Cost Reduction Strategy

Energy
 

The situation

A South African longwall thick-seam coal mine needed to increase its throughput, effectively improve its contractor management and reduce its overall cost per ton to produce.  The client faced operating shortfalls in both the mining and maintenance areas.  These included critical issues due to a lack of management systems, inconsistent planning, ineffective root cause analysis and a negative culture with contractor spend over budget, unmanaged, and with scattered KPIs.  DBA installed a customised cost reduction model which reduced costs by 43%.

The DBA involvement

 

We provided an analysis of the existing processes and implemented a new management operating system (MOS), including:
 

  • Identifying the key drivers and behaviours constraining the existing processes and systems

  • Designing a new MOS based on shortfalls

  • Identifying champions for each workstream with responsibility of embedding the installed changes

  • Measuring the installed initiatives, driving compliance and ownership of the new MOS up to performance management levels

Key outcomes

  • Increase in mining tonnage and improved management of engineering and contractors

  • Increase in cutting time of 16-24%, above 15% project target

  • 31-43% reduction in contractor costs, above 23% project target