Achieving 15% Productivity Improvement

ACHIEVING 15% PRODUCTIVITY IMPROVEMENT

WITH THE INTELLIMINE SYSTEM AND CHANGE MANAGEMENT SERVICES
-CASE STUDY-

Terence Chigova
Mine Engineer Value Add Services
Modular Mining Systems Africa, South Africa
July, 2009
(+27) 11 463 5995
Chigova@mmsi.com

Soledad Riao
Senior Mine Engineer Value Add Services
Modular Mining Systems Inc., Tucson, AZ, USA
(1) 520 806 3223
July, 2009
riano@mmsi.com

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ABSTRACT
In 2008, Anglo installed the Modular IntelliMine System at its Kleinkopje Mine (AKK). As part of this deployment, Anglo
also used the Change Management Consulting Service offered by Modular to ensure a successful installation. This paper
outlines the benefits that AKK has realized through the deployment of the system, including a 15% improvement in
tonne/kilometers per hour (TKPH). The mine benefited from the improvements provided by the system almost immediately
by utilizing change management to more effectively integrate IntelliMine technology into their processes. This case study
includes details about the deployed system, the implementation of change management, and recommendations to ensure
success in future projects.

EXECUTIVE SUMMARY
The mining industry has always been affected by the cyclical nature of metal prices. When metal prices decline, mines
focus on reducing operating costs. Under more extreme circumstances, mines are either closed or put under care and
maintenance until prices improve. Alternatively, mines can improve operational efficiency and thereby increase throughput
by deploying real-time mine management systems, such as the DISPATCH system.

To identify the 15% productivity improvement at AKK, Modular divided the project into two phases and simultaneously
implemented a change management plan.

Phase I:
A productivity analysis was conducted following the installation of the IntelliMine communications infrastructure, central
computer systems, truck field systems, and excavator field systems, but prior to the decommissioning of any legacy
support systems. This provided a baseline for comparison of productivity after the DISPATCH Optimization Strategy
(DOS) was enabled.

Phase II:
This phase focused on maximizing mine productivity within production requirements, which was accomplished by
integrating real-time KPI data and by optimizing asset utilization and minimizing operational losses using dynamic haulage
allocation controlled by the DISPATCH solution. Data was analyzed for a total of fourteen shifts. In parallel, a Change
Management plan was created to manage the impact on users, focusing on operators to minimize resistance to the
system. This plan included a project risk assessment and an analysis of the impact on the mines organization. Because
people-related issues were addressed in the early stages of the project, operator resistance was minimized and a
smoother and faster transition to IntelliMine system was realized.

1. Kleinkopje Mine - Background and Location

According to T. Tamenti (2007), Kleinkopje Colliery is a multi-product opencast mine situated 10 km southwest of Witbank
in the Mpumalanga Province of South Africa. The mine opened in 1979, though there had been underground mining in the
Kleinkopje area in the 19th century. Five main coal seams that are numbered in order of deposition from No.1 seam to
No.5 seam are present at Kleinkopje Colliery, which is typical of the Witbank Coalfield. The coal reserves of the mine are
predominantly found in the No.1, 2 and 4 seams. There are limited reserves in the No.2 Lower and No.5 seam. Select and
non select horizons are mined using selective mining and then delivered to a processing plant, as shown in Figure 1
below.

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Figure 1: Kleinkopje Mine

Mining is currently being carried out in four pits, and according to the current plans, Kleinkopje colliery will be mined until
the end of 2025. Along with Goedehoop, Bank, Greenside and Landau Collieries, Kleinkopje Colliery is one of Anglo
Coals South African coal export mines.

Some of the challenges facing the mine are spontaneous combustion, appreciable amounts of in-pit water, steep ramps,
bad quality run of mine coal as a result of burnt coal, and cladding that is employed to prevent the burning of the in situ
coal. The in-pit floor is full of undulations and is relatively confined. The distances trucks have to travel from the loading
area to the tipping area are relatively long (greater than 10 km in certain instances).

Five draglines are currently in operation at Kleinkopje Colliery for overburden removal. They are managed by the Tritonics
Dragline Management System. Blasted coal is transported by trucks from the loading area inside the pit to the three tips
being utilized (Tip A, Tip B, and Tip C), with Tips A and B having a coal handling capacity of 1500 tph.

The mine truck fleet includes:

6 x EuclidHitachi 1600
4 x EuclidHitachi 1700
8 x EuclidHitachi 3000
3 x EuclidHitachi CH 135
2 x CAT777F

The loading fleet includes:

1 x Komatsu PC1250 backhoe
1 x Komatsu PC1100 backhoe
1 x Hitachi EX1200 backhoe
2 x Hitachi EX1900 backhoe
1 x Hitachi EX3600 backhoe
1 x P&H 1900 rope shovels
2 x P&H 2100 rope shovels
1 x O&K RH200 hydraulic shovel
2 x CAT 992 front end loaders
1 x CAT 994 front end loader

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2. Project Description and Business Impact

2.1. Change Management
To achieve performance and productivity improvements as quickly as possible, and to ensure data reliability,
Modular customized a Change Management strategy to run in parallel with the project installation. This aimed at full
user system integration and smooth transition from previous operating practices to real-time monitoring, with the
focus of minimizing resistance through the change.

The Change Management plan was conducted in three stages: Preparing for Change, Managing Change and
Reinforcing the Change (see Figure 2 below). In the Preparing for Change stage, three user groups were identified
as a high risk through the development of the Change Management Strategy that impacted 15.5% of the total
workforce at AKK. Pockets of resistance were also identified within each group. This resistance was managed using
morning briefings with the help of supervisors from the early stages of the project. Raising awareness of the impacts
of the new system on people was also one of the goals for Modular personnel, as lack of knowledge and fear of new
technology can negatively impact project success. Users skills were also assessed during this stage using a
change management tool from PROSCI called the ADKAR model. The AKK sponsors continuous support was the
key to performing this Change Management project and to receiving middle manager support, ensuring employee
integration and system use. A Change Management team structure and sponsorship model were also defined.

During the Managing the Change stage, a selective training, communication, and resistance management plan was
created. A variety of learning and skill levels at AKK indicated that reinforcement was needed to achieve expected
results. Key Performance Indicators (KPIs) were monitored to identify gaps in system use and interaction.
Corrective actions, such as specialized training and coaching, were taken to ensure full system integration. Once
again, AKK sponsorship was instrumental in achieving the 15% productivity gain confirmed by monitoring the KPIs.
Further, Change Management reduced communication breakdown within the organization, increasing the
information flow between organizational departments.

Because DISPATCH is a fairly complex system for new users, regular face-to-face communication at both morning
and night shift change sessions increased awareness among the workforce and supported the overall
implementation.

The Final Acceptance Certificate was signed on October 28, 2008 by both AKK and Modular Africa.

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Project Management

Prepare Manage Reinforce

CM Process

Define and Select Develop Change Collect & Analyze

deployment Strategy Management Plans Feedback

Diagnose gaps and

Select and Prepare CM Take actions and
manage resistance
team Implement Plans

Implement corrective
Develop Sponsor Model
actions and celebrate
and Engage Primary
success
Sponsorship

Leadership / Sponsorship
Figure 2: Change Management Plan Breakdown

2.1.1. Impact Assessment by Group

To start, three main system user groups were identified:
Pit Foremen
Operators
Dispatch/Dispatch Engineer (Control Room Personnel)

For AKK, this meant that about 15.5% of their work force was going to be affected by the change of
technology. Thus, an Impact Assessment by group was carried out (see Figure 3 below).

Figure 3. Risk Analysis by Group

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As per Figure 3; Dispatchers/Dispatch Engineer is the group most impacted due to a change in role and
responsibilities. Impact on Operators was expected to be high due to new technology use and past
experience. Both groups were rated as high risk for resistance due to the complexity of the IntelliMine System.
The Organization readiness score above 35 showed that the company needed to overcome past project
failures and to motivate end users through repeated management support.

2.1.1.1. Pit Foremen

Throughout the installation of the system, Pit Foreman concerns were purely based on lack of understanding
of the system. They regarded the system as a threat that was going to take their jobs and reduce their
opportunity for growth. Their job definitions therefore had to be redefined to suit their new roles. As a result,
Modular recommended that AKK ensure a fair, objective and transparent selection process in their recruitment.
A set of Modular-standard role definitions was made available to the mine in their selection process, with the
need for Foreman training at Dispatcher Level 1.

2.1.1.2. Operators
Similar to the Pit Foreman concerns, truck and shovel operators had fears that resulted from lack of knowledge
of the system. Some of them were unfamiliar with the system and thought it would be used to spy on them.
During operator training, there was an emphasis on the benefits of the system to everyday work. The best
operators managing the system were also regularly reported to reinforce training and motivate by example.

2.1.1.3. Dispatcher/ Dispatch Engineer Control Room Personnel

Before the DISPATCH system was installed, control room personnel were using a basic legacy load counting
system to keep and update production records. The control room personnel group was at the highest risk
because of the wholesale change in their roles and responsibilities in the new Dispatcher position. Change
Management put special emphasis on this group to ensure faster and smoother transition from the legacy
system to the IntelliMine solution.

Detailed Risk analysis showed that AKK was a high risk installation with much resistance to change, possibly
causing a large disruption to system deployment that could threaten its success. A Change Management Plan
was developed to minimize the risk of those groups considered as high impact.

Change
resistant Medium risk High risk

Organizational
Attributes

Change Low risk Medium risk

ready

Small Large
Incremental Disruptive

Change characteristics
Figure 4. Overall AKKs risk based on CM data analysis

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2.1.2. Justification for Change Management at AKK:

Potential consequences to the project if the change was managed poorly include:

Inability to reach the Productivity Improvement of 15%

A long lead time between system installation and realized success
Increased resistance within the organization
Incorrect usage of the system and poor data quality
Unclear definition of role identification
Agitation within the work force

2.1.3. Change Management Plans and Structure

The following IntelliMine standard organizational support structure was also proposed to the mine. The
structure is not rigid and can be changed to meet specific mine objectives.

Figure 5. Structure to support IntelliMine system, as recommended by Modular

2.1.3.1. Change Management Reinforcement Plan Action Plan

An Action Plan was developed by Modular and AKK to counter possible resistance within the organization, and
a Training Plan was developed once user groups were identified. Action items included:

Track progress and address implementation issues

Gather feedback from users during the deployment phase
Identify root causes of resistance
Implement corrective actions
Celebrate success and early wins
Conduct post-review of overall Change Management program
Implement sustainable training plan

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2.2. Phase I - Data Collection - Baseline

In order to define a productivity baseline, a first measurement was conducted by the Modular team from July 25,
2008 through August 1, 2008. Data was collected on all normally defined Day (occurring from 07:00 to 19:00) and
Night (occurring from 19:00 to 07:00) production shifts. All captured data was analyzed to determine a minimum of
fourteen (14) shifts for each phase that could be used to define the official data set. There was to be no interaction
with the system or use in any form of data captured or generated by the system by any AKK personnel to support,
confirm or augment mine operations. AKK controlled and managed all aspects of production using the legacy
system from the IntelliMine Mine Control facility. The TKPH for individual shifts and Phase I average of the whole
phase is displayed in the Table below.

Table 1: Data Collection Phase I

KPI VALUE
Total Ready Hours 1597
Total Loads 1576
Weighted Average Normalizing Base 1.01
Average Normalizing Base 1.17
Current TKPH 1048.40
Expected TKPH 1205.66

The Normalizing Base is a measure of the cycle times of the fleet per shift. In essence, it is the available hours
within the haul cycle, calculated as follows:

Normalizing Base (NB) = ReadyHours

LoadCount

2.3. Phase II IntelliMine System implementation

In Phase II, the IntelliMine system was fully utilizedincluding DISPATCH optimization. The focus of Phase II was to
maximize mine productivity within production requirements by optimizing asset utilization and minimizing operational
losses through dynamic haulage allocation and integration of real-time KPI data. In this phase, the AKK and
Modular IntelliMine Controllers managed all aspects of AKK production operations. Monthly TKPH analyses and KPI
assessments were performed to monitor the improvements of the operator and dispatcher interaction with the
system, as outlined in Table 2 below.

Table 2: Data Collection Phase II

KPI PERIOD
Jul 25-Aug 2,08 Dec 8-13,08 Jan 5-10,09 Feb 2-9,09 Mar 26-Apr 2,09
Total Ready Hours 1597 2281 1946 2257 2059
Total Loads 1576 2808 1814 3457 3318
Weighted Average Normalizing Base 1.01 0.81 1.07 0.65 0.62
Average Normalizing Base 1.17 0.84 1.26 0.68 0.64
Current TKPH 1048.40 892.63 1032.54 944.16 1191.77
Expected TKPH 1205.66 1205.66 1205.66 1205.66 1205.66
Variance -15% -30% -17% -25% -1%

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2.3.1. KPI Assessments

Each month an assessment of the operators and dispatchers was performed to evaluate their readiness for
unlocking (optimizing) the system. The measured KPIs include:

Late arrivals <4 min, 4-12 min, and >12 min

Missed beacons (wrong route)
Unexpected arrivals (wrong route)
Re-assignments
Bad paths and routes (no feasible paths)
Steep roads
Location updates
Frequency of trucks at shovels, crushers and dumps
Actual vs. required trucks (according to LP solution)
Idle shovels vs. queuing trucks
System check by the systems administrator
Proper dispatching structure

KPI performance was reported to AKK against their expected targets as shown in Table 3.

Table 3: Key Performance Indicator Flags 1= Inadequate, 2= Adequate, 3=Exceptional

Requirement Level Expected Level
Recommended Organizational Structure in Place 2 3
Dispatcher Assessment (by AKK System Administrator) 2 3
Dispatcher KPIs 3
<4 min Late 1 3
4-12 min Late 1 3
>12 min Late 1 3
Missed Beacons 2 3
Unexpected Arrivals 1 3
Reassignments 1 3
Bad Paths 2 3
Operator KPIs 3
Inputting Employee ID 2 3
Capture Status Change 2 3
Button Pushing Cycle Compliance 1 3
Following GOIC Actions 1 3
Bad Full 1 3
Written Procedure for Dispatchers and Operators 2 3
Change Management 2 3

2.3.2. Action Plans

Specific action plans were drafted during monthly meetings, which were later used to ensure that dispatchers
and operators accomplished their KPIs, including:

Training sessions by a Modular training specialist

Systems Administrators workshop at Modular facilities

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Remote System TKPH assessment by Modular

System TKPH assessment by AKK
Operator KPI assessment by Modular and AKK
Dispatcher KPI assessment by Modular and AKK
Hardware technician training onsite and at Modular workshops
AKK KPI quarterly reports

3. Benefits Realized by AKK

1. Based on TKPH, AKK achieved a total improvement in Productivity of 15% through usage of the IntelliMine
system (See Figure 6).

Figure 6: TKPH Analysis

2. The labour-intensive process of manual load recording at the crusher was eliminated.

3. The previous issue of trucks running out of fuel was virtually eliminated.

4. A more effective fleet monitoring system gave Pit Superintendents a better planning strategy.

5. Truck cycle times were reduced by over 40% (See Figure 7)

CycleTime(min)
60

50

40.7% Time Reduced

40
Bin(sec)

30

20

10

0
July25 Aug2,08 Dec813,08 Jan510,09 Feb29,09 Mar26 Apr2,09

Date

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Figure 7: Cycle Time Analysis

4. Conclusions/Recommendations
1. Kleinkopje was able to achieve a 15% improvement in productivity with the IntelliMine Mine Management System.
Instrumental to this success was targeted Change Management throughout the implementation.

2. Managers and sponsors involved from the beginning of the project ensured the success of the project by
managing early resistance as identified in the Change Management Plan.

3. Compared to previous experiences at Kleinkopje the implementation project was a resounding success, due in
large part to targeted Change Management. Kleinkopje should strive to continuously apply Change
Management techniques for operators and dispatchersespecially when new technology is introduced.

4. The system should be configured to run fully optimized (i.e. unlocked) at all times.

5. Bibliography
- T. Tamenti (2007) Feasibility study of replacing bottom dump trucks with rear dump trucks at Kleinkopje colliery
- Prosci (2009) Change Management Best Practices

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