Business Improvement in Mining - How are Mining Companies Benefitting from Lean and Six Sigma?

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Six Sigma and Lean have their origins on the production floor of two of the biggest companies in the world; Motorola and Toyota.

In the beginning, Six Sigma was seen as a measurement - 3.4 defects per million opportunities - but over the past 20 odd years it has developed far beyond this to become a methodology and a management system.

Along with the principles of Lean - which looks to constantly eliminate waste - the concept is now making its way from the manufacturing plant to the mine site - and is producing savings which are too great to ignore.

Operational improvements from Six Sigma

One advocate of Six Sigma within the mining industry is Rio Tinto, which is applying the concept, along with Lean, to derive value from its Bell Bay site.

In its 2010 Sustainable Development report on the site, it detailed how its undertakes week long Kaizens (literally meaning improvement or change for the better) in which it implements Six Sigma projects using the five step DMAIC process - define, measure, analyse, improve and control.

These projects were said to have significantly reduced the time it takes to implement Six Sigma initiatives, including the oreing up process for covering carbon anodes.

The DMAIC Kaizen, designed to reduce the airburn caused by poor coverage of carbon anodes, led to the setting of new standards and significant measureable impacts.

Percent default during oreing up was reduced from 22 percent to 11 percent and the time at which oreing up occurred was reduced by up to two hours.

Meanwhile, Fresnilo credits the implementation of Six Sigma with helping it achieve record silver and gold production during the final quarter of 2010.

"Our newest gold mine, Soledad-Dipolos, was an important factor in this excellent performance, as well as efficiency measures at our mines and the implementation of the six sigma management tool improvements," chief executive Jamie Lomelin said.

Six Sigma Cost Savings

Process improvements such as these lead to a more efficient operation with fewer defaults, and this ultimately impacts on the bottom line.

The 2010 Sustainable Development report from New Zealand Aluminium Smelters Limited, which owns the country's only aluminium smelter, a joint venture with Rio Tinto, estimates savings of NZ$18.7 million (£9.5 million) were made during the year as a result of its Lean Six Sigma initiatives.

Earlier this year, Newmont Ghana also announced possible savings of $3 million as a result of its business excellence Lean belt training, just a few months after the training was given.

Among the initiatives to come out of the instruction were a way to minimise shutdowns, increase gold production and increase the chance of annual plan attainment at the Ahafo Mine, bringing with it potential savings of $2 million.

Others included streamlining the particle size of crushed ore to allow it to consistently meet customer requirements and back office initiatives to reduce errors in contractor invoices, which saw faults fall from 90 percent to roughly 5 percent.

It's clear that the opportunities are there for mining companies to benefit from Lean and Six Sigma, however, improvements do not come overnight and require the participation of the whole organisation.

In a speech given in 2008 when Rio Tinto was expanding Six Sigma within its iron ore business, chief executive Sam Walsh explained: "This is a very fundamental change in the way that we structure our work, actively engaging, actively involving, actively communicating with our people...

"It's not the senior management that implement the sort of significant improvement on the ground it's actually every single person working within RioTinto Iron Ore and working within Rio Tinto."

Interested in learning more about Business Improvement in Mining? Check out our upcoming conference, taking place on 25th and 26th October in Brisbane, Australia at www.businessimprovementinmining.com.au