We have already talked about many industries in previous posts within this blog. But there has been one sector that has never been analyzed. And that is the mining sector.
Logistics from mining is a complicated thing as the process and big operating machines need to be in place and with the correct maintenance. It is a daunting task that requires trial and error and that can go wrong if not closely monitored.
As David Kiger found out a lot of mining companies operate with no planning and with safety risks that are near to breaking the law or to having total environmental and infrastructure collapse.
Today we are going to take a look at a case where the company was in a state of disrepair and was saved by correctly applying logistics to their mining processes.
The company we are talking about is Exxaro’s Inyanda. Exxaro’s Inyanda coal depot is a JSE listed, SA based mining group that has a wide class commodity portfolio in base metals, coal, mineral ferroalloys, sands and iron ore. This company is one of the three biggest coal producers that can handle up to f 47 million tons per year and it is also very successful in the production of mineral sands (they are the 3rd largest global producer of mineral sands).
Their facilities, equipment, and machinery were totally underutilized and had many facility problems due to bad management within their service provider. Their facilities were a total disaster and it was just unthought-of how they could operate for some years. The challenge was huge because they didn’t even have a plan for maintenance of their trucks which were doing 7-9 trips per day.
Exxaro Inyanda saw the need to do something about all the issues so they hired another service provider to get them out of the dark spectrum they had fallen into. The company and the services provider designed a two stage solution and a strong supply chain partnership between them and set the goal of transforming the mining company into an efficient company that could forecast and plan their route and operations; do follow up to their expenses, understand efficiency and measure performance and productivity.
The challenge was huge. Since their facilities had been underutilized for several years their only goal was to improve service levels, increase production as soon as possible and train people for efficient working. All this so Exxaro Inyanda’s could regain their competitiveness and continue to be sustainable for the future to come.
But the real problems were yet to be seen. The depot that was used to collect water was a total disaster since it had an unstable surface and was polluting the environment around it. And these were just the little issues. There were other big issues such as following: the density of the coal did not reach standard levels and that in turn resulted in very low payload capacity; many trips were required to produce and transport the coal and the maintenance strategy was a total failure; there were some legal issues with the permits for the truck tractor and trailer combinations; visual estimates were done incorrectly due to over and under loading of the wagons; there were significant coal spillages, dust, grazing and water contamination.
So what could be done to improve such problems? As said before, the company and the service provider designed a two stage solution that included immediate purchase of equipment and facilities, and a long-term shift to different systems, managerial strategies, resources, and protocol. The first thing they did was to stabilize the facility by purchasing and running new graders and rollers, and by covering the surface with dump stone. Then, they changed all the transportation fleet and the equipment for it was also replaced.
The other problem that was attacked was the loading issues. They used load cells to actually measure the loads and to have accurate weight numbers.
The results of all the changes in Exxaro were seen in operational efficiencies and commercial benefits. Since the new service provider took over the contract to manage all the transportation and loading operations the company started to meet monthly goals and to reduce the penalties they had to pay for not delivering on time to a minimum.
Exxaro had a big change just by changing their logistics within the mining site. They started to always be on time and meet train schedules by always having their site and equipment fully operational. As for today, according to Exxaro´s CEO, they are even getting extra trains from the train company because of their loading efficiency, and that in turn allows them to boost volumes and generate additional income.
Be sure to also read this post about logistics within the military sector
* Featured Image courtesy of Janet at Flickr.com