Whittle Consulting (Africa) has completed a successful Enterprise Optimization Study for Assmang's Manganese Division in South Africa.
Assmang mines manganese ore at the Nchwaning and Gloria mines operated by Black Rock Mining near Postmasburg and Hotazel about 700km south-west of Johannesburg. Most production is exported to the Far East, Europe and the USA. The balance is used at Assmang’s Cato Ridge smelter in KwaZulu-Natal for production of ferro-manganese alloy, most of which is also exported.
After record sales in 2007/08, production at Nchwaning was reduced in 2009 due to the GFC and the cutback in steel production by mills throughout the world. The market situation was monitored constantly during 2009 and the opportunity was used to proceed with projects to increase capacity at Nchwaning and Gloria.
Senior Assmang staff attended a Whittle Consulting Enterprise Optimization course in November 2009 and expressed interest in having a study of the manganese operations done.
Assmang’s Manganese Division includes several underground mining operations with different manganese grades and iron/manganese ratios, multiple export and smelting options necessitating stockpiling and blending, complex logistics and transport issues over great distances, and a mix of short and long term product contracts all with different prices and product grade and size requirements.
Optimization of the entire value chain is a complex problem beyond the capability of most mining houses or manufacturing companies to solve without the assistance of a consulting group such as Whittle.
Phase 1 of the work focused on mining operations using the first six steps of Whittle Consulting’s typical suite of optimization mechanisms and was completed between April and August 2010.
After an extensive phase of data collection, a Data Input Model for the entire Manganese Division was developed and consolidated into a single document. This typically represents as much as half of the total effort of these studies since few companies operating in multiple locations with several profit and cost centres capture all of the operating and financial data required to optimize the enterprise in a central location.
In Phase 1, a mathematical model of the mining operation was developed which selected and determined the net value of ore blocks, grouped them into phases or areas, applied sequencing rules for the development and stoping of these phases enabling Whittle’s proprietary Prober optimization software to prioritize them, then applied scheduling optimization for specific ore blocks within each phase. A Base Case was generated which was carefully compared with the current operational business plan.
Assmang is a complex organization with many internal stakeholders whose assistance to verify and approve the input data from each department and the output of the base case Prober Runs is acknowledged. The verification process was a lengthy exercise which had to be completed before subsequent work could proceed.
Working from the Base Case, Phase 1 also investigated dynamic cut-off grade, blending of ore to achieve product minimum manganese grade and also minimum manganese:iron ratio, transport and smelting costs for various alternative strategies already being followed, and optimization of the different ore products currently exported each of which has a different sales price. The capacity limits of each step in the value chain were also taken into account.
About 40 Optimization Runs were completed in this phase of work, each of which generated about 30 tables and 40 charts containing annual operational and financial information over the entire planned life of the operation. The major output tables were analysed after each Run in order to set the input parameters for the future work.
After Phase 1 was presented to Assmang management in a half day workshop, a second phase of work was commissioned. Phase 2 was completed between November 2010 and March 2011. Additional ore resource block model information was incorporated and an assessment was made of optimization of possible mine, logistics and smelting expansion plans in parallel with engineering and costs studies being done by others. In addition, seven major alternative smelting strategies were considered, each of which had several subordinate categories.
Variable and dynamic mining width was considered for each of the ore bodies, the implication being that increased mining width would result in a considerable increase in recoverable ore resource provided that product manganese grades and manganese:iron ratios could be maintained. About 40 additional Optimization Runs were completed during Phase 2 and the interim and final results were presented to senior management on several occasions.
The work was sponsored by ARM Ferrous' executive technology Henk Bouwer and led by ARM Ferrous' manager mining Christo Kuhl. Henk Bouwer provided the customer’s assessment of the work done by Whittle Consulting and concluded:
- The exercise has been of great value in aiding decision-making,
- The whole process enabled the team to better understand the Assmang manganese business,
- The Business Enterprise Optimization Model will be used again in future to aid in long term decision making,
- Whittle can add considerable value if a company has a complex ore body and complexity regarding logistics and processing options.