Wednesday, June 12, 2013
Business Analytics in Mining
Recycled from a previous blog post...
I just saw this great article by Dr Graeme Lumly in the latest issue of 'Highgrade". He talks about the need for more and better analytics in the mining industry and provides an example.
The example is a clear illustration of what can happen when you don't really know what your process looks like. In an effort to change their bulk transport processes to prevent (or at least lessen) the amount of ore that is spilled, the mining company managed to do an amazing thing. The new process saved about $1 million in cleaning up spillage, but cost approximately $9 million in revenue. The change to the process led to less ore being transported.
This is obviously not a great outcome. It certainly argues strongly for better analytics that would help operators to define their current practices, and to model what any change to process might mean. Tying that to bottom line outcomes can clearly show whether a change is a good idea or not, clearly had the company in the example done so they might not have proceeded. I'm sure that eventually common sense would prevail as the revenue started to be affected and questions started to be asked.
The illustration begs another question about innovation. I didn't get it from Dr. Lumley's article, but did the company do a pilot of the process change. If they had they would have quickly determined that the change was great for the spillage problem, but not great for the financials!