Integrated Operations Management Solutions in the Mining, Mineral ...

Integrated Operations

Management

Solutions in the

Mining, Mineral &

Metal Processing

Sectors

Getting the

Fundamentals

Right

At a time when mining, mineral and metal (MMM) demand is

once again increasing, even as the global economy remains

uncertain, MMM companies are looking to simplify their

operations, focus on core business and streamline automation.

This has resulted in an increased focus on an integrated systems

approach; allowing operations to adopt a lifecycle view to

optimization and improved energy management from

contextualized, transparent data. Companies that leverage the

expertise of an end-to-end solutions provider to help deliver

actionable benefits in these focus areas will be best positioned to

take market share and grow business.

Frost & Sullivan

October 2010

Getting the Fundamentals Right MMM

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Background

This white paper was commissioned by Schneider Electric with the objective of exploring the changing

environment in the mining, mineral & metal (MMM) processing sector, as well as to highlight the benefits

that MMM firms can realize through adopting strategies to derive the most value from integrated

operations management solutions.

The white paper was written by analysts of the Industrial Automation Practice at Frost & Sullivan.

Founded in 1961, Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their

growth. The company's TEAM (Technical, Econometric, Application & Market) Research, Growth Consulting

and Growth Team Membership empower clients to create a growth focused culture that generates, evaluates

and implements effective growth strategies. Frost & Sullivan employs over 45 years of experience in

partnering with Global 1000 companies, emerging businesses and the investment community from more

than 40 offices on six continents. The Industrial Automation & Process Control Practice of Frost & Sullivan

monitors and tracks markets and technologies in MES, PLC, DCS, SCADA, HMI, asset management and

optimization, simulation, robotics, motors, drives, fluid power and other process and manufacturing systems.

For further information on Industrial automation markets and technologies, visit

http://www.industrialautomation.frost.com

About Schneider Electric

As a global specialist in energy management with operations in more than 100 countries, Schneider Electric

offers integrated solutions across multiple market segments, including leadership positions in energy and

infrastructure, industrial processes, building automation, and data centres/networks, as well as a broad

presence in residential applications. Focused on making energy safe, reliable, and efficient, the company's

100,000+ employees achieved sales of more than 15.8 billion euros in 2009, through an active commitment

to help individuals and organisations “Make the most of their energy”.

www.schneider-electric.com

© 2010 Frost & Sullivan. All rights reserved.

This White Paper was prepared for submission to Schneider Electric.

Frost & Sullivan takes no responsibility for any incorrect information supplied to us by Schneider Electric.

The Paper was completed in October 2010.

Integrated Operations Management

Solutions in the Mining, Mineral & Metal

Processing Sectors

Upswing or Downswing, It’s the Fundamentals That Matter

Despite the cyclical nature of the mining, mineral & metal (MMM) processing industry,

long-term demand drivers remain strong, including the need to develop infrastructure,

with the subsequent demand for steel across many of the large markets; particularly

China and India. World crude steel production touched 119 million metric tonnes in

June 2010, 18 percent higher than in June 2009.

Source: World Steel Association

In the downswing of 2008-09, MMM firms responded by cutting operational costs

where possible, disposing off non-core assets, shutting down some capacity and

delaying new projects; particularly exploration projects.

As the industry once again moves into an upswing, productivity is again a focal point

and investment is being directed toward expanding production capacity that is in

many cases, already at full utilization.

Through both downswing and upswing, MMM companies are increasingly the focus of

regulatory attention in terms of levies and taxes, increased expectations around


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sustainability, energy efficiency and worker occupational health and safety, and

ownership/control of mineral assets. These externalities have significant bearing on

the industry.

As MMM companies contend with these externalities and seek to improve

preparedness in increasingly competitive markets, key areas of focus internally are on

the operational fundamentals of:

• Systems integration

• Optimization of operations

• Effective energy management

Effective systems integration and transparency of data provides the framework for

optimization and productivity improvement as well as energy management. Often

these goals are reached through a single optimization strategy.

While the cost of capital equipment and

energy has been increasing (a trend that is

expected to continue), the cost of information-

rich devices utilized in an industrial process

has decreased. This is not surprising given the

fact that control and automation devices now

come readily equipped with Ethernet-based

communications and rich libraries of

functionality. Imaging and detection solutions

are being increasingly developed specifically for the mine environment. The speed and

bandwidth of communication networks has improved significantly. The processing

power of computers is vastly superior to that of their predecessors. And there is an

increased use of web-enabled tools.

In most cases mining operations have deployed data-rich devices across their

enterprises but in many cases have failed to effectively access the information they

contain. A good example is where power protection devices have been used for their

fundamental purpose of electrical protection but the energy consumption data they

capture is left untapped.

A closer look at each of the three operational focus areas will help elaborate on the

challenge and possible approaches to successfully leverage these fundamentals:

The fall in the cost of information to

mines has resulted in a surge in the

volume of information generated, but

left unutilized.


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Integration

When mining demand peaks, competitive differentiation can be obtained by higher

productivity (improved yield in reduced time) and improved product quality (with

reduced rejection rates). An integrated solution with accessible and contextualized

process data can be a significant aid achieving this competitive differentiation.

Piecemeal Solutions

In delivering operations solutions for MMM firms with multiple locations and differing

requirements, Engineering-Procurement-Construction-and-Management consultants

(EPCMs) have for long adopted a “best-of-breed” sourcing approach. This means multi-

vendor sourcing of electronics, controllers, instrumentation, SCADA (supervisory

control and data acquisition), historian, MES (manufacturing execution systems), etc.

The rationale for this ‘unbundled’ approach is a combination of the following

assumptions:

• Apparent risk reduction by using multiple specialist providers (this thinking

says: ‘do not place all your eggs in one basket’)

• MMM companies have not traditionally perceived major technology vendors as

being one-stop solutions providers with the ability to deliver across

geographically dispersed locations

• The fear that there might be compromises on some aspects of product or service

if a ‘single vendor’ approach is pursued

• A belief that by cherry picking across the technology stack a better outcome will

be delivered despite the challenges in integration

For new projects, what this approach

means is that project-focused EPCMs,

typically with only a short-term

involvement, tend to recommend individual

“best-of-breed” solutions without holistic or

long-term considerations in mind.

For the mining site, it means higher upfront

and ongoing maintenance costs as well as

the challenge of having to deploy a mix of

skill sets amongst its operators to effectively leverage disparate systems.

Often the lack of out of the box interoperability creates challenges in standardization

and upgrading the system as the operation ages and grows.

In the event of a system failure, there

is a great deal of finger-pointing

amongst vendors, with no single

stakeholder taking responsibility and

managing remedial action.


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End-to-end Solutions

Using an integrated-solutions-provider

helps shift the focus to the system, rather

than to who owns pieces of the system.

The advantages of this approach are:

• A single ‘face’ for end user solutions

• Easier to manage one relationship

than multiple relationships and

risk mitigation in the execution of

system implementation

• Less confusion, ambiguity amongst

operators using the solution

• Easier coordination of services

• Time, effort and cost savings

(Simpler implementation, less engineering required to integrate systems, lower

total cost of ownership (upfront and for maintenance/upgrades), less time spent

navigating through systems etc)

• Greater onus on the integrated solutions provider to demonstrate ‘value’

• Increased opportunity to customize solutions for the customer

• Easier scalability and upgradability

• Higher confidence levels in using a large, international vendor as opposed to

multiple small/niche vendors

In the operations solution environment, this means maintenance personnel have less

complexity to contend with during troubleshooting. Standardization is easier to

achieve across an enterprise with the associated advantages in benchmarking

operational performance. With a web-enabled integrated solution, remote operations

and demand chain management become easier to achieve.

An integrated solution also means a richer set of information that can be aggregated

and presented to managers and corporate stakeholders in a digestible form. The

challenge with many site configurations today is that useful information tends to sit at

device level, and without the benefit of integration, remains untapped.

Optimization of Operations

Optimization is not optional add-on value to the mine site or processing plant. It is

intrinsic to competitive advantage. To deliver this advantage through operations

solutions, MMM companies are increasingly adopting a whole-of-lifecycle approach.

Using integrated solutions, mine and

mineral processing sites can realize

time, effort and cost savings (Simpler

implementation, less engineering

required to integrate systems, lower

total cost of ownership (upfront and

for maintenance/upgrades), less

time spent navigating through

systems etc)


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Typically, process control expertise becomes part of the design cycle sometime after

process modeling and conceptual mechanical design has taken place. Taking a

lifecycle approach to optimization means that process control methodologies can be

simulated immediately after process modeling has been completed, at the outset of a

project, to confirm that automation of the process will be capable of delivering the

yields expected by the process engineer – or indeed, improved. This same process

control simulation can then be used by the process control expert to export process

control objects into the configuration environment to develop and enforce control

system standards and to decrease implementation time.

The process control model can then be used during plant startup as an offline training

tool for operators (in a simulated control room environment, using sample plant data).

Finally, when the site is operational, process control experts can sit the model on top

of actual process data to run what-if scenarios for optimization activities.

Opportunities to Leverage Process Expertise across the Lifecycle

Source: Frost & Sullivan

Some elements of this approach are already being implemented in various sites across

the world; more frequently in oil and gas operations than MMM sites. However, the

advantage of adopting a complete lifecycle approach is that efficiencies and cost

savings are realized at every stage in the lifecycle. Rather than developing from the

beginning at each stage, components of the process model used in preceding stages

can be reused in later stages.

Amongst the most important consequences of process optimization across the life of a

site is the potential improvement in energy management, which is currently a focus for

the MMM industry, regulators, investors and customers.


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Effective Energy Management

Energy represents about 5 percent of the value of mining products and 15 percent of

the manufacturing cost of steel (US Department of Energy). This makes it a critical

input that impacts profitability.

Since energy consumption is dependent on

the amount of material to be handled, the

amount of ore that needs to be handled to

arrive at final saleable commodity is

critical. This is higher in the case of metal

mines than with coal or other non-metallic

commodities. Another critical factor is

whether the site is an underground mine

(in which case, more energy is consumed to

get the ore to the surface) or a surface mine. In the beneficiation stage of mining

(reducing ore to particles that can be separated into mineral and waste), the crushing

/ grinding phase is the most energy-intensive.

Since MMM operations are a series of distinct steps, one following the other, energy

savings made in the early stages have a positive ripple effect on potential savings in

activities further downstream.

The main energy flows in a typical mining operation can be seen in the simplified

schema below:

Energy represents about 5 percent of

the value of mining products and 15

percent of the manufacturing cost of

steel.


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Energy Flows in Typical Mining Operations

Source: Frost & Sullivan

Considering the schema outlined above for energy flows, the biggest energy losses tend

to be due to equipment inefficiency (primarily motors and drives).

When it comes to energy management, what is critical to mining firms is the

identification of low hanging fruit and quick wins i.e. areas/processes/equipment with

excessive energy consumption that can be focused on or peak demand changes that

can be made for tangible savings. This requires a ‘locate-measure-analyze-action’

series of steps for the site.

SCADA systems, by virtue of their site-wide coverage, can be leveraged to pull together

data for improved energy efficiency. Data gathered by the SCADA system can help

operations personnel identify, for example, if fans and pumps can be managed better

to reduce energy consumption or if soft starts are required on specific motors or if

variable speed drives can be adjusted to reduce conveyor energy consumption.

Sometimes, experienced process specialists – using the information from the SCADA

system – can go beyond machine/device level recommendations to actually suggest

process tuning or changes to the processes which could deliver significant energy

savings for a site (For example, using different grinders for different materials and

Re

cycl

ed

En

erg

y

Generation losses, boiler losses

Losses in transmission lines, pipes, valves

Losses from motor/drive

inefficiency, waste heat


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adjusting the process parameters to achieve energy savings accordingly). In some

cases, the recommendations may even go beyond the process to cover the overall

operations (for example, proposing a change in work shift timings to ensure smarter

use of electricity and gas at peak hour rates).

On top of this, MES can be used to benchmark energy indicators across the site and

benchmark between various sites. Effective reporting tools can then feed energy audit

outcomes to business stakeholders so that energy efficiency initiatives are aligned with

overall strategy.

While real-time monitoring of energy flows and losses is the foundation of energy

auditing, embedding energy efficiency into operations occurs best when process

control experts are brought in at the initial mine site planning phase (as underlined

earlier in the lifecycle approach to optimizing operations).

Critical Success Factors

While the tools for integration, optimization and energy management are many, in

reality it is difficult to find and partner with a single provider who can provide the

breadth and depth of offerings required.

Schneider Electric is one such end-to-

end solutions provider who can help the

MMM industry realize the full benefit of

integration, optimization and energy

management. At device level, the

company’s offerings include motor

starters, drive systems, power supplies,

transformers, switchgear, switches,

relays, meters, surge arrestors, sensors,

distributed I/O, RFID, UPS, cooling

systems, CCTV, building management

systems, lighting controls and more.

At control level its offerings include SCADA (Vijeo Citect), Historian (Vijeo Historian)

and MES (Ampla) that together provide an integrated mine-wide operations solution.

In terms of service and support, Schneider Electric's suite of project management,

consultancy, training and maintenance offerings deliver expertise across all lifecycle

stages, be it design, build, operate, improve or recycle.

“For over 10 years, Vijeo Citect has

provided us with great reliability,

superior connectivity and a secure

upgrade path. It will be part of our

control and monitoring system for years

to come.”

- Jack Rainey, Senior Process Control

Engineer, Highland Valley Copper,

Canada


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With a global footprint and a demonstrable track record of success in the MMM

industry, Schneider Electric brings to these offerings the credibility of a large and

skilled team of solutions experts.

Significantly, the company also enables

the adoption of the lifecycle approach

(discussed earlier). As Schneider

Electric's VP for MMM Solutions, Diego

A. Areces points out, “It is not enough to

have control specialists who can

execute an operational solutions project.

MMM companies would do well to look

for process experts with experience in

MMM processes, who can therefore

provide valuable input at the design

phase, before then assisting in the operational phase.”

The exhibit below highlights how experienced and informed intervention can realize

significant savings for MMM firms:

Source: Schneider Electric

“By implementing Schneider Electric’s

SCADA and Historian solution, we were

able to meet and manage critical

production operations rather than just

watching them occur.”

- Tarun Khulbe, VP & Chief, Cold

Rolling Division, JSL Ltd, India

The Problem

Scope of Problem: Large site (annual production - 25 mt). Significant penalties paid for low power

factor (on account of inefficiency of electrical installation)

The Client: An Jia Ling coal sorting plant, China

The Intervention Schneider Electric conducted a site-wide audit and delivered a solution that included:

• Upgrades and retrofits onto the existing installation

• Improvements in power factor correction

• Installation of power quality analysis devices and energy/cost saving calculation systems

The Results

• 0.906 power factor achieved at 35 kV level

• US$351,481 savings per year, through cancellation of low power factor penalties

• 12,362,400 kWh electricity savings per year

• Installation of power quality analysis devices and energy/cost saving calculation systems


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Conclusion

As demand for mining commodities and steel continues to rise, the search continues

for technologies and processes that raise productivity while at the same time ensuring

safety and environmental stewardship.

Shortages in the skilled workforce and the need to improve operator safety will prompt

increased R&D and investment into remotely managed automated mine operations

(such as those pioneered by Rio Tinto). In that ‘mine of the future’ scenario, the

benefits of integration, a lifecycle approach to optimization and effective energy

management will be even greater.

MMM firms that can effectively partner with experienced end-to-end solutions

providers will not only be better prepared to minimize downtime when demand peaks,

but will position themselves better even further down the road, by designing in a

stronger competitive advantage into their site-wide operations solutions.

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