cycle records

~        Forecast major component change-out requirement

~        Current production rates

~        Mobilisation

~        Transport

~        Site re-assemble requirements

  • To decide which used equipment best meets the capital requirements, show:

~        Asking price ex the machine location

~        Forecast costs to relocate the machine to the mine operator’s site plus any additional work or options required etc

  • Three items of each used equipment type to be prepared for submission to the project team (Where ever possible)
  • Final selection of used equipment machine.
  • Oversee purchase, payment and delivery to the mine site.
  • Review site requirements for management systems and negotiate same
  • Assist with Personnel transition, training and management.
  • Assist with establishing relationships for procurement of operating consumables.
  • Establish maintenance plans for all equipment
  • Assist with the establishment of OEM equipment support including parts inventory and critical spares
  • Establish Owner Mining and maintenance KPI’s and management procedures

 

Contact us if you would like assistance with any of the above activities.

 

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