From aging to agile: Getting sustaining capital right
As mines age and conditions shift, sustaining capital has become a strategic tool, not just for maintenance, but for unlocking long-term strategic outcomes.
Every mine, regardless of size, will eventually need to develop a sustaining capital programme. It’s not a matter of if, but when. That turning point often arrives sooner than expected; a change in operating environment, a different or changing ore body, or the existing circuit is reaching end of life. Throughput declines. Long-term viability comes into question. And investors demand a plan.
A successful sustaining capital programme is no easy feat. Mines often struggle to execute because these projects demand careful planning and involve added risks. They need to be delivered as efficiently as possible with minimal down time. Despite its importance, sustaining capital is often under-resourced and poorly integrated into day-to-day operations.
Too often an orphan
Large mining organisations generally will have dedicated teams of professionals or centres of excellence available to support mines as they deliver sustaining capital projects. For most, however, the responsibility tends to fall on someone within the operations team – often a process manager or an asset manager.
Operation Managers have a keen understanding of the issues impacting their specific mine or plant but must juggle a list of competing projects and limited resources (both time and capital); just getting it off the ground can be a major challenge. Even after an improvement project is approved, teams often find it daunting to determine the best approach to solving the challenge, whether through study work or new test work. There are so many factors to getting the planning and execution part right. But even when projects are approved and underway, many still fall short of their potential. The problem often starts with how value is approached from the beginning.
Unlocking the value up front
In some cases, the problem is simply a mismatch between ambition and capital. But, more often we see teams fail to meet project goals due to a lack of upfront planning.
For example, we come across sustaining capital projects that have failed to fully assess and integrate the technical risks across the entire system. Teams often make changes in isolation, like only considering the risks of swapping one component or asset out, without considering the upstream or downstream implications. This often leads to new bottlenecks in the process, introducing inefficiencies and reducing product quality as the process is recalibrated.
Even in situations where sustaining capital programmes are expertly integrated, prioritised and sequenced, we have seen mines miss significant opportunities for improvement. Sometimes, opportunities to solve the problem with a process change rather than an engineering fix can be overlooked, or chances to leverage a newer, more cost-effective technology developed and proven in a different jurisdiction is missed. Human nature encourages us to go with what we know. Yet understanding your options and their impacts, whether those are financial, environmental or social, can unlock massive value.
The point is that – when done well – sustaining capital doesn’t just maintain operations, it transforms them.
5 keys to sustaining capital success
At Ausenco, our team has decades of experience supporting mines as they plan and execute sustaining capital projects. Based on our experience, here are five key takeaways for developing a successful and impactful capital strategy.
- Take a holistic view. Every change to the circuit or to the ore body can impact the entire operation, potentially creating new bottlenecks or worsening existing ones. At the same time, new opportunities may emerge, particularly in places where the addition of new technologies (like ore sorting, for example) could unlock greater productivity. The key is to maintain a holistic view of the impacts and opportunities of your project from the start while considering the requirements of the mine now and the future.
- Look at all your options. There are a wide range of technologies and processes that can be used to upgrade or extend a mine operation. For mines over ten years old, technology has advanced significantly since initial design and construction, and these technologies could be implemented to improve operations. Depending on the ore body and the process, some will deliver more value than others. The trick is in exploring all the various options – large and small, understanding their trade-offs and impacts, and assessing the unique integration challenges they may create for your operation. In many cases, advisors with deep visibility across the technology landscape can guide better decisions.
- Get the scope right. Developing the project scope, building the business case and setting the financial requirements can be challenging, particularly for those delivering a sustaining capital project for the first time. Resist the urge to gold plate everything. And don’t ignore the environmental and social value that can be created by your choices. Getting the scope right is not only key to building investor confidence and delivering on your objectives, but also to securing the capital you require to succeed.
- Derisk without decelerating. Particularly with the nature of fluctuating commodity prices, mine owners are keen to move quickly on their sustaining capital programmes when the price is right. While pace is good, it must be balanced with a clear focus on derisking every aspect of the project. That means not only ensuring a defined scope and plan, but also taking the time to consider the integration, operational and safety risks that may arise and prioritising the projects accordingly. Risks mitigated today are delays avoided in the future.
- Choose the right partner. Sustaining capital projects – large and small – can be complex and may require capabilities and experience beyond what’s available onsite. External support, capacity and advice can often make the difference between success and failure. Ideally, you want to find a partner that can provide a holistic view, identify and assess options, help scope and deliver your project while also transferring knowledge and capabilities to your team and local ecosystem to ensure long-term sustainable benefits.
Get more from your investment
Our experience working with mines around the world suggests that a strong sustaining capital programme can extend the life of a mine by 50 percent or more. In today’s resource-constrained environment where new operations can take years to develop and commission, sustaining capital should be at the top of every mine leader’s agenda.
At Ausenco, we have deep experience partnering with mines throughout the asset life cycle, helping plan, assess and execute sustaining capital programmes. Contact us today to explore how we can help you asses your sustaining capital strategy, identify opportunities for improvement, and deliver long-term value across your operation.