12.5% cost reduction
with new HME fleet strategy

While maintaining consistent performance over 10 years

Developing an effective fleet strategy is a complex task for mining companies. Asset performance, maintenance tactics, labour factors, business risks, life of mine, OEM pricing and capital availability all influence fleet replacement decisions.

For internal decision-makers, this can lead to:

Uncertainty over how to accurately evaluate the options available – while understanding the business impact of those options

Defaulting to less effective methods – like industry benchmarks, OEM defaults, and replacing before major maintenance spend

Higher business expenses over an asset’s life, because these methods don’t consider financial parameters – like time value of money

The company operates a large iron ore mine, rail and port in the Pilbara region, and was uncertain whether replacing or extending the life of its heavy mobile mining assets represented the best choice for its business goals.

Core Asset Co. specialises in strategic asset planning and decision support for mining companies

CHALLENGE

With 10-years remaining until the mine’s end of life, our client needed to make critical strategic decisions on their fleet, including replacement and maintenance. The Core Asset Co. team knew that they had to consider the site’s unique financial, maintenance, performance and risk parameters – including:

Performance issues of an ageing fleet – reducing asset availability

Industry-wide labour shortage – hampering maintenance
capabilities

Acquisition lead times of up to two years – affecting timelines and turnaround

Closure of the mine within 10 years – necessitating careful capital investment

Considering these issues, Core Asset Co. approached the client’s heavy mobile equipment (HME) fleet strategy with three success criteria in mind.

  1. Improve asset availability and reliability
  2. Reduce capital and maintenance expenditure
  3. Minimise on-site maintenance labour demand

SOLUTION

Working with the client’s team, Core Asset Co. undertook a comprehensive analysis and decision process to ensure that the recommended fleet strategy was backed by fact-based insights. This involved:

Gaining a clear understanding of asset demand over life of mine

Aligning decisions on the best solutions – considering the
unique business context

Coordinated actions to deliver results quickly.

Understand

  • $

    Define assets for assessment
  • $

    Analyse mine plan demand
  • $

    Map maintenance strategy

Most fleet replacement analyses across the mining industry use one of three techniques:

  • 5

    Industry benchmarking
  • 5

    Equipment manufacturer (OEM) replacement age recommendations
  • 5

    Lowest maintenance cost points

However, these methods alone don’t consider critical factors specific to a mine and its assets – leaving significant value unrealised.
Core Asset Co. would build upon these basic principles to formulate a strategy most suited to the client’s situation.

To determine how to achieve these best-for-business outcomes …

Core Asset Co. examined relevant high-impact quantitative and qualitative data – including:

Mine plan demand requirements

L

Whole-of-life costs and labour requirements

L

Depreciation, inflation and cash rate

Capital availability

L

Asset suitability for the client and project

L

Unique business and site characteristics

Technical risk

L

Fleet automation capabilities
and integrations

L

Carbon emissions and
ESG implications

Decide

  • $

    Identify spend and timings
  • $

    Model asset whole of life
  • $

    Evaluate scenarios
  • $

    Provide recommendations

Over 12 months, Core Asset Co. developed and implemented a new strategy to maximise the value of the client’s fleet – refining the company’s fleet lives to match their business requirements and life of mine.

This saw some replacement points reduced, some unchanged and some extended – all based on technical insight and backed by in-depth analysis.

OUTCOMES

  1. New fleet strategy with improved replacement points for each asset – including order points that consider acquisition lead times:
    1. Hydraulic excavators – replaced at 54,000 hours
    2. Caterpillar 793 and Hitachi EH5000 – run to the mine’s end of life, supported by new and individualised maintenance strategies that
      mitigate late life failure modes (like cracking and repair downtime)
    3. Bulldozers, loaders, drills and graders – aligned to the most economical replacement points, considering residual value at the
      mine’s end of life.
  2. Verified business value case shown in Net Present Value.
  3. Optimised capital spend profile, outlining impacts that spend decision scenarios will have on whole-of-life business costs, maintenance and labour requirements.
  4. Toolset for client’s team to analyse subsequent fleet strategy scenarios and capital spend options.
  5. Training for client’s engineering team in fleet strategy decision-making, data analysis, toolsets and process improvement.

For a total investment of less than AUD 1 million, Core Asset Co. enabled the client make confident and informed decisions about its assets. Optimal replacement ages and maintenance strategies have locked in substantial cost savings over the 2023-2032 period.

AUD 142.3 million
Net Present Value to client;
a reduction of 12.5%
in total costs (NPC)

Up to
4% improvement
in asset availability, with no decline in
performance

8.2% reduction
in maintenance labour demand

Additional value from
increased production
through identified asset
configuration options

Get in touch

Looking for a partner who understands your requirements, before taking action?
Speak to Core Asset Co. to transform your asset performance.