Shutdowns impact to companys revenue and profits on two ways; directly and indirectly.
Direct cost’s are:
- Materials required
- Additional labor requried conducting planned tasks
- Crane-, scaffolding-, special tools rentals and other services
- Mobilization and de-mobilization consts
- Accomodation for external labor and so on
By inderect cost’s, we don’t mean indirect labor costs like supervision, camp cost’s but value of the lost production when the plant in on maintenance. Usually indirect cost are way greater than direct cost’s are and sometimes this cost is overlooked.
Assuming we have a Copper mine with annual capacity of 30 000 tpa without any by-products and the mill is operated 8000 h per year. With Cu price of 8 200 $/t and NSR 5%, annual revenue is 233.7 M$. With 8000 operating hours, hourly revenue loss is 29 212,5 $ when the mill is on maintenance. With said Cu price level, typically EBITDA is round 50 % from revenue and this leads that hourly EBITDA loss is 14 606 $/h.
Normal year has a 8760 and typically concentrator’s design criteria is 8000 h of production time per year. Increasing annual production time by 100 h, we increase the revenue by 2,921 m$. EBITDA increases more since fixed costs remain the same regardingless the operating hours or produced Copper.
Maintenance cost for said size plant can be round 10 m$/a. In order to get same benefits by saving on costs than increasing the annual run hours is a truly oxymoron as well as extremely challenging since doing less maintenance usually leads less run hours.
Assuming from that 760 non operating hours 80 % is planned downtime (608 h), just 10 % reduction in shutdown times leads a huge pay back time if some investments are required.