COMPUTER BUSINESS REVIEW

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Issue Date: October 2007

Boost profitability with software?

1 October 2007

Mining organisations operate in an unpredictable world full of variables. They must continually address critical business issues such as process improvement, global competition, and rapid consolidation at both regional and local levels.
To be successful in this unpredictable environment, they increasingly understand the vital importance of managing the entire mining value chain.
They also understand the need to deploy assets to the best of their inherent capability and are looking for ways to further improve cost efficiencies and satisfy customer demand, while seeking to improve complex and unique operational processes.
As the industry continues to consolidate, mining organisations seek tools and processes to unite and integrate newly-merged and acquired operations.
Regional consolidation, for example, means that mines look to be able to derive economies of scale at both the physical asset and organisational levels, while moving to standardise on best practice across the organisation. For them the challenge varies from managing remote and widespread operations to effectively staying competitive in the global economy.
Mining software solutions play an integral role in supporting these efforts – from exploration systems that manage drill and grade control data to geological modelling and mine planning systems, from material tracking to laboratory information management and outbound logistics to production accounting capability for processing operations.
Mining organisations need now, more than ever before, intelligent mining solutions and a total solution approach to bring about predictability in this unpredictable world.
Because of industry consolidation, the supply of major commodities is now controlled by relatively few companies.
For example, more than 40% of the world export coal market is controlled by four global mining houses. As a result, customer expectations regarding delivery times and quality control are increasing and customer service is playing an even greater role in customer retention at mining organisations.
Another major challenge for mining organisations is being equipped to handle compliance and regulatory reporting standards such as Sarbanes-Oxley and emerging industry codes of practices.
Section 409 of Sarbanes-Oxley, for example, requires realtime visibility of operational information for risk management purposes. This means it is important to have technical mining solutions that gather information from the various production control systems and field instruments that are susceptible to day-to-day challenges such as ‘drift’ and calibration issues.
Moreover, to ensure accurate data for reporting purposes, having tools that will provide a data validation platform and enable proactive alerting when calibration issues occur are imperative to minimise the impact of poor-quality data on decision-making processes.
Production accounting solutions have emerged as a key end-user requirement in the industry to not only provide better value management but are also increasingly needed to align with industry guidelines. Historically, in the mining and metal processing industry, the accounting for metals/commodities across processing plants has not generally been performed at the requisite level required by corporate governance standards.
When incompliant, a minerals/metal production operation is exposed to financial risk associated with its metal accounting process to the extent that there is uncertainty in the valuation of the quantities of metal delivered to that operation and produced by it.
In addition, there is the risk to the reputation of a company and of negative market perceptions resulting from major metal accounting discrepancies.
Dave Stevenson, vice president Mining of 
Mincom
Dave Stevenson, vice president Mining of Mincom
Addressing the challenges
To address these industry challenges, mining organisations require intelligent mining solutions to better predict and manage operations – tools that provide the widest range of technical capability and which cover most aspects of the mining value chain from the exploration phase through to outbound logistics.
Key to achieving improved business outcomes is the adoption of a total solution approach where the value proposition of an integrated package of solutions is greater than the individual solutions and provides richer data to support each aspect of the mining value chain from ore body through to final product.
Solutions employed should also help mining organisations to comply with the stringent reporting requirements required to ensure good corporate governance.
By employing intelligent mining solutions and adopting a total solution approach, mining organisations can typically enjoy a decrease in maintenance, procurement and purchasing life-cycle costs or reduced inventory holding, IT overheads and ‘total cost of ownership’. They can also improve business processes (for example: people re-deployed to higher duties) which allows them to better plan and schedule activities and resources, all of which can lead to an increase in bottom line profitability.
Ultimately, intelligent mining solutions play a vital role in driving the capability that lets mining organisations be successful and maximise shareholder value, while ensuring they manage the delicate balance between optimising the life-of-mines, maximising the life-of-production plant and extending the life-of-contracts to customers.


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