Professional Documents
Culture Documents
ABSTRACT.
In 2001 the Catholic University of Chile undertook a maintenance benchmarking
study of six open-pit copper mines having mill capacities varying between 18.000 tpd and
156.000 tpd and collectively responsible for 58% of Chilean copper production. This paper
describes the methodology used to conduct the study, as well as the overall results. Key
performance indices were selected to measure the effectiveness, efficiency and
development of the maintenance process. Using a balanced scorecard philosophy, these
indicators were divided into client satisfaction, financial, internal process, and learning and
growth indices.
Maintenance was found on average to be responsible for 44% of mine production
costs. Percentage planned maintenance of equipment fleets were found to be low by world
standards, averaging 35%, 56% and 44% respectively for blasthole drill, shovel and haul
truck fleets. Fleet availabilities were found to be significantly influenced by the percentage
of planned maintenance achieved, whilst maintenance cost per equipment was found to
decrease non-linearly with increases in percentage planned maintenance. Investment in
technical training (including planned maintenance practice) was found to be low by global
standards. The paper concludes that fleet availability and maintenance costs in Chilean
open-pit operations could be considerably improved by improving and/or developing
maintenance planning standards, and investing in training personnel in planned
maintenance techniques.
INTRODUCTION
In todays capital intensive mining industry, maintaining high equipment availability,
utilization, production and quality (or yield) rates is vital to the financial performance of
mining companies. Equipment maintenance and repair (referred to hereafter as
maintenance) play a vital role in assuring productive capacity and equipment capability.
Due to a lack of publicly available benchmarks, in order to identify opportunities for
improving current equipment management strategies, mining companies should participate
in maintenance benchmarking studies. These studies involve comparing the maintenance
performance of: mines operated by the same owner (internal benchmarking); competing
companies with a mutual interest in sharing data (competitive benchmarking); or
companies operating in different industry sectors generally acknowledged to be industry
leaders in maintenance (functional benchmarking). Since equipment operating parameters
can vary markedly from one mine to another, an essential element of benchmarking
studies is to find ways for eliminating bias in the data to enable accurate comparison; the
so called comparison of apples with apples.
In 2000 the Mining Council of Chile (Consejo Minero a.g.) agreed to assist the Mining
Centre of the Catholic University of Chile to undertake a competitive benchmarking study
of key maintenance performance indices in Chilean mines and concentrator plants. The
chief executives of the 17 companies that then formed the membership of the Mining
Council were approached with regard to participating in the benchmarking study. Eight
mines decided to participate in the study. All eight mines produced copper as the principal
product. Since one mine exclusively used underground extraction methods and another
mine submitted data in an aggregate manner that made it impossible to separate mine and
mill performance, the maintenance performance of the six remaining mines employing
open pit mining methods were benchmarked. In order to maintain the commercial
confidentiality of the participants, the names of these mines cannot be published. In the
study they are referred to by letters as mines A to F inclusively. The milling capacities of
these mines varied between 18.000 tpd and 156.000 tpd, and, in 2000, the six mines were
collectively responsible for 58% of Chilean copper production.
Study Objectives
The objectives of the benchmarking study were fourfold;
To ascertain the relative importance of maintenance as a percentage of mine
production costs
To identify the leaders in mine maintenance performance and to determine their
associated best-in-class performance indices.
To identify global improvement opportunities for the Chilean mining industry, and
To identify specific improvement opportunities for participating companies.
This paper outlines the methodology used and principal findings associated with the
benchmarking study.
Benchmarking Methodology
The first task in any benchmarking study (beyond identifying the potential
participants) is to determine which performance indices to compare (see Camp (1994) and
Watson (1993)). Considerable differences exist in the number and type of indices
measured by companies. Some companies measure only the basic indices, whereas
others have determined additional performance indices to be useful. It is therefore
necessary to determine which performance indices are commonly used by all
benchmarking participants, and, to narrow the focus of the study, which of these indices
should be solicited for inclusion in the benchmarking study.
Furthermore, companies have adopted widely different definitions when it comes to
calculating performance indices. For example, equipment availability may be calculated on
the basis of: calendar hours; or programmable hours (calendar hours minus unavoidable
losses due to energy cuts and natural phenomena) in a given time period. In any
benchmarking study it is essential to understand and locate these differences otherwise,
apples will be compared with oranges or bananas!
Maintenance Performance Indices
Labor
Materials
Business Environment
Operations
Maintenance
System
Availability
Reliability
Maintainability
Throughput
Product Quality
Safety
Environmental Norms
Profitability
OUTCOMES
Effectiveness indices
Much has been published concerning maintenance performance indices (see, for
example: Campbell (1995); De Groote (1995); Wireman (1998); Art et al (1998); Dwight
(1999); and Duffuaa et al (1999)). The key maintenance effectiveness indices used in the
mining industry are equipment availability, reliability and maintainability. Reliability is often
measured by mean time between failures (MTBF), and maintainability as the mean time to
repair or restore service (MTTR). At the time of undertaking the benchmarking study
(2001), only two of the six participating mines were routinely measuring these parameters.
For this reason it was decided that the study should focus on comparing fleet availabilities
and forego the collection of fleet reliability and maintainability data1. Fleet availabilities
were solicited in the form of [available hours / (calendar hours lost hours)], where lost
hours include energy shutdowns and stoppages due to storms and other natural
phenomena.
Safety statistics, namely accident rate and severity (expressed as the number of losttime incidents and lost-time hours per million man hours respectively) were solicited for
maintenance personnel. This included both company employees and contractors working
on non-capital projects. Production data, in terms of tons of ore and waste mined per year
were solicited from the participating mines. As well as ensuring fleet availability and
reliability, maintenance contributes to a mines profitability via its cost efficiency. Total
annual maintenance costs for the mines were solicited which, combined with the
production data, enabled the unit costs of maintenance (US$/ton) to be calculated. These
costs include the direct and indirect costs of maintaining the mobile equipment and work
shops. In one case (Mine B), it was not possible to separate the primary crusher
maintenance costs from aggregate data submitted. This is an acknowledged source of
bias in the financial results.
Efficiency indices
Efficiency indicators can effectively be divided into two groups; financial and internal
process efficiency indicators. The following financial indicators were solicited from the
companies participating in the study:
1
It is interesting to note that, in the three years that have passed since undertaking this study, most Chilean mines now
routinely report these variables. Considerable difficulty still exists in benchmarking MTBF and MTTR values between mines,
since no industry standard has been developed for the measurement of these variables. For instance, some mines include
all stoppages, including PMs, in their calculation, whilst others incorporate only those events which they classify as failures.
drills, hydraulic and cable shovels, wheel loaders, haul trucks and auxiliary
equipment)
Scheduled maintenance compliance (actual planned hours versus scheduled
planned hours)
Organizational efficiency in terms of the ratio of supervisors to maintenance
technicians (the inverse of this ratio is known as the span of control).
Investment in maintenance planning as evident from the ratio of planners to
maintenance technicians (planning clerks and statisticians were also considered to
be maintenance planners)
Efficiency in inventory practices as evident from the stores turnover ratio (value of
spares and repairables consumed versus average annual on-hand inventory value)
and service level (percentage of requisitions that the store is able to meet without
delay).
Results
The aggregate results of the benchmarking study are shown in Table 1. All data are
for maintenance performance registered in 2000.
Performance Index
CLIENT (EFFECTIVENESS) INDICES
Availability per fleet (%)2
Blasthole drills
Shovels
Wheel loaders
Haul trucks
Auxiliary equipment
Accident frequency3
Severity index3
Mines
Inferior
Superior
Mean
6
6
6
6
6
5
5
64%
68%
69%
76%
63%
0
0
89%
93%
88%
89%
85%
8.1
450
78%
84%
78%
83%
79%
4.12
153
FINANCIAL INDICES
Maintenance cost4 per ton extracted (US$/ton)5
Maintenance cost as % of mining cost
Maintenance cost per equipment (KUS$/equip)6
Labor cost as % of direct cost of maintenance
Spares & repairables as % of direct cost of maintenance
Contractors as % direct cost of maintenance
Overhead as % direct cost of maintenance
5
5
5
5
5
5
5
0.46
40%
486
0%
0%
16%
1%
0.29
50%
684
28%
49%
99%
7%
0.36
44%
549
14%
32%
50%
4%
5
6
6
5
5
3
5
5
5
4
4
2
3
11%
45%
19%
25%
21%
47%
37%
20%
0%
1/6
1/10
1.7
80%
65%
67%
71%
58%
66%
91%
54%
98%
5.3%
1/16
1/24
1.9
100%
35%
56%
40%
44%
42%
67%
45%
56%
2.5%
1/8
1/14
1.8
92%
Availabilities recorded by Mines C, D and F are on the basis of calendar hours and do not take into account lost hours.
Fleet availabilities for the remaining companies should be marginally lowered for comparison.
3
Safety indicators for Mines A and D correspond to contractor personnel only, responsible for the majority of man hours.
4
Cost data for Mine B includes the primary crusher.
5
Includes ore and waste (does not includes ore from stockpiles). Maintenance and production costs are annual, do not
include depreciation and amortization, and are expressed in US dollars as of December 2000. The conversion factor used
considers both MPI (Major Price Index) and CPI (Consumer Price Index): Factor = 0.68*Variation CPI + 0.32*Variation MPI.
6
N of equipment includes: drills, shovels, loaders, haul trucks and auxiliary equipment.
7
Total maintenance hours are divided in two categories: planned maintenance (under schedule) and unplanned
maintenance (reactive).
8
Total man hours worked includes operations and maintenance for company and contractor personnel.
9
Contracted man-hours include only maintenance tasks and exclude capital improvement projects.
10
Mine A and Mine D values correspond to contracted personnel representing 84% and 98% of total personnel respectively.
11
Mine A and Mina D values correspond to contracted personnel.
12
Average values for the six months July-December 2000.
4
4
4
4
0.06%
27
32%
71
0.39%
75
100%
870
0.21%
55
77%
497
4
4
4
4
4
3%
4%
24%
13%
0%
24%
42%
52%
17%
17%
13%
27%
40%
15%
5%
0,90
Mina E
0,88
Mina D
0,86
Mina F
0,84
0,82
Mina B
0,80
0,78
Mina A
0,76
20%
30%
40%
50%
60%
Training delivered to own personnel, with the exception of Mine D, which includes company and contracted personnel.
Mine D value corresponds to contracted personnel only.
in the study operate mixed haul trucks fleets, and whilst a new fleet may have an
availability in excess of 90%, the availability of an older truck fleet will tend to reduce
overall fleet availability.
(b) Maintenance costs. For the companies participating in the study, representing 58% of
the production of Chilean fine copper in 2000, the cost of maintenance represents
between 40% and 50% of mining costs (including operating and maintenance costs
but excluding general and administrative costs). The average value is 44%. This
highlights the importance of maintenance in the overall cost structure of mining.
(c) Unit maintenance costs. The cost of maintenance per ton extracted is dependent upon
environmental variables and operational factors that are specific to each mine. For this
reason, a comparison based on this indicator alone cannot be made. The main factor
affecting unit cost is the size of the total equipment fleet operated by the mine per tons
milled. An indicator that takes into account fleet size (a function of haul route distance
and profile, equipment availability and utilization and operational factors such as
blending) and can be better used for comparison is the maintenance cost per
equipment. However, this indicator does not take account of cost differences arising
from the use of equipment of different capacities.
(d) Planned maintenance. The low levels of planned maintenance (preventive, predictive
and programmed component replacement) for the equipment fleets indicate that
company resources are being used for reactive maintenance, resulting in higher costs,
lower fleet availabilities and making it more difficult to schedule proactive
maintenance. Analyzing the data per company, it can be seen that as planned
maintenance increases, the overall maintenance costs are reduced as a result of a
more efficient use of resources (See Figure 3).
800
700
Mine A
Mine B
600
Mine D
500
Mine C
Mine F
400
300
200
100
0
20%
30%
40%
50%
60%
70%
Figure 3: Annual maintenance cost per equipment v/s percentage planned maintenance15
15
For each company, percentage planned maintenance is calculated as the average of the percentage planned
maintenance for each equipment fleet weighted by fleet size. Mine B does not consider the blasthole drill and auxiliary
equipment fleets. Mine C does not include the haul truck fleet.
Educational level. The private sector mines participating in the study employed a
higher percentage of university and technically qualified maintenance professionals
than did the state-run mine that participated in the study. In addition, a trend towards
hiring better qualified maintenance personnel was shown by the two recently
commissioned mines participating in the study.
Third
Quadrant
Second
First
<78%
<78%
<78%
<78%
<78%
78-84 (78%)
78-84 (84%
78-84 (78%)
78-84 (83%)
78-84 (79%)
85-91
85-91
85-91
85-91
85-91
>91%
>91%
>91%
>91%
>91%
<8
8-19
20-40
>40 (50%)
<65% (35%)
<65% (56%)
<65% (40%)
<65% (44%)
<65% (42%)
<15
66-78
66-78
66-78
66-78
66-78
15-35
79-94
79-94
79-94
79-94
79-94
36-70 (67%)
95
95
95
95
95
<1/9 (1/8)
<1/25 (1/14)
<0.5
<93 (92%)
1/9-1/17
1/25-1/59
0.5-0.7
93-96
1/18-1/40
1/60-1/80
0.7-1.2
97-99
>1/40
>1/80
>1.2 (1.8)
>99
<40
40-69 (55)
70-80
>80
>70
Table 2: Comparison of results with global industry benchmark results (Humphries, 1998).
In 1998 James Humphries, Vice President Manufacturing for the engineering
company Fluor Daniel published a paper entitled Best-in-class maintenance benchmarks
in which maintenance benchmarks were gathered for 148 global companies considered to
be in the top quartile of their industry according to earnings and/or market share
(Humphries, 1998). The industries represented in this study included: mining and metals;
refining and petrochemical; paper; automotive; textiles; food processing; rubber products;
power; electronics; consumer products; chemicals and pharmaceuticals. 75% of these
companies were North American, 16% Asian and 9% European. Table 2 presents a
16
The availability figures in Table 2 correspond to those listed for discrete processes by Humphries (1998).
REFERENCES
Arts R.H.P.M; Knapp, Gerald and Mann, Lawrence (1998) Some Aspects of Measuring
Maintenance Performance in the Process Industry, Journal of Quality in Maintenance
Engineering, Vol. 4 No. 1, pp. 6-11.MCB University Press.
Camp, Robert (1994) Business Process Benchmarking, American Society for Quality
Control (ASQC) / Quality Press.
Campbell, John (1995) Uptime: Strategies for Excellence in Maintenance Management,
Productivity Press, Portland, Oregon.
De Groote, Peter (1995) Maintenance Performance Analysis: A Practical Approach,
Journal of Quality in Maintenance Engineering. Vol. 1, N2, pp 4-24. MCB University
Press.
Duffuaa, Salih; Raouf, Abdul and Campbell, John (1999) Planning and Control of
Maintenance Systems: Modeling and Analysis, John Wiley & Sons Inc.
Dwight, Richard (1999) Searching for Real Maintenance Performance Measures, Journal
of Quality in Maintenance Engineering Vol. 5, N3, 1999, pp 258-275. MCB University
Press.
Humphries, Jim (1998) Best in Class Maintenance Benchmarks, AISE Steel Technology
Magazine, October.
Kaplan, R. and Norton D (1992) The Balance Scorecard Measures That Drive
Performance, Harvard Business Review, January-February, pp. 71-79.
Tsang, Albert (1998) A Strategic Approach to Managing Maintenance Performance.
Journal of Quality in Maintenance Engineering, Vol. 4, N2, 1998, pp 87-94. MCB
University Press.
Watson, Gregory (1993) Strategic Benchmarking: How to Rate Your Companys
Performance against the World Best, John Wiley & Sons Inc.
Wireman, Terry (1998) Developing Performance Indicators for Managing Maintenance.
Industrial Press, Inc. New York.