Service Trucks Are Assets, Too

It’s no surprise that heavy machinery and vehicles used in mining and other industries will eventually need major repair or replacement. But the same applies to mechanics’ service trucks used to keep the equipment running. Service trucks are assets, too, after all!

Nick Frenks studied the landscape in 2015 when completing his master of business administration degree at Simon Fraser University in suburban Vancouver, B.C. Frenks had joined Teck Resources Limited as maintenance and materials manager at its Highland Valley copper mine near Logan Lake, B.C., a few years earlier and realized the mine’s haul trucks were aging even as metal prices were slumping.

This presented a dilemma. Commodity boom-bust cycles are a fact of life in mining, and sagging copper prices were rendering capital dollars scarce for keeping the Highland Valley’s large fleet of heavy equipment and vehicles up to date.

Frenks channeled his efforts into classic applied research. In the process, his thesis, “An Alternative Strategic Option in Managing Mine Mobile Asset Replacement,” would help him earn a degree from SFU’s Teck Executive MBA Program.

Mine provides study material

In his paper, Frenks describes Highland Valley as Canada’s largest copper mine, with three open-pit areas, a giant metallurgical concentrator complex where ore is crushed, ground and processed, and an equipment repair shop.

While the mine has been busy, its enormous fleet of heavy equipment and vehicles has fast approached the optimal time for replacement.

“It would be beneficial to Teck Highland Valley Copper to understand if there is a more cost-effective alternative to straight-out asset replacement at predetermined asset lives,” Frenks wrote, itemizing a lengthy list of assets, including graders, loaders, blasting trucks, rubber-tired bulldozers, mobile cranes, drilling rigs, an ambulance, fire trucks and 20 buses for ferrying workers.

Frenks singled out 240-ton Caterpillar 793 mechanical-drive haul trucks used to move ore and waste rock as a suitable proxy for all fleet categories. “If we can create an alternative strategy that works for the haul truck fleet, the other fleets would likely be candidates for a similar strategy,” he explained.

While the Caterpillar 793 trucks date back to 1999, Frenks noted that age isn’t necessarily the main determinant of something going wrong. While it’s optimal to change components prior to failure and on a planned basis in order to minimize downtime and costs, usage and condition are the prime considerations.

“Year to year we look at what equipment can be pushed (kept operational) in order to postpone replacement and curtail the sustaining capital requirement,” Frenks wrote. “This is not too difficult for a year or two, but many low commodity pricing environments last for five to ten years.”

However, when a company delays equipment replacements for successive years without a longer-term strategy, operational capacity decreases because equipment requires ongoing maintenance. “The unintended consequence of pushing asset replacement is a reduction in capacity and an increase in repair costs,” Frenks wrote.

Paper offers options

Frenks proposed two options for capital-strapped mine managers: To procure a single asset to maintain capacity in the short term, or — more cost-effectively in the long-term — to execute a targeted precision rebuild of the asset in order to maintain capacity.

Analyzing factors such as the manufacturer’s recommended operating life, average costs to repair and rebuild equipment, and the projected life-span of a particular mine, Frenks compared costs associated with replacing six older trucks.

“In the case of HVC, we are already looking at pushing our mine life out to 2040 and therefore (a) short-term strategy would not fit well with the long-term resource plan we are developing,” Frenks wrote.

One strategy Frenks identified would take a single truck out of service for a rebuild, keeping the rest in service. “In order to ensure we do not adversely affect the mine operation’s hauling capacity, we would purchase one new 793 haul truck to maintain capacity throughout this process. With the new 793 haul truck in service, we would then look at taking the next five oldest trucks out of service one at a time and perform a targeted rebuild on each unit.”

The question, Frenks explained, is whether it’s more cost effective to purchase six new trucks or to purchase one new truck and perform a targeted rebuild on five old ones. The answer, he suggested, comes down to good planning and thoughtful re-use of components.

“Mining companies have rebuilt haul trucks in the past and the first lesson learned is that the sum of the parts adds up to more than the cost of the haul truck,” Frenks wrote. “Here is where precision must come into our execution. We must only perform the targeted work planned and be precise in execution in order to keep the costs in line. That means that when we remove our components during the tear down, all healthy components will be re-used. If we target properly and are precise in our execution, this may become the alternative to asset replacement.”

Beware of capacity shortfall

In the short term or for a mine nearing the end of its life, a single asset can be procured to guard against capacity shortfall. However, Frenks wrote, this can only occur until the shortfall in availability equals the capacity of the additional haul truck. Then, a mine must consider purchasing another haul truck to again guard against a capacity shortfall.

“This is indeed only a short term solution as the increase in fleet size and operators will be cost prohibitive in a longer term situation,” Frenks explained.

In the longer term or increasing life of a mine, Frenks concluded that the targeted precision rebuild of current mobile mine assets will ensure capacity can be maintained while providing a long-term, cost-effective solution to mobile asset replacement.

In an interview, Frenks told Service Truck Magazine that the goal is keeping assets running smoothly to maximize availability and efficiency, all while weathering market fluctuations.

“Your fleets are aging and you’re forecasting when you’re going to change your fleet over. But all of a sudden your capital is dwindling away. What do you do?”

His question was rhetorical. “If you do nothing you lose capacity,” he reasoned. “If you keep saying ‘Next year we’ll buy,’ all you’ve done is lost capacity without doing anything. There should be more than one strategy for how you handle your assets, depending on where you are in your business cycle.”

Study listed service trucks

While Frenks used Caterpillar 793 haul trucks as a proxy for all fleet categories, he listed 20 lube/fuel/service trucks in Teck’s overall Highland Valley fleet, and says they’re highly vulnerable to wear and tear in a mine environment.

“Underfoot conditions are changing all the time in a mine,” Frenks explained. “What may be a fairly smooth haul for a 240-ton truck is a very aggressive haul for a service truck.”

Of course, symptoms differ. Wear and tear on a haul truck often shows up in cracks, whereas on a service truck the mounts generally break first, Frenks said.

Whatever goes wrong with a service truck, Frenks said, if you don’t identify it early on and get it under control, you’ll probably retire the vehicle early because it will gradually become too expensive to maintain.

“It’s no different than using a service truck in the lumber business or on a lumber road,” Frenks said. “You need to identify what’s affecting the truck.”

Sometimes the answer is a simple fix. A stressed out stress riser might benefit from cushioning to protect against further wear, or beefing up the area so stress is pushed to other areas of the frame.

Ultimately, Frenks said, fleets can be maintained cost-effectively through condition-based asset monitoring. “If you find out what’s taking your fleet down, start to put in some key performance indicators and start measuring those.”

Frenks chose to focus on haul trucks because that’s where the mine’s bottleneck was at the time he did his research. But bottlenecks can change. Tomorrow, it could be drills or shovels.

“If our mine plan changes and we haul less waste and less ore, our focus may move over to the mill, and then we’ll pay attention there. I’ll take what I learned and try to find the same changes there.”

Saul Chernos is a writer based in Toronto.

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