Life Cycle Costing: one of the critical elements of a systematic approach to maximising mining equipment efficiency and productivity

In the mining industry, equipment plays a vital role in the productivity and efficiency of operations. It is essential to maintain and plan for mining equipment so that it operates at peak performance throughout its lifecycle. The key to achieving this goal is Life Cycle Costing (LCC) and planning, which is a systematic approach to estimating the total cost of ownership of equipment throughout its lifecycle. 

 What is Life Cycle Costing? 

LCC is a method used to determine the total cost of ownership of an asset over its lifetime. The method takes into account all costs associated with the equipment, including acquisition, operation, maintenance and disposal. The objective is to identify the most cost-effective solution, not just the lowest initial cost. 

Why is Life Cycle Costing important for mining equipment? 

In the mining industry, where the wear is excessive (a high abrasive environment), the acquisition cost of equipment cannot be the only consideration. The cost of operations and maintenance is simply too big an input to be ignored and so must also be taken into account. 

By using LCC, maintenance engineers, engineering managers, plant managers and reliability engineers can evaluate different options for equipment acquisition, maintenance and disposal, and select the most cost-effective solution. 

LCC, however, only looks at the cost, and ultimately the cost per unit of work delivered. To improve the reliability and availability of the equipment, tools and techniques like failure mode and effects analysis (FMEA) and reliability-centred maintenance (RCM) are used to bring down the unit cost of the asset. These tools enable the engineering team to analyse the costs associated with acquiring, operating, maintaining and disposing of the equipment. 

Using a Life Cycle Costing Model (LCCM) 

The LCCM can be used to compare the total cost of ownership of different equipment options and select the most cost-effective solution. 

The following are the steps to develop an LCCM for mining equipment: 

Step 1: Define the equipment and its intended use 

This includes specifying the equipment type, capacity and expected service life. 

Step 2: Identify the costs associated with the equipment 

This includes acquisition costs, operational costs, maintenance costs and disposal costs. 

Step 3: Estimate the costs over the equipment’s lifecycle 

This includes estimating the annual operating costs, maintenance costs and disposal costs. 

Step 4: Discount the estimated costs to present value 

This is necessary to account for the time value of money and to make the costs comparable. 

Step 5: Compare the total cost of ownership of different equipment options 

 This includes comparing the present value of the costs of each option and selecting the most cost-effective solution. 

With a proper LCCM in place, mining professionals can evaluate different options for equipment acquisition, maintenance and disposal, and select the most cost-effective solution. The key is to look beyond the initial acquisition cost and consider the total cost of ownership over the equipment’s lifecycle. This approach will help to ensure that mining operations are productive, efficient and cost-effective. 

For more about Pragma’s view on the role of the reliability engineer in LCC, you can click on this link.