As mining companies face rising costs and volatile commodity markets, making the right design decisions is a must. E&MJ looks at worrying capex trends, and some of the software available to help keep costs under control.
By Simon Walker, European Editor
Optimizing resource utilization has always been a challenge for mine designers, with nature still eminently capable of throwing up surprises that can both delight or confound. Brownfield exploration is often the key to the former—take Neves Corvo in Portugal or Garpenberg in Sweden as examples here—while unforeseen stress regimes, water or weak strata are often the cause of forced changes in plan. Cameco's flood-related tribulations at Cigar Lake are a case in point.
In consequence, mine design systems have to be capable of addressing sudden amendments as well as providing the overall framework for getting the most out of a given deposit, in both tonnage and financial terms. Soviet-style planning focused on the former at the expense of the latter, while examples abound of operations that have been run exclusively on financial rails and have closed early, only to find new leases on life under a different operating regime.
The development of mine design software, which has been on-going since the first systems such as Datamine were introduced over 30 years ago, has resulted in a strong supply base of competitive concepts. Not surprisingly, there has been a degree of consolidation within the mainstream players in recent years, as well as acquisitions of suppliers by larger companies who have realized that the mining-sector market is no longer a niche. Such moves can, of course, bring significant benefits in terms of having greater development resources available, as well as the potential to merge software systems with different focuses into more comprehensive packages. As with machinery manufacturers, the goal is often to be able to meet all of a customer's needs from one source, rather than risking part of the business (and its potential for long-term support) going elsewhere.
The Cost of Making Wrong Decisions
Looking first at greenfield project development, one of the most obvious trends of the past 10 years has been the rapid escalation in capex costs that companies worldwide have had to face. One of the first examples to come to widespread notice was BHP Billiton's Ravensthorpe nickel laterite project in Western Australia, where the initial $1 billion cost more than doubled between 2005 and 2008. The mine failed, and BHP sold it to First Quantum Minerals for $340 million in 2010. First Quantum in turn spent some $370 million on re-engineering it and bringing it back into production, which itself was nearly double the company's original $190 million re-engineering estimate.
In point of fact, cost overruns are more of the rule than the exception. In November, the management consultants Accenture published a report titled Achieving superior delivery of capital projects, which makes alarming reading if for no other reason that it highlights the scale of the overrun problem.
The survey that provided the foundation for the report sought the views of 31 senior industry respondents with responsibility for capital projects around the world. Of these, 22 respondents were involved with mining projects, and the other nine with metals. According to Accenture, "less than a third (30%) of the respondents reported staying within 25% of approved budgets for all projects, and less than a fifth (17%) said they completed all projects within a 10% budget range."
Put in financial terms, the implications—as well as the sums involved—are huge. Accenture estimates that capex for metals and mining projects will have been more than $140 billion last year, with the prospect of $1 trillion to $1.5 trillion being spent between 2011 and 2025. "With $100–$200 billion in annual spend, the impact of project delivery overruns on individual companies and the industry as a whole is enormous," the company commented.
"When asked what typically causes delays in project schedules, survey respondents cited the availability of talent (57%), new or unconsidered regulatory requirements (45%) and insufficient detail during the planning stage (42%)," Accenture added, while pointing out that mining projects are often more complex than metals projects, so are more likely to experience longer delays and higher cost overruns. In some ways, though, that seems counter-intuitive since smelter and metallurgy projects in general can be highly complex and, in consequence, risk budgets being broken. The high capex requirements for today's nickel-laterite treatment plants is a case in point, relying as they do on autoclaves and sophisticated hydrometallurgy.
Leading Attributes and Recommendations
However, that is by far from being the whole picture, since a host of other factors can come into play. Looking purely at the key reasons for cost overruns, and setting aside the question of whether or not a company can attract competent staff and contractors (which is an issue in its own right), it is difficult to understand how projects can fall foul of factors as obvious as 'unconsidered regulatory requirements' and 'insufficient detail during the planning stage.' Those, frankly, are fundamentals that any company considering a major investment should be capable of addressing, and it begs questions that shareholders should be posing if they feel that their interests (and investments) are not be husbanded properly.
Still, there are some companies that can and do deliver projects on schedule and budget, even faced with the pressures of skilled-labor shortages and rising equipment costs. According to Accenture, a number of common attributes identify them:
• They make fewer revisions to the approved schedule;
• They make significantly fewer changes during construction; and
• They have greater confidence in their own culture in delivering projects.
In addition, these companies make wider use of analytics, including key performance indicators, and have better access to performance data across multiple dimensions, such as timeliness, accuracy, range and source.
In its report, Accenture defined five key recommendations for effective project delivery:
• Establish strong project governance and risk-management tools;
• Proactively manage external stakeholders' increasing expectations for sustainability;
• Optimize scarce talent through portfolio management, organizational flexibility and training;
• Integrate information systems among capital project players; and
• Accelerate operational readiness.
"Addressing cost and time objectives of capital projects is a prime opportunity to achieve competitive advantage," Accenture concluded. "Ideally, capital projects should be run as high-stakes businesses with targeted objectives, clear delivery strategies and careful monitoring to track progress toward high performance." And this, of course, is where good design has a major part to play.
Among consolidations that have recently taken place within the mine-design software companies, the current wave of acquisitions seems to have started in April 2010 when CAE bought out The Datamine Group. It followed this in January 2011 by adding Century Systems Technologies to its portfolio, thereby boosting its capabilities in geological data-management and governance systems.
Shortly afterward, Switzerland-based ABB acquired the Australian mining-software developer, Mincom, bundling it into its existing software systems unit as Ventyx. During 2012, meanwhile, the major change came with the French 3-D specialist, Dassault Systèmes', $360-million purchase of Vancouver-based Gemcom, now part of Dassault's Geovia brand. At the time, its CEO Rick Moignard explained the potential benefits of the move: "Advanced technologies in 3-D modelling and simulation will not only enable engineers and geologists to model and visualize resources but also improve sustainable mine productivity," he said.
Orebody modelling led the way in bringing computerization into mine design. Today's mine engineers have a plethora of competing products to assist them in interpreting geological data and optimizing resource extraction. Some software focuses specifically on geological resource data; other packages address surface-mine layouts; yet more take specific mining methods such as block caving, providing the design department with the tools to model the resource and apply 'what-if' tests to determine the effects of production schedule changes or commodity-price movements on the operation's viability and resource utilization.
In the remainder of this article, E&MJ looks at some of the mine-design software packages that are currently available. There are, of course, many other providers; the common thread here is that each of the suppliers mentioned was among those that exhibited at last year's MINExpo.
In 2005, the Australian software developer, Runge, took the unexpected step of buying out U.S.-based mining consultants, Pincock, Allen & Holt, with the subsequent addition of Minarco-MineConsult boosting its consultancy arm. In December, the company, which today claims to be the world's largest independent group of mining technical experts, announced a change of name to RungePincockMinarco (RPM).
The company's software suite includes FRACSIS for visualizing geological data, XPAC and XACT for mine scheduling, TALPAC, HAULNET, DRAGSIM and FACETS for simulating loading, haulage, dragline and longwall face operations, and XERAS for financial analysis. At MINExpo 2012, it released an update for its TALPAC haulage and loading software which, it says, is used by mining operations world-wide to evaluate the performance of mixed fleets.
According to RPM, it now has a database of more than 500 trucks and 400 loaders, allowing virtually any truck and loader combination to be simulated and evaluated. The up-date includes Caterpillar's Unit Rig MT4400D AC and 777G trucks, Komatsu's 750E (AC) truck and Hitachi's EH 5000AC-3 truck, all of which were launched at MINExpo, together with newly introduced or upgraded equipment from other manufacturers such as Liebherr, Bell, Volvo, Belaz and P&H.
Geovia: A Raft of Upgrades
At MINExpo, Dassault Systèmes' subsidiary Gemcom (now Geovia) introduced updates to its Surpac, GEMS, InSite, Whittle and MineSched mining-industry applications. "With the mining industry facing higher costs and more pressure on commodity prices, it is imperative that they can unlock additional efficiencies and economic value from their mining operations," said Moignard. "The new features will provide additional tools and functionality for mining professionals to better quantify, plan and manage extraction of their orebodies."
Surpac 6.4 (geology and mine-planning software) will be available in the first quarter of 2013, and has a new integrated Dynamic Shells tool for significant time savings when initially evaluating deposits, Geovia said. It also has increased memory handling for faster working with very large datasets, and a new stereoscopic 3-D visualization capability. The company is also introducing a Dynamic Shells tool for its GEMS 6.5 collaborative geology and mine planning application, which will launch in early 2013.
Whittle 4.5, for open-pit mine planning, now has the capability of producing more practical mine plans through the use of a new mining direction feature and alternative pushback creation capabilities, while MineSched 8.0 provides users with much faster response times, with production scheduling up to 50-times faster and development scheduling 10-times faster than before, according to Geovia.
The upgrade to its InSite mine-production management software, version 4.2, has improved reporting and analysis capabilities, the company adds, helping to give users a closer view of material balances and stockpile management for faster reconciliation and end-of-the-month processes.
Micromine 2013 Available Soon
From its headquarters in Western Australia, Micromine provided visitors to its MINExpo exhibit with a preview of the latest edition of its namesake exploration and mine design software. Micromine 2013 is scheduled for release early in the year, having still been at the development stage at the Las Vegas show.
The company reports that new features within Micromine 2013 will include capabilities for rotated block models, with one, two or three-dimensional rotations being supported. Orientating the blocks to match the orebody means they are a better fit with reality, producing a smaller model and saving processing time and disc space, Micromine says.
The new version will also contain tools to simplify the creation of seam block models, including splits, plies, overburden and interburden, even in stratigraphically complex areas. The company says that Micromine's stratigraphic modelling tools honor the original data, with smart tools that handle seam pinching and missing holes, producing a geologically correct model.
There will also be a range of new features and improved functionality for Vizex in Micromine 2013, including seam correlation, annotation layers, seismic SEG-Y, drillhole solid, color/hatch/symbol sets, line styles and stereo 3-D.
At MINExpo, Micromine presented its Coal Measure software which, it said, is coal-industry specific in terms of terminology, features and functionality. The suite combines the data management features and benefits of Micromine's Geobank geological data-handling software, integrating coal database management with three-dimensional geological modelling, gridding, seam block modelling, resource categorization, resource reporting, pit optimization, pit design and plotting. The software is also suitable for other stratified resources, such as tin, mineral sands, uranium and potash, as well as those with complex tectonics or multiple splitting and merging of seams.
Post-mining Design from Carlson Software
With its center in Maysville, Kentucky, USA, Carlson Software draws its mine design credentials from its background in surveying, and now offers a complete software suite that covers data collection, surveying, engineering design and drafting, mine planning and modelling, construction estimation and machine control. The company claims to be the largest provider of design software for mines in the U.S., with increasing applications in other countries.
From its initial focus on U.S. coal mining, Carlson Mining software is now used in designing operations for minerals such limestone, trona, clay, phosphate and other sedimentary deposits, with routines for block modelling gold, silver, copper, nickel, iron and other orebodies having been added to its capabilities. The company also offers a basic version of its mining package, allowing access to computerized design for operators who only need a low-cost tool for simple mining practices.
Aside from mine operating design, Carlson said its Natural Regrade software is unique as a tool for reclaiming mine sites, regrading surface mines back to natural land-forms. Natural Regrade provides an affordable and natural way to achieve sustainability, with its GeoFluv fluvial geomorphic design method bringing back natural landforms while establishing stability against erosion and enhancing water quality. The software enables users to build with on-site materials, save costs on material moving, reclaim steep slopes in a stable way, handle water and sediment naturally, and produce a self-maintaining, natural-looking result. New features include the ability to visualize vegetation growth in 3-D at various stages throughout reclamation.
Mintec Adds New Plug-ins
Mintec took the opportunity afforded by MINExpo to launch MineSight 7.5 which, it said, provides better visualization and compatibility between products. Version 7.5 includes improved versions of MineSight 3-D, Schedule Optimizer, Torque, Basis and Data Analyst.
The Tucson, Arizona, USA-based company followed this in December with the 2013 update to MineSight, version 7.6, which features new plug-ins such as a surface resloping tool for MineSight 3-D's engineering open-pit CAD. This allows engineers to reduce a shape, such as a waste dump, to a desired final slope while balancing cut and fill requirements. MS3D also includes plug-ins for auto cut generation, used to create cuts starting from polygons, polylines or solids, and Digline Generator, used to assign a mining sequence for cuts on every individual bench of each phase.
Mintec reports it also has four new products scheduled for release early this year.
MineSight Implicit Modeler is a mathematical tool for geologists to take drillhole, polygon, point and fault-plane data, and then interpret new geological scenarios. MineSight Performance Manager is used to assess and report on mining performance in near real time, as well as providing analytical tools that can answer why something has happened. MineSight Atlas is a complete package for manual scheduling and stockpile blending, while the company describes MineSight Stope as being not only a design tool, but also a very quick first-pass scheduling tool for underground engineers to look at alternatives for stope locations.
Maptek Moves Off-shore
Australia's Maptek released the latest version of its Vulcan geological modelling and mine planning software at the end of last year. The company noted that a customer request for generating strategic pit and dump designs led to the development of a new rapid pit design tool, which has been released in Vulcan 8.2. Mine planning engineers can quickly create mid-bench based designs, it said, as well as generating phases and reserve reports, and can evaluate multiple designs in the same amount of time previously needed for a single design.
"The new tool helps engineers to quickly create and analyze different pit designs, allowing them to look at many more alternatives before producing a final design," said Steve Uecker, Maptek's Vulcan client experience manager.
Maptek reports that AuruMar, the South African-based joint venture established between AngloGold Ashanti and De Beers to evaluate off-shore mineral resources, has adapted Vulcan 3-D modelling software for its exploration on 26 mining leases off-shore Nome, Alaska. Vulcan GeoModeller provides a complete set of tools for exploration and mining geologists, and can be used on both stratigraphic and non-stratigraphic deposits. The Vulcan platform allows users to do resource modelling, mine planning and reconciliation in the same environment.
Hard Dollar: Counting Cash Where it Counts
As noted earlier, plenty of mining companies are feeling the combined effects of soaring capex costs, upward pressures on operating costs and uncertainties over commodity markets. In a presentation given in April last year, Scottsdale, Arizona-based Hard Dollar commented that "mining companies must take measures to manage cash flow and conserve spending, while ensuring that projects stay on schedule."
The company went on to point out that controlling costs and managing mining resources requires a robust tool, suggesting that its Project Cost Management (PCM) package removes common hurdles from cost controls, allowing mining companies to make project decisions that easily avoid cost overruns.
While not specifically a mine design package, PCM provides a way of producing detailed, timely project status data, the company states. These data immediately show what was estimated and budgeted, versus actual project performance. Through customizable daily reports, an entire project overview is displayed, clearly showing variances and forecasts at completion.
In July 2012, Hard Dollar teamed up with Canadian company CAE to include its PCM in CAE Mining's mine design, planning and scheduling software suite. "Hard Dollar's integration with the new CAE Studio 5-D Planner provides customers transparent delivery of cost and productivity throughout the entire project lifecycle," the companies said at the time, while pointing out that by integrating the two products in an industry first, they had provided users with the opportunity to merge mine design, scheduling, financial and productivity modelling for both study and operational environments.
According to Hard Dollar, PCM can reduce the time it takes to build, plan, deliver and forecast cost and productivity by more than 300%, while increasing profits by 15% or more.
CAE Moves Deeper into Mining
A relatively recent entrant into the mine-design software market, in the past CAE has perhaps been better known world-wide for its simulator and training technology. However, the company's purchases of Datamine and Century Systems Technologies has increased its interest in the mining sector, such that it now has a dedicated business area, CAE Mining.
CAE Mining supplies software tools for underground mine planning, including Mine2-4-D and its successor, CAE Studio 5-D Planner. The company's Mineable Reserves Optimizer (MRO) package determines the optimal mining envelopes within which stopes should be designed, and can be used for preliminary underground reserve estimation. The Mineable Shape Optimizer (MSO) automatically produces optimized stope designs that maximize the value of recovered ore within the given geometry and design constraints. It supports massive, sub-vertical and flat horizontal deposits and can quickly generate individual stope designs within a resource model, CAE Mining says.
In terms of access design, Mine Layout Optimizer (MLO) produces optimal decline designs to satisfy access requirements and design criteria. The company suggests that this can be valuable with rapid engineering during the analysis stages of a project, as well later once designs become more detailed.
Good Designs Save Time and Money
With so much pressure on exploration and mining companies to bring projects on stream in a cost-effective, timely manner, while working in increasingly remote and often logistically challenging environments, it is hardly surprising that there is a strong market for comprehensive software tools that can take some of the risk out of the design process. Each of the major suppliers has its own list of 'satisfied customers', working in locations from Nevada to Papua New Guinea, and from Australia to Appalachia.
It is, of course, sensible to remember that all of these software packages rely on having accurate data to work with, so it is essential that users ensure that their input information is not only clean, but is as accurate as can be achieved. After all, the old maxim 'garbage-in, garbage-out' applies to design software as much as it does to any other data-reliant process.
In common with other sectors of mining and exploration technology, there appears to have been a steady trend toward consolidation within software suppliers, usually with the aim of amalgamating complementary products. Most suppliers claim dominance in one particular aspect or another, although it is clear that no one company has an over-riding position in the wider world market. Software development and computing power have gone hand-in-hand here as elsewhere in the industry, with 64-bit technology becoming mainstream where large amounts of data have to be handled.
Shareholders should always be able to see where a project's design has not met the mark. Whether they can do anything about it is, of course, another matter. Perhaps the best thing about good design is that it just keeps paying dividends.