The mining value chain of an operating business starts from extracting the ore out of the ground, through to mineral processing, smelting or refining, and finishes with delivery of the ore concentrate or metal to the customer. The mine to market value chain is made up of interdependent steps with the corresponding activities within each step: mine, processing plant(s), inventory, rail or road, port, ship and market. It is supported by mineral resource exploration, valuation and management, maintenance, logistics, human resources and environmental management. Mining value chains are complex, involving capital intensive assets such as mining equipment, trucks, railways, processing plants and ports, and global logistics as mines and markets are frequently located in different countries. The life of a mine is finite, as the ore body is gradually depleted, while exploring and replenishing with new deposits. Eventually the mine is closed when it is no longer economic to operate and the site is remediated or rehabilitated.
The main challenges facing the mining industry are shifts in commodity markets, e.g. strong fluctuations in prices, and tightening regulations, e.g. environmental laws. Being a cyclical business and practically a price taker, with rare exceptions, the mining companies must continually improve on operating costs and asset utilisation and remain profitable even during a down cycle. With ever more stringent environmental regulations, they must continually reduce their environmental impact by significantly decreasing emissions and energy and water consumption.
Lean Six Sigma (LSS) is a data driven business improvement methodology. It consists of a set of principles and tools to systematically improve a process to a higher performing state. In the case of the mining industry, the market determines the global commodity prices and product quality such as purity. LSS can help mining companies deliver consistently in specification ore concentrate or metal to the customer at the current market prices in the shortest delivery time, at lowest cost and highest asset utilisation for maximum profitability, while maintaining a safe work environment and meeting legal and communal obligations.
For mining, LSS improves efficiency at the process level. Where implemented and sustained properly, the top benefits at the business level are:
Lean Six Sigma focuses on the customer and value is defined by the customer. In mining, the ultimate customer is the external recipient of the ore concentrate or metal, with internal customers being the recipient of the intermediates downstream of each operation.
The key principles of LSS, in the mining context, are:
LSS focuses on eliminating waste, reducing process variation and reducing defects at each step in the mining value chain.
The concept centres around speeding up flow with Lean tools and reducing defects or process variation with Six Sigma tools. Waste and value are identified using value stream mapping of the existing process through direct observations of people and operations and first hand interactions with workers on the mine or processing site and/or in support functions. Types of waste consist of defects, overproduction, waiting for a machine or person, non-utilised talent of personnel, transporting of items, inventory, motion of people and extra processing.
As the mining business is typically huge and complex, LSS is usually applied at the operational level in a targeted way for best return on investment. Management is responsible for identifying, selecting and prioritising areas for improvement in line with the overall business strategy. The areas chosen for improving cost efficiency or asset utilization or intermediate/final product quality should be those which will have the greatest impact on the overall business performance.
Some examples of how LSS is applied in mining are described below.
As LSS is a structured methodology requiring statistical, visualisation and facilitation skills, a team of highly trained and experienced staff members or consultants is required to implement, embed and sustain the improved changes, with the unwavering support of management. The initial implementation could be forming an in-house core team of highly trained change agents or engaging an external consultant.
Imagine you now have an improved mining business with the measurable and undeniable benefits, after applying LSS successfully. What could your improved business go on to achieve? What competitive edge would you have?
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