integrated operations management solutions in the mining, mineral
TRANSCRIPT
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
2
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
Getting the Fundamentals Right MMM
4
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.
Getting the Fundamentals Right MMM
5
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.
Getting the Fundamentals Right MMM
6
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)
Getting the Fundamentals Right MMM
7
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.
Getting the Fundamentals Right MMM
8
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.
Getting the Fundamentals Right MMM
9
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
Getting the Fundamentals Right MMM
10
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
Getting the Fundamentals Right MMM
11
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
Getting the Fundamentals Right MMM
12
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.