Replacement of wheel loaders in Replacement of wheel loaders in Open-pit operations mining

Agenda

1. Introduction2. Developed methodology3. Results3. Results4. Conclusions & limitations

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Agenda

1. Introduction2. Developed methodology3. Results3. Results4. Conclusions & limitations

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1. IntroductionIn this study, we address the issues ofReplacement of wheel loaders with32.000 operating hours

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1. IntroductionIn this study, the wheel loaders is leasingand along with payment of the last fee, wemust decide between the following5 alternatives:5 alternatives:

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1. IntroductionAlternatives evaluated in this estudy:

a) Purchase a new of same manufacturerb) Renewal of leasing with manufacturerc) Rent to local companyd) Purchase of old equipmente) Leasing with equivalent competitiveequipment

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1. IntroductionSome points to consider for this evaluationare the following:

• The replacemente of assets should• The replacemente of assets shouldevaluate to 6 years, because is theremaining time life of mine

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1. Introduction• We have reliable information

maintenance costs and useful livesmajor and minor components

• The wheel loaders is miningproduction equipment

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1. Introduction• Every years we make a 10 yearsprojection of costs and availability

• Outsourcing maintenance (dealer)

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Agenda

1. Introduction2. Developed methodology3. Results3. Results4. Conclusions & limitations

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2. MethodologyIt uses the methodology of calculation ofequivalent annual costs (EAC) porcomparing 5 replacement alternative instudystudyGiven the definition of the introduction,year 6 is of interest for this study

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2. Equivalent Annual Costs

• I : Value of the initial investment oracquisition cost in year zero

• Tn : sale or trading value of the assetin year n of life

nin year n of life

• Cj : Operation & Maintenance (O&M) cost in year j of life

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2. Equivalent Annual Costs

• Cinef. : Downtime costs in year i of life

• n : Year of life for equipmentreplacementreplacement

• r : Agreed discount rate

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2. Methodology

How the methodology of Equivalente Annual Cost (EAC)

is mathematically expresed?

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is mathematically expresed?

2. MethodologyWe must minimise the following function:

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O&M costs+ Downtime costs

Evolution of costs

0 6.000 12.000 18.000 24.000 30.000 36.000 42.000 48.000 54.000 60.000

Equipment hours (hours)

Agenda

1. Introduction2. Developed methodology3. Results3. Results4. Conclusions & limitations

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3. Results

In a 2-dimensional graph,consideringX-axis: Hour meter of the equipmentX-axis: Hour meter of the equipment(hours)

Y-axis: Dollars (U.S. $)16/30

Equivalent Annual Cost (EAC)

32.000 38.000 44.000 50.000 56.000 62.000 68.000 74.000

Equipment hours (hrs)

3. ResultsThe alternatives that were dismiss as beingthe higher EAC are:

c) Rent to local companyc) Rent to local companye) Leasing with equivalent competitivesequipment

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Equivalent Annual Cost (EAC)

32.000 38.000 44.000 50.000 56.000 62.000 68.000 74.000

Equipment hours (hrs)

3. Results

They make a sensitivity analysis onel Downtime costs to see how EAC varies

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Equivalent Annual Cost (EAC)

32.000 38.000 44.000 50.000 56.000 62.000 68.000 74.000

Equipment hours (hrs)

Equivalent Annual Cost (EAC)

32.000 38.000 44.000 50.000 56.000 62.000 68.000 74.000

Equipment hours (hrs)

3. Results

In the case of Downtime costs < 1.500 [U.S. $ / hrs]d) Purchase of old equipment

If Downtime costs > 1.500 [U.S. $ / hrs]a) Purchase a newb) Renewal of leasing

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Agenda

1. Introductions2. Developed methodology3. Results3. Results4. Conclusions & limitations

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4. Conclusions

Alternatives a) and b) are the leasts EACCAE assessment for 6 years andDowntime costs of 3.000 [ U.S. $ / hrs ]

EAC a) y b) (6 years;3.000) = 3,42 MUS$

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4. Conclusions

The results vary significantly depending oncomponent major costs and lifetime

• Engine, Transmissions, Converter• Engine, Transmissions, Converter• Final drives, differential, cylinders, PTO

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4. Limitations• Requires an estimate of the O&M

costs, which can be inaccurate in case that new equipment that have notconsolidated their designsconsolidated their designs

• The restriction to evaluate the projectin 6 years, seriously limits the result

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4. Comentaries• The asset sale value will depend on

aspects such as:

- The conditions of the rental and sales market- The conditions of the rental and sales market- On the world economy and local activity level- Geographical location

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4. Commentaries• In all simulations performed the

alternative c) rent to local company; proves to be the most expensiveoptionoption

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Ending………

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Thanks you very much

Víctor Barrientos Boccardovbarrientos@cmp.cl

CAP Minería I Cerro Negro Norte

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