Value modelling

When assessing the future value of investment in a new technology, for example a fleet of autonomous load haul dump machines, several value and cost drivers emerge. These include increased productivity, improved safety and lower equipment maintenance costs.

Based on light historical data and assumptions, mining companies utilise traditional spreadsheet tools to establish a high-level business case for the new technology. These traditional spreadsheet tools tend to be large, uncontrolled and static, and are built with complex macros that only the developer and owner of the model truly understands.

Mining3 is working on a dynamic software solution that forecasts the value, risk and business case of new technologies. Accurate technology assessments could help to speed up and increase adoption of new technologies by reducing risks to mining companies.

The challenge is understanding the impact (economic and non-economic) to the business as a whole and assessing the impact dynamically. The ability to use a whole of business (WoB) value modelling approach to understand issues like operational debottlenecking, life of mine opportunity trade-offs and change management implications is critical to whether proposed value is overstated.

Mining3 has taken a whole of business, value driver tree modelling approach to assessing the new technology and methodologies. Utilising a top-down approach (with adequate levels of lower-level high-impact), we are developing a plug-and-play modular modeling structure, comprised of four main modules covering financial, production, task allocation and utilisation models.

In a hierarchical structure, in which the utilisation model (the lowest level set of inputs) flows into the highest-level model (the financial model) that contains familiar financial metrics including cash flow, net present value and internal rate of return.

By building out the model from the top down, customisation is possible where a generic model can be applied to any mine and swiftly adapted for use on other mines by simply plugging in and plugging out modules.

Once a modular based model is built, data at the lowest level of the value drivers, such as equipment capacity, utilisation, and commodity costs, will flow up to the high-level business case.

By utilising ranges of inputs rather than static inputs, the capability of sensitivity and attribution analyses is unlocked, where small variances in a low-level input can be tracked through the model in a series of scenarios where the impact of the change of an input is quantified using stochastic or Monte Carlo style analyses.

The benefits are immense. They include:

• Opportunity to de-risk investment in innovative technologies
• Accurate forecasting of cost and cost savings
• Whole-of-Mine (WoM) bottleneck identification
• Improved evaluation of comparable technologies
• Identify value eroding “improvement” initiatives
• Investigate disruptive impact of emerging technologies and innovations
• Evidence-based uptake of new technology
• Integrated value-risk modelling of business opportunities
• Enhanced ability to model process-driven operational constraints

The Mining3 team, and its industry members, are working to complete the development of a one-stop-shop, plug-and-play innovation value modelling tool that the mining industry can trust to assess new technologies and methodologies.

Significant strides have been made in developing this capability but there is still work to be done before it will be available to the mining industry.

The project is open for mining companies to get involved to help progress the whole of business value driver modelling system.