Working in close collaboration with the group mining engineer, who possessed extensive knowledge of all mining operations, the optimisation process was meticulously designed.
For mining cost benchmarking the process comprised:
Apply the mining company’s geological models, mine design, production schedules, and contractor bill of quantities to:
- determine the ideal mobile equipment requirements for the mining operations.
- using the selected size and operating weight, draft tender enquiries and obtain formal capital and Life Cycle Costs (LCC) from leading Original Equipment Manufacturers (OEMs).
- determine all other resources, such as manpower, materials, drill and blast, etc., for total mining cost estimations.
- select the most suitable OEM, apply formal capital and LCC prices, and estimate the unit rate mining costs from first principles, using the contractor’s tendered bill of quantities.
- compile an owner versus contractor trade-off unit rate analysis for the Life of Mine.
For cost estimations TacminMadini applied Candy Construction Computer Software:
The ultimate construction, estimating, planning and project management software, Candy is unique, powerful, and dynamically focused on project control in the construction & engineering industry. Candy specifically targets the contractor's requirements, from quantity take-off, pricing and planning a project, controlling at site level, through to the final certificate. Candy uniquely provides an interactive link between the Bill of Quantity (BOQ) and estimate and the programme or schedule of work in one exceptional construction project management solution. Put simply, it aligns time and money. By bringing together these two key factors of construction and engineering projects, management and client alike have a wealth of information at their fingertips
Emanating from the comprehensive, group-wide operational excellence exercise, what was particularly interesting was the significant difference in unit rates (approximately 30% on average) between two nearby open-pit gold mining operations. These operations were managed by two different contractors, despite the similarity in size and quantity of mobile equipment deployment.
Following the cost estimation benchmark from first principles, as described above, our results revealed similar unit rate discrepancies which warranted further investigation. Upon a detailed examination of our cost benchmark, we conducted a comprehensive analysis into the two mining and cost models and made the following observations:
- To achieve the target production, we derived more or less the same size and quantities of mobile mining equipment units that the contractor assigned.
- A mining equipment resource analysis on the project with the higher unit rates indicated lower than designed equipment production capability.
- Because of the above, the equipment assigned to this project had surplus production capability, yet it could not be achieved with the parameters tendered upon.
- Further investigations proved that unit rates dropped and production increased significantly if the mining equipment could reach their designed production capability.
- A redesign of the pits, ramps, dumps and haul routes made it possible to increase production and reduce unit rates without employing additional resources.
Using the information derived from the investigations, we redrafted the commercial agreement between the parties. We replaced the production targets, substituted the pit, ramp, dump, and haul route designs, and reissued it for pricing by the contractor. The contractor’s revised unit rates dropped significantly, and their anticipated target production schedules with the equipment deployed, increased considerably.
If you would like to improve the unit rate and increase production of your open-pit contract mining application without incurring significant expenditure, do not hesitate to contact us.
