A broad church

The advancement and sustainability of economies depends largely on the availability of resources and commodities, which are often located oceans away.

As the forces of global population growth and globalisation of world economies continue to strengthen, so too do the needs to expand or develop new and integrated corridors.

Achieving the best results requires the ability to take into consideration the entire logistics supply chain along these corridors, from the mine throughout the various routes of transportation, terminals, ports, and shipping.

Because of the massive capital expenditure and operational expenditure requirements, it’s important that key stakeholders take a collaborative approach that incorporates an in-depth understanding and knowledge of all components of the logistics supply chain, their interactions, and the integration thereof.

Stakeholders frequently target the wrong throughput, based on information that may be slanted by their individual point of view or ‘gut feel’, without first testing the key performance drivers (KPDs) that will influence outcomes. For example, a mine owner may nominate 20m tonnes per annum output, when the supply chain will only support 15m tonnes per annum.

With the economic pressures driving reduced capital spend, more stakeholders are focusing on improved operational efficiency and capital effectiveness. Advancements in achieving the optimum dollar-per-tonnage will be more dependent on creating a logistics system that is well balanced and economically optimised.

Critical to predicting a successful business case is the ability to accurately define capacity, realistically increase throughput, and proactively translate objectives into design and operating requirements. This transition requires a fundamental understanding of the drivers that impact capacity, cost, and value across the entire logistics chain.

Assess interaction

A common approach to analysing outcomes includes simulation modelling to estimate port, rail, and mine capacity. This strategy typically focuses on design and fails to include (upfront) how these various sub systems will affect one another, and how the export corridor will be accessed, operated, and managed in real life. These complex issues are not easy to model, but will dramatically impact operating efficiencies and throughput.

Business decisions based on simulations that fail to include KPDs, such as the channel’s tolerance to tonnage output, blending requirements, use of storage capacity, rail logistics, total time in port, time at anchor, size of ships, number of products per ship, weather losses, and maintenance strategy, will frequently result in fewer tonnes per annum and an unsupportable export business case. Conversely, assumptions that are too optimistic will lead to unrealistic capacity expectations that cannot be practically achieved.

Stakeholders need a ‘next level’ simulation that incorporates individual operations, their interdependencies, and their effects on business results. Hatch was instructed by one of the world’s largest mining companies to quantify the impact of port operating rules to be imposed on a port expansion project. The exporter was in the process of negotiating a new coal terminal berth when the negotiations hit an impasse. At issue was the preferential treatment being authorised by the port authority for large shipping vessels, and the perceived impact on the exporter’s ability to achieve their targeted 30m tonnes per annum throughput because they intended to utilise smaller vessels.

Hatch was engaged to conduct an objective study to quantify the impact of various berth and port design options and operational rules on the capacity and operability of the port as a whole, and in particular, the client’s metallurgical coal berth.

The lessons learned from the exercise demonstrated several key findings, including:

• The vessel fleet composition, port design, and operating rules made little difference in their ability to achieve their targeted 30m tpa throughput;
• The planned capacity of 30m tpa was not the ideal target; simulation results indicated that 25m tpa or 35m tpa were more likely outcomes depending on the resolution selected;
• Their loading rates were simply too low; they needed to find ways of ensuring higher loading rates, or invest in a second berth.

The dominant constraints for this project proved to be linked directly to the berths themselves and not the port operations, tidal influences, or vessel traffic – any improvement that reduced the time spent at the berths had a direct positive impact on the export capacity.

Failure to consider the appropriate KPDs at the onset can have a serious impact on achievable results, and could have resulted in the loss of millions of dollars spent on an unachievable projected return on investment. To achieve a well-balanced supply chain that optimises capacity and business outcomes requires combining world-class skills in simulation, design, engineering, and project execution throughout the entire logistics supply chain.

Rüdiger von Varendorff is the Australasian lead for Hatch’s Dynamic Simulation Group. With over 20 years of experience, Rüdiger specialises in simulation and modelling and has developed and created models for mining, industrial and logistic projects/operations for major international clients since 1993. For more information go to www.hatch.com.au, or contact Rüdiger on +61 7 3166 6120, or RvonVarendorff@hatch.com.au.