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How To Reduce Total Cost of Ownership in Mine Dewatering

Underground MIning Dewatering Submersible_ umps
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The reason submersible pumps are used for mine dewatering is to support mining operations. This seems obvious, but often when financial decisions are being made about the capital cost of pumps, the potential for impact on mining operations can be forgotten.

Cost Of Cutting Corners

Purchasing driven by a focus on one off capital costs can lead to dramatic and costly problems on site. It can play out on mining sites like this. The project boss gets pressure from above on cost, and tells the team "I need to reduce costs now." The team listens and gets to work on cutting costs.

They put all their purchasing options into a spreadsheet, compare upfront costs, and choose the cheapest option. Because they can compare higher priced to lower priced options, they can report back that they've bought a particular item for 10% less, and claim a saving. The cost cutting exercise looks good on paper. It shows the team have responded to the cost saving directive from above.

But that small initial saving can turn into a false economy if the pump doesn't perform, or frequent breakdowns occur.

We recently saw an unfortunate example of this when we visited a particular mining site that had installed some low-cost dewatering pumps a few months earlier. The team were frustrated, and mining operations were in chaos. The cheap submersible pump had broken down quite early and had just arrived back from servicing. On its first day back in operation, it failed again. The total cost to the mining project? A cool $30,000 hit to the bottom line because of the delay. For that client, it was a major set back.

What Going Cheap Actually Gets You

Now, why would a pump break down just after a service? A partial service rather than a full service could cause that. That is what can happen when a business is aiming to deliver cheap service contracts - the maintenance costs less because less work is done. Only half the parts that need regular replacement have been replaced. The result - a breakdown immediately after a service.

Does the client see the connection between the initial price paid and the resulting performance? Not always.

That is why we suggest that when looking at the capital costs associated with submersible pumps, always factor in the total cost of ownership (TCO). If you factor in cheaper pumps, you should also factor in a higher level of risk for delays. More frequent replacements. Repeat service calls. Miners know how to model operations, the same approach needs to be applied to dewatering infrastructure.

So broadly speaking, there are two TCO approaches for purchasing submersible pumps - you can target low upfront cost, higher ongoing costs and more downtime, or target higher upfront costs, lower ongoing costs and lower downtime. Each mine is different, so do your own costings, make realistic assumptions and see what your TCO model shows.

Benefits Of Buying Right

As in many markets, low cost, low-quality suppliers can present a challenge for suppliers who are committed to quality components and quality service. When customers have a single-minded focus on upfront cost, you will lose out to companies who have what appear to be cheaper products and services. However, when mining companies focus on total cost of ownership, the focus switches to value for money. Given how expensive it is to cause a delay in mining operations, higher value equipment often pays for itself many times over.

We work to educate the industry decision makers in the concept of total cost of ownership (TCO). You spend a bit more upfront to save bigger dollars in the long haul, in terms of equipment replacement cost savings, reduced total service cost and reduced costs from production delays.

If you are in a position to influence pump procurement, I urge you to consider the total cost of ownership (TCO) and look carefully at the value for money for the pumps you're buying.

Saving a few dollars up front can soon turn to a false economy. If your equipment breaks down and delays mine production, any small savings you made in procurement can rapidly go out the window.

So total cost of ownership (TCO) is an important consideration in mining pump procurement. The risk of costly production delays should be factored into the total cost of pump ownership. Once you do that, the real cost of a pump rapidly comes into focus. Cheap might not look so cheap anymore.