Mining Productivity Report
Within the framework of the 21st version of CESCO WEEK SANTIAGO, one of the most important meetings of the copper mining industry worldwide, the President of the National Productivity Commission (CNP), Joseph Ramos and the Executive Director of Center for Copper and Mining Studies (CESCO), Alejandra Wood, led the opening day on Monday, April 3.
The CNP, through its Executive Secretary, Alfie Ulloa, presented the main advances and findings of the Great Copper Mining Productivity Report in Chile. It should be mentioned that this is a work mandated by the Government that aims to propose public recommendations to reverse the deterioration of mining productivity regarding the last 15 years.
Alejandra Wood stressed that “in Cesco we believe that this is a unique opportunity for the sector that normally perceives itself to be misunderstood and distant from the daily work and thinking of our country. The mining sector needs fresh views and the interaction that the development of this study produced and will produce, is an important window for the entry of that new air”, she said.
On the other hand, Joseph Ramos highlighted the concern of the current context, “where the productivity of mining has fallen (on average) 1% per year for the last 15 years, a situation that affects not only the sector itself, but also the economy considering the relevance of the sector in aspects as important for the country as growth, investment and tax collection, among other variables. Hence, the Government requested the CNP to examine this situation and propose public recommendations that would allow the Great Copper Mining of Chile to achieve higher levels of productivity, similar to that of best international practices, focusing on measures at the sectorial level and of public policy”, he said.
During this day also the Executive President of the Mining Council, Joaquín Villarino and Luis Felipe Ross of Matrix Consulting participated.
Great Copper Mining Productivity Report
Alfie Ulloa detailed that Great Copper Mining Productivity Report in Chile is a work that, among other things, represents a first effort (at a global level) to analyze comparable gaps in labor productivity, as well as efficient use of equipment.
Information on 12 Chilean operations and 7 international operations were used in terms of productivity and best practices (e.g. safety, environment, organizational, among others).
The data collected show important productivity gaps, both within Chile and with respect to international operations. “Regarding the efficiency in the use of equipment, there is an important heterogeneity (or difference) of productivity between the Chilean mining sites considered in the sample with the average of the international sample: For example, in transport, the most efficient deposit in Chile used trucks 80% of calendar time, while the least efficient 47%. The national (international) average is 64% (71%)”, he stated.
There is also an important gap in labor productivity. This means that the most efficient national operation of the sample requires 43 man hours to move 1,000 tons of material, while the least efficient requires 115 man hours. The international average shows that it takes 30 man hours to perform similar work”, he explained.
Identification of findings
Alfie Ulloa stated that the identified findings "can be grouped into three large groups: Private, sectorial, and public findings. The first ones (private) are managed by the companies themselves and cannot be a public matter or CNP’s. In the second case (sectorial), they require the coordination of agents in the sector, for example, mining companies with their suppliers and / or contractors (among others). In the third case, they are factors that are manageable by the public side.
These are findings that have identified important aspects that help explain the current situation of the large copper mining sector, and they are an important basis for the construction and work of the public policy recommendations that CNP will soon deliver to the President of the Republic”, he said.
At this point the executive secretary of the CNP explained some of the findings identified by the entity:
Findings of public policy
He showed that the approval and disapproval system of large projects is extremely long, a situation that negatively influences investment. “We also saw that we have an excessive reality of procedures of long duration. For example, the exploration concessions take up more than 8 months and those of exploitation until more than two years," he detailed.
“Another relevant finding is that there is very little investment in exploration. We have to consider that Chile spends 16% on exploration and produces almost 30% of copper production worldwide, so our figure of exploration does not match what we produce”, he confirmed.
Another finding, he added, is that "there is a challenge for labor regulations in facilitating the achievement of maximum labor continuity in this area”.
On the other hand “there is an important human capital gap. We see that it is necessary to prepare a significant number of operators and maintainers, besides preparing for the competences of increasingly automated technologies. Human capital is the key to a substantial improvement in the productivity of the sector. To date, according to the sector's own figures, there is an important human capital gap in the mining industry. The public sector has to be part of the solution”, he said. Another finding of public policy is that "the relationships of companies and communities the state, and local governments have failed in facilitating and making feasible long term solutions and mutual benefits in a transparent and credible way”, he indicated.
Finding of sectorial nature
Some of the findings within the sectorial area of large copper mining that the executive secretary of the CNP mentioned were the existence of spaces for:
– Make a more efficient use of strategic resources and common infrastructure formining;
– Advance in reducing the certification times of the contracting companies through the agreement of standards and homologation of entrance requirements with the mining companies;
– Mining companies shall homologate much of the operational information they generate to simplify the benchmark study;
– To keep progressing towards the qualifications framework alignment, both for companies and for the training sector.
– The establishment of certain technological standards (interoperability), among others.
Findings of private nature
He also referred to findings manageable by the companies themselves and among them. At this extent, he mentioned the excessive rotation of high commanders; excessive existence of hierarchical layers; presence of "controlling" culture versus an empowerment and accountability culture. There is also insufficient adherence and fulfillment of plans (e.g. maintenance), among others.