Optimising equipment utilisation and

improve turnaround time

Underground Logistics Case Study

Carel Coetzee, Sasol Mining
Session Overview

Project background and approach

Monitoring and recognising improvement

Information gathering and modelling
Tools and techniques

Identifying and comparing impacts

Evaluating and comparing alternatives

Conclusions

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Background

Case for Change

Operational cost
Effective vs. Efficient
Safety requirements
Equipment replacement strategies

Should we spend the money on the current system or should we

redesign the logistics system?

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Approach

Sasol Business Development & Implementation model (BD&I)

Systematic approach for the development and implementation
Based on traditional stage gate process

Value Add
Align leadership, business, operational and technical efforts
Helps us to do the right thing at the right time
Guides us through a sequence of clear decision gates

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 Focus: Business Definition Business Establishment Operate Business
Idea Continuous
Front End Loading Implementation
Generation Improvement
Idea Pre- Basic
Packag ing 1 2 Feasibility 3 Development 4 Execution 5 Start-up 6 Evaluation 7 Operation 8/1
feasibility
Provide assets Safe start-up of the Evaluation to Optimise oper a-
Strategic Facilit y Planning Project Planning according to assets and ensure project
Business Planning tion, maintenan ce
alignment Business Plan business systems meets objectives & products

•Opportunity • Identify & assess •Develop & select •Optimised & fully • Implem ent with • End-of j ob • Performance tes t • Product Quality
Phase objectives

scanning opportunity best defined scop e mini mum c hanges documentation • Start business ass uranc e
• Brain • Assess busi ness alternatives •Authority • Facility & business • Stead y oper ation support • Legal &
stor ming alternati ves, (logistics systems) Engineering s ystems ready for • In s pecific ation • Post proj ect audit governance
• R&D Stage uncertai nties & •Select Technology •Execution Plan start-up product • Product accepted complianc e
Gate Model risks (equipment to •Accurac y + 10% • Owner quality • SBU acceptance in m arket • Opportunity
• Business • Company Strateg y support selected •Product ass uranc e identification
enquiries Alignment system) acceptan ce b y • Product quality • Technology
• Accurac y + 50% •Execution & D esign mar ket (detail ass uranc e s ystems support
philosophies design of in place • Technical support
•Develop Business suggested system •Asset management
opportunity accepted, incl. • End–user s upport
•Accuracy + 30% interfaces)
Track Deliverables

Optimise
Business/ Final Business
Business Case Business Plan The Business Running Entity Post Audit Report business &
Operations Plan
product
Optimise plant
Engineer ing/ Preliminary Eng. Conceptual Eng. Basic Eng. Start-up Performance
Technical Technical Integrity saf ety, reliability &
Proposals Proposal Package Assistance Certified
integrity
Project Project Execution Project Execution Project Execution Project as per Project Close-out Project Close-out Project
Managem ent Assessment Philosophy Plan Execution Plan & Rev iew Report Report Gov ernance
Basic
Sponsor Corporate
Feasibility Charter Dev elopment Project Charter Gov ernance Gov ernance Gov ernance
Gov ernance
Charter
Probability of Business 70% 95% 100% 100% 100%
Dev elopment proceeding30% 50%
Gate Criteria

• strateg y fit • right • right business • project • RFO • beneficial • all objecti ves • busi ness
• continue / opportunity? solution? authorisation • approve start-up operati on met management
abort • continue/abort/ • continue/ abort/ • optimum project • stable operating • acceptanc e of governanc e in
• accept next rework rewor k definition plant post audit & plac e?
phas e pl an • accept next • principle • continue/ rework/ • quality produc t close-out • busi ness c ontin-
approval abort reports uation still feasible/
phas e plan
• accept next • accept next phas e ec onomical ?
phas e pl an plan
Copyright: © Sasol T echnol ogy (Pty) Ltd 2005, revision 5, 1 J une 2005
Pre-feasibility (Monitoring and recognising improvements)

Information gathering
Underground observations / Interviews / Business information (SAP)
Time studies
Material movement and process
Equipment
Utilisation
Costs
Safety record

Simulation model

Opportunity quantification

copyright reserved 2007, P&TS, Sasol Mining

Time Study

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Material Movement and Process (1)

106 logistical needs identified

Driven by
Breakdowns
Production
Schedules
Deliveries
Ad-hoc work
Main areas
Material movement to sections and other areas
In-section movement
People movement

copyright reserved 2007, P&TS, Sasol Mining

 Material Movement and Process (2)
Supplier
delivery
1
Offload (1 and 6)
Forklift
Manual
Unhitch (1 and 9)
Shaft stores 2 and 8
Load (2)
Hitch (2) Forklift
Manual NFP Tractor
Empty trailer

Hitch (8)
NFP Tractor
Full trailer Main
3
Unhitch (3) shaft

Load (4) Offload (5)

Offload (3)
FP Tractor LHD LHD
Hitch (4) Manual
Full trailer Manual Manual Machine /
Unhitch (7)
4 Section A
Unhitch (5) working face
LHD/SC/Manual
FP Tractor
5 Hitch (6)
FP Tractor
6
7
FP Tractor
Empty trailer

copyright reserved 2007, P&TS, Sasol Mining

Equipment Utilisation

Number Adapted
Type (Percent) Utilisation

LHD 5% 41%

Tractor 12% 21%

FEL 1.5% 8.5%

LDV 18% 12.5%

Trailer 63.5% N/A

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Equipment Cost

Annual Equipment Cost

Total cost (R000's)

Tractors
LHDs

2003/2004 2004/2005 2005/2006

Year

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Simulation Model

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Safety Record (Logistics related)

First Aid Medical

Category Case Treatment LWDC Total
Fall of Material 1 1 2
Machinery 1 1
Material Handling 7 4 1 12
Mobile Machinery 3 4 6 13
Slip and Fall 2 2
Tools and equipment 1 1
Grand Total 15 8 8 31

Based on Sasol Mining June 05 to Feb 07 –

copyright reserved 2007, P&TS, Sasol Mining Contributor to Sasol Mining RCR – Target < 0.5
Opportunity Quantification – Equipment Numbers

As-is Centralise Centralise As-is Centralise

Type improve non-critical all U-frames U-frames

LHD -5% -10% -15% - -10%

Tractor -10% -25% -35% - -25%

LDV -1.5% - - - -

Trailer -10% -33% -33% -75% -75%

copyright reserved 2007, P&TS, Sasol Mining

Opportunity Quantification – NPV’s
NPV of alternatives

U-frame bucket
U-frame trailer
NPV (R Million)

Brakes
Tractor capital
LHD capital
Trailer maint
Tractor maint
LHD maint

As-is As-is impr. Cent. non-crit. Cent. all As-is U-frames Cent. with U-
frame

Alternative

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Feasibility Phase (Identifying and comparing impacts)

Alternatives generation
Brainstorming and interviews with end-users
Benchmark (RSA & USA)

Conceptual design of alternatives

Alternative screening
Simulation models of alternatives

Evaluation of alternatives

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Evaluation Criteria

Service levels
Waiting/delivery time of materials

Costs
Utilisation
Fleet size

Safety
Qualitative

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Summary of Alternatives

Current system
All trailers with brakes
Replace tractors and LHD’s with new units
Diesel and flame-proofing in section
More equipment
Centralisation of fleet
Decentralisation of transport
Materials down at satellite shafts
Old oil and ISO at both satellite shafts
U-frames
Articulated tractors
Communication system
In-section battery scoops and/or utility vehicles
24h deliveries
copyright reserved 2007, P&TS, Sasol Mining
 NPV (R millio n)

- R 3 5.00
- R 2 5.00
- R 1 5.00
- R 5.00
R 5.00
R 1 5.00
R 2 5.00
R 3 5.00
A s is

R 0 .00
U- fr a m e M a in 16,2

- R 1 .02
U- fr a m e M a in 12,6

-R 1.02
U - fr am e M ain1 2,6 ,L3T

- R 3.2 1
U- fr a m e M a in 15,8

- R 0. 30
C e nt L DV M a in s ha ft
R 8 .98

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C en t LH D M ain s h aft
R 1 0.18

C en t LH D M ain - 3
-R 6.08

C en t LH D M ain - 5
- R 15.92

Ce nt T ra c to r M a in
S h aft
R 10.18
Ca pita l diffe re nce (NP V)
Alternative Comparison (Capital)

C en t LH D +T r a c M ain
s h aft
R 10.1 8

S tor e s at s h afts
R 1.68

A r t ic u la ted tr ac t
R 2.97

C e nt a ll at s ha fts
R 12 .22

Ce nt s haf ts -
3 LH ,4 LD ,4T
- R 9.55

Ce nt s haf ts -
5 LH ,9 LD ,9T
- R 27 .51

S c he du led de liv er ies

- R 4.64
0.0
5.0

- 5.0
10. 0
15. 0

- 15.0
- 10.0

Ave service level difference (min)

 Cost difference (R m illion)

R 10.00
R 15.00

-R 15.0 0
-R 10.0 0
-R 5.0 0
R 0.0 0
R 5.0 0
A s is

R 0.00
U - fr am e M ain16, 2

-R 0.52
U - fr am e M ain12, 6

-R 0.52
U - fr am e

-R 0.80
M a in1 2,6,L 3T

U - fr am e M ain15, 8

-R 0.51
C ent LD V M ain s h aft
R 1.53

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C ent L HD M a in s haft
R 2.73

S S annua l dif f
Cen t LH D M ain - 3
-R 0.10

Cen t LH D M ain - 5
-R 1.99

C ent Tr a c tor M ain

R 2.73

S h aft

Cap dif f er enc e ( NP V )

C ent L HD +T r ac M ain
R 2.73

s h aft
Stea dy state total cost diffe re nce per yea r

S tor e s at s hafts
R1.53

Ser v ic e lev e l

A r tic u late d tr ac t
R 0.08

C ent a ll at s h afts
R 4.77
Alternative Comparison (Operating & Capital)

Ce nt s h afts -
-R0.51

3LH ,4LD ,4T

Ce nt s h afts -
-R 5.47

5LH ,9LD ,9T

S c hedu led deliv e ries

-R 1.81
0.0
5.0

- 5.0
10 .0
15 .0

- 15.0
- 10.0

Ave service level difference (min)

Conclusions

The BD&I Model provides roadmap for the process

Pre-feasibility and feasibility work form the basis of every project

Data integrity and analysis of data critical for decision making

Decision criteria for every gate

Change Management

Application of a process – Result will be optimising of Logistics

System and the improvement of the turnaround time of logistics
equipment.

copyright reserved 2007, P&TS, Sasol Mining