Operational Readiness in Mining and Metals Capital Projects
Successful capital projects go beyond construction and commissioning. Explore how operational readiness helps mining and metals leaders prepare people, systems and controls for safer start-up, effective ramp-up and sustainable operations, protecting the investment case from project development through stable performance.
Preparing assets and organizations to realize investment case
Capital invested in a mine, processing plant, smelter or refinery generates its expected return only when the asset operates safely, reliably and at the required level of performance. Construction completion and commissioning are necessary milestones, but neither physical completion nor completion of readiness activities is sufficient evidence that the asset and operating organization can perform under the conditions they will encounter. Operational readiness provides the owner with a structured process for defining those conditions and confirming that the asset, systems, controls and organization function in practice. Without that evidence, ramp-up may be prolonged, production and revenue deferred, operating costs increased and start-up risks elevated.
VALUE AT STAKE DURING START-UP AND RAMP-UP
Production and revenue: McNulty’s review placed only 23 of 81 mineral-processing plant ramp-ups, or 28%, in the bestperforming profile1. Assets that follow slower profiles generate less saleable production during their early operating period, delaying revenue and realization of the investment case.
Project value: For an asset with capacity of 1 million tonnes per year and a contribution margin of US$100 per tonne, every 10-percentage-point annual capacity shortfall represents US$10 million of contribution margin not generated. The loss is permanent where production cannot be recovered within the resource life, licence term or available market window. Delayed production also reduces NPV because cash inflows occur later while start-up and operating costs continue.
Cost of reaching stable operation: RAND’s study of 51 U.S. process plants reported a four-month median and an eightmonth mean start-up period. The corresponding reported startup cost values were 3.6% and 5.5% of construction capital3. The difference between these values is 1.9 percentage points, equivalent to US$19 million for a US$1 billion project.
Safety and continuity: The U.S. Chemical Safety Board has cited refining-industry research indicating that 50% of processsafety incidents occur during start-ups, shutdowns and other infrequent events4. A serious event during start-up can harm personnel, damage the asset, interrupt ramp-up and defer production and revenue. Operational readiness, including PSSR for high-hazard processing facilities, provides assurance that hazards, safeguards, procedures and workforce capability have been established before start-up.
THE dss+ POINT OF VIEW
Start by FEL-2: Operational readiness should begin while design, technology, operating-model and contracting decisions can still be influenced. For projects using a conventional FEL process, dss+ considers that this should be as early as FEL-2.
Maintain distinct accountability: A readiness team should work alongside the project team, with clear responsibility for preparing the future operation.
Address the full operating environment: Readiness should cover the asset, organization, culture, systems of work and supporting ecosystem, including foreseeable variations and constrains that could affect start-up and ramp-up.
Treat safety readiness as a condition of progression: The asset should progress to start-up or the next production stage only when hazards, controls, competence and emergency capability have been demonstrated.
Assess individual and team capability: Readiness should be based on evidence that people can apply the required systems, controls and procedures under normal, abnormal and emergency conditions, rather than on training or deliverable completion alone.
Retain owner accountability: The owner should sponsor and resource operational readiness, define operating and acceptance requirements, assure readiness across owner and contractor scopes, and retain authority for decisions to proceed into commissioning, start-up and production.
INDICATORS THAT OPERATIONAL READINESS MAY BE AT RISK
Operational readiness may require additional attention where:
- No readiness leader or core team has been established by FEL-2, or the equivalent stage.
- No approved operational-readiness plan is in place by FEL-3, integrated with the project schedule and decision gates.
- The required readiness outcomes, deliverables, acceptance criteria and supporting evidence have not been clearly defined.
- Readiness is managed entirely within the project team without distinct accountability for the future operation.
- The intended culture and systems of work have been defined for project execution but have not been translated into the future operating organization.
- The required start-up capability and support model have not been defined, including competence for abnormal conditions, troubleshooting, criticalcontrol management and access to specialist support.
- Readiness is measured mainly through completed documents and training records, without evidence that individuals and teams can apply them in practice.
- Readiness is left to the project-delivery team or future operating contractor without defined owner assurance, acceptance criteria and decision authority.
- Ramp-up assumptions have not been tested against ore variability, technology, utilities, workforce and supply-chain conditions.
- Safety-readiness reviews are planned as late compliance activities rather than evidence-based decisions.
- Readiness activity is expected to finish at handover rather than continue through ramp-up and stabilization.
TESTING A CRITICAL CONTROL UNDER OPERATING CONDITIONS
At an underground coal operation, a proximity detection system was installed on shuttle cars, supported by procedures, assigned ownership and operator training. Once production began, steel mesh used for ground support interfered with the system and caused repeated equipment trips. The control had been installed and documented, but its effectiveness had not been demonstrated under representative operating conditions. The example shows why readiness assurance should confirm that controls function in the intended environment and that the operating organization can respond appropriately when performance differs from design.
APPLYING THE APPROACH ACROSS A MINING AND METALS PORTFOLIO
dss+ recently supported a diversified mining and metals group in developing an enterprise operational-readiness approach for mines, processing facilities, smelters, refineries and supporting infrastructure.
The work established common governance and assurance principles while allowing project-specific requirements to reflect the asset, technology, operating model and risk. The approach included early initiation during project development, distinct readiness accountability, implementation-based reviews and owner assurance of contractor readiness.
Implementation is being extended across the portfolio, providing a consistent basis for readiness ownership, planning, monitoring and assurance while allowing requirements to reflect the characteristics and risks of each asset.