Mining executives are faced with significant, daily challenges in all areas of the business - from the strategic - including fluctuating commodity prices in a highly cyclical industry, to the tactical - dealing with operational and logistical issues caused by inhospitable and remote mining locations.
The risk that South Africa's decision makers run by utilising conventional optimisation approaches in mining is that these methods reinforce silo thinking by focusing on operational constraints.
"In reality," observed Nikhil Datta, Lead Partner of Datta Burton & Associates, "most resources firms need to optimise across multiple operations, products and grades, and are faced with multiple moving constraints and non-linear logistical constraints."
According to Datta, the focus on productivity and cost initiatives in silos is preventing businesses from making strategic and far higher value decisions achievable by analysing their businesses holistically. "Historically, productivity and cost gains were easy to find - the so-called 'low hanging fruit', but after a decade of productivity and cost initiatives, businesses now need to take a step back and take a more rigorous approach to uncovering value."
Another challenge is the limited choice of decision support tools available. Commonly used models tend to be either overly simplistic, such as Excel models and single-constraint-based value driver trees, or complex packages that require extensive data integration with SCADA or operational systems. Many mines utilise both approaches, but these packages are unsuitable for complex value chains, stated Datta, due to their various limitations. "These existing business intelligence tools are expensive and time-consuming to set up, expensive to reconfigure, and not very user-friendly. Most importantly, they try to do too much without answering the key questions."
After identifying a clear gap in the industry for a holistic optimisation model, Datta Burton & Associates leveraged its ability to bring together powerful analytics and a thorough knowledge of the mining value chain to help clients unlock substantive hidden value. The new and unique approach, called the 'Dynamic Constraints Modelling' (DCM), was the consequent result. Dynamic Constraints Models are not built around a static operational constraint, explained Datta, but are rather designed to analyse complex value chains with multiple operations dynamically, changing feed grades, multiple products, logistics, energy and operational constraints.
In his article, Dynamic Constraints Modelling, Datta further unpacked the inner workings of this unique model - how operational, logistical and financial constraints are modelled in an easy-to-understand manner, which makes complex value chains easily understood. "Our modelling framework's familiar approach integrates easily into any operating philosophy, and can realistically model large, complex value chains with desktop analytical capability that management and executive teams can use to make both operational and strategic decisions," stated Datta.
The DCM framework has multiple applications and is currently being used by clients to support five-year planning and budgeting processes, product mix optimisation, risk modelling and capital portfolio optimisation as well as for more tactical decision making such as benefits modelling for capital and productivity projects.
Results from the company's case studies are encouraging and indicate that the Dynamic Constraints Model Framework delivers exactly what its name promises - a powerful desktop decision support tool that maximises whole-of-system value through powerful analytical capabilities - enabling mining executives to optimise their resource-to-market value chain by making better decisions every day.
Read Nikhil Datta's article on the topic.
