PAYBACK”S THE KEY

Williams mine manager Peter Rowlandson probably said it best: “If we can get 5 cents here, 10 cents there, and multiply by two million tonnes, that’s quite an improvement.”

And that’s what most mine managers are doing. Cutting costs wherever possible. Buying new machinery, equipment and so on only when a mine or mill can’t function efficiently with the existing hardware or when productivity improvements from a new process or machine can’t be ignored. The key term here is payback.

Says Robert Perry at the Dome mine: “I don’t buy anything that isn’t absolutely necessary. But we’re also aggressive in asking for something, if we can substantiate a payback.”

Like businesses in other sectors, mining has also embarked on downsizing by cutting out a swath of middle managers, both at head office and at the minesite. The term is “pancaking,” or flattening, the organization.

Placer Dome’s vice-president of Canadian operations, Art Brown, when we spoke to him, was in the midst of his annual tour of operations. Pancaking, he explains, has a double benefit — workers take on more responsibilities while, at the same time, managerial layers are diminished.

The venerable Dome serves as a recent example. It had an especially difficult strike a couple of years ago. Now, the mine is making do with less — half the number of employees, for example, down to 339 from a pre-strike level of 741. Workers have been trained at several tasks. One person now might run an LHD, drill a round or man a loco. There is also a Performance Incentive Plan, not just for the miners but for all employees.

To boost output, the Dome is milling open-pit material, which averges about 25% of total millfeed. The target mill rate this year is 4,200 tonnes per day, up from 3,750 tonnes.

To cut costs, the mine was divided into zones and only those requiring compressed air are fed it at any given time. Before, it was mine-wide all the time. As well, programmable logic controllers (PLCs) now monitor fans and pumps to maximize off-peak electrical draw. Sensors were installed in low-occupancy buildings, so lights go on only during occupancy. Dome also bulldozed 113 of its 122 mine property houses, saving a fair bit of change on maintenance and other costs.

At Teck/Corona’s Williams mine, Rowlandson figures every manager must “work smarter.” He says government-mandated costs, such as the energy bill and the costs of running the province’s Workers Compensation Board (WCB), are rising dramatically. For example, the Williams energy bill is roughly $10 million per annum. It’s been rising by about $800,000-$900,000 a year for the past few years. Williams forks out another $3 million to $4 million in WCB payments. “Those are the kinds of increases that, when the price of your product isn’t rising, really hurt, Rowlandson says.”