The mining industry in South Africa has played an important role in our economy. Initially, a fairly simple system was used to extract raw minerals such as gold, with a large emphasis on labour.
However, this industry has since evolved into a giant and the business – which includes operations, finance, HR, stock and more – has become multi-facetted. IT has been a key enabler but it's not yet the 'silver bullet' it promised to be.
Says Cassim Parak, CEO of e.com institute, a business solutions provider: "There have been a number of significant changes over the years in the mining industry, affecting the way planning is done, how the business is administered and people are managed. Accurate and timeous information that better informs decision making at an operational level is essential if operational performance and efficiencies are to be enhanced and these organisations are to remain competitive."
While the big mining companies are all in the process of converting to ERP for financials, HR and supply chain management, there is no suite that is specifically designed to cater for this industry. Thus operations, safety and some risk systems are still run separately or done manually.
Says Parak: "BI tools and methodologies are being used to integrate data. Data is imported to a data warehouse to generate reports and build and populate dashboards. This may satisfy the need of top management. However, to keep a finger on the pulse of business and improve performance, more accurate and more timeous integrated information is needed."
In the world of underground mining, the 'factory' is below the surface of the earth, but with a traditional focus on management there has been little in the way of investment in IT infrastructure at the workface.
Parak explains: "This has left an information gap. With no real time information to support decision making at this level, IT systems have become a runaway train, exerting undue influence on business and operational decisions. In a nutshell – mine management just doesn't have the full picture. Top down control needs to be complemented by accurate and timeous bottom up information."
A change in the way business is conducted also points to the need for new business and information support systems. Where previously planning was only done at a high level, mining executives now have to dig deep into their resources and data base to gain access to not only the geological information and historical production information, but the knowledge and skills necessary to properly manage their most precious asset, their ore resources.
Added to this, the way people work and how they are managed has changed and corporate governance and compliance requirements are exponentially more stringent.
"Maintenance of underground equipment, resource management and operational planning are key instances where IT systems fall short at an operational level," Parak notes. "Planned maintenance is essential but so is a system that manages unexpected equipment breakdowns. Mines need to know not only what to do in terms of standard maintenance but, to optimise daily operations, they need to know what has broken down where and be able to deal with it timeously. At present, an outgoing shift manager will pass on this information by word of mouth to the incoming team, which may only report the problem (often inaccurately) 24 hours later."
The same issue arises with regard to resources. Explains Parak: "While HR systems contain all the necessary details to ensure staff are paid accurately, resource management functionality is limited. If someone takes ill, a verbal report may only reach the resourcing officer two days later. It takes another two days to find a replacement. Meantime, the shift is short of a full complement of people. Time is lost and production quotas suffer.
Parak adds: "Accurate planning means getting the right equipment to the right point with the right number of resources and skills mix to meet task requirements. This requires a solution that allows information to be captured as and when needed – one that will update management systems timeously to enable accurate daily planning."
Financial systems also do not cater for operations. In the last couple of years, compliance issues have driven the adoption of better financial systems. Financial accuracy is a must for reports and the validity of data has been a focus.
Notes Parak: "For management, the goal has been to reach a point where they don't challenge the accuracy of the information contained in a report, they challenge the problem it represents. However, a key weakness is that financial reports still drive the organisational structure and investment decisions.
"Without an understanding of underlying impacts and the root causes of business performance, this leaves the IT system to drive the business. A crucial shortcoming is that financial systems are built for financial professionals, not operational staff."
Underground operations will look at processes and the cost implications of the processes. Process and activity costs are normally influenced by the depth, temperature, travelling distance and the distance to the stope face. The deeper or the further you go into the mine, the higher the costs.
Says Parak: "To accurately determine and manage costs, an operations manager will thus have to consider the area in which mining is taking place, the activities happening at any point, who is responsible for costs, and the type of costs (labour, stores, etc) incurred. While most financial systems will cater for one or two of these items, none cater for all. There is thus little true transparency. Since few mines have access to this information, averages are applied – which makes it a hit and miss affair."
ICT cannot be positioned as a business driver; it must be an enabler of the mining business, Parak reiterates. "A better approach is to identify the 'real' business requirement and find a solution that meets that requirement, ultimately improving the performance of the organisation."
As in any organisation where information begins to be applied to the advantage of the business rather than being used as a tool for individual advancement, a culture change is necessary.
Advises Parak: "Everyone in the organisation – and especially those that have not previously had access to information that can assist decision making – needs to become more aware of the value of information. With broader access to more accurate information, the experiential knowledge of individuals can be better leveraged and applied to the benefit of the business.
"Support for this change needs to come from the top down, however, the right systems and data structures need to be put in place."
Building such a system could take as little as nine months if data structures are in place and data is accurate, Parak suggests.
"However, if the business needs to start from scratch – identifying available information, cleansing it and building a system that delivers the right information at the right time to the right people – this process could take as long as five years. While this represents a considerable investment, the benefits can be enormous, not only improving performance at all levels, but increasing the sustainability and agility of the organisation."