Paper plants never fail, but sometimes they get built
The collective aim of study phase is to come up with a plant design that maximises the lifetime value of its associated ore body. In an industry where there is no solution, just trade-offs, the final design often represents thousands of decisions made over many years and by many domain experts.
However once refined, most designs go through a process called “Value Engineering”, where a team not involved in the design looks for cost reduction opportunities. The premise being that the study team is too invested in the design hence blind to cost reduction opportunities and/or too risk adverse.
While it’s easy to sit in head office and strike out parts of a flowsheet for a paper lift in project value, the problem is some paper plants actually get built. Without an appreciation of techno-economic trade-offs involved, the value engineering process can and often does go too far, crippling a plant’s capacity to perform and hence realise its full value.
For the competent people in the study team, watching the heart being cut out of a plant design that still bears their names but no longer represents their best shot, the process can be gut wrenching. The paradox is that it’s hard to argue against value engineering, especially as paper plants never fail. It’s not until long after the short-term incentives have been banked that the false economies of value engineering become apparent, by which time it’s too late (and expensive) to reverse.
No one wants to be associated with a failed mining project, especially one that originally had potential, so what’s the answer?? Study teams need simple tools that can frame their technical and engineering trade-offs in terms of financial metrics.
The status quo approach is broken, and study teams need tools that bridge the two worlds (engineering and corporate finance) and translate their engineering and performance trade-offs into the language of money, but what does that look like? The AusIMM has developed guidelines for techno-economic analysis, and while the primary aim was to facilitate informed investment decisions, the approach can also be used to quantify the underpinning trade-offs and therefore ensure value engineering decisions are more informed.
Maintaining a register of all the material decisions as well as a live version of the techno-economic model is the best way to defend trade-offs and achieved and informed value engineering assessments.
In most cases CapEx is the weakest Net Present Value (NPV) influence, yet many people outside the study team are surprised by the NPV’s sensitivity to the things CapEx impacts, like global recovery and unscheduled down time. Small changes to these inputs, and the dramatic impact they have on a project’s value, are the back story of many a less-than-optimal McNulty curve.
At idoba mineral processing is in our DNA, which is why we have developed tools to support study teams. Inspired by AusIMM monographs as well as our own personal experiences, these Level 1 tools built by mineral process engineers for mineral processing engineers are designed specifically to explore and inform techno-economic trade-offs, and then help you defend them when the time comes.
Interested in knowing more? Read on.
How does DiiMOS Modelling bridge the gap?
Quantum levels beyond the minimal standard sensitivity analysis, DiiMOS modelling comes with the ability to factorially flex the key variables to three levels, generating the full suite of possible scenarios in less than 10 minutes … displaying them all in graphical value landscape that instantly tells the project’s value story.
More than that, DiiMOS Modelling calculates the interplay and cross-dependencies between variables. For example, capital cost is usually linked to both recovery and plant availability. As such “Value Engineering” can inadvertently reduce the percentage mineral recovery and increase downtime. Moreover, relaxing the project’s annualised capacity (nameplate) can have a counterintuitively beneficial effect on a project’s financial metrics. In short, the impact of any one change on the bottom line is not always obvious.
When the entire project depends on the quality of this analysis, the conventional approach of assuming inputs are independent of each other feels inadequate. As a study owner there is nothing you want less than leaving a high-value scenario on the table, especially one that is obvious in hindsight and important in the context of the value engineering process.
DiiMOS Modelling for Scoping and Feasibility Studies
idoba’s DiiMOS Modelling arms you with a powerful, AusIMM-aligned model that shows potential investors you're not just digging around in the dark. It helps them see the sparkle in your project.
With DiiMOS Modelling you are not just choosing a tool; you are choosing a future where your decisions are faster, smarter, and in line with the best standards in the industry. It is time to take your projects from scoping to green light with confidence and ease.
For more information on how DiiMOS Modelling can revolutionise your study-phase modelling and help you align with AusIMM guidelines, visit our website:
Paper plants never fail but with these tools, you can defend their integrity so when they are built they perform as intended.
About idoba
idoba, part of the Perenti Group, is a digital transformation company dedicated to solving mining's toughest challenges.
We do this by combining deep mining expertise, data insights and innovative technology. We believe in the power of co-creation, working closely with our clients to rethink, reimagine and transform the mining sector. Together, we're creating a better future for mine operators and the talented people who work in the industry.
To learn more about how we can help solve your gnarliest mining problems, get in touch here.