R&M and Power Costs analysis and Reduction Strategy

Aim -23% reduction in overall R&M and Power Costs in the region

How

Reduce rate of breakdown – spares quality and correct use of the machine

Use of quality spares at the right price –eliminate the middleman

Accountability – machine ownership scheme (artisan + operator)

Moving towards Total Productive Maintenance –reduced workshop labour from 34 to 23 and sawmill R&M from 43 to 25 @ 06/2012

Key skills retention and training schemes –toolbox scheme

Charter Mobile Equipment Age Distribution

1 1

2

1

1

1

1

2

1

2

1

5

3

1

5

1

2

1

2

0

2

4

6

8

10

12

1 2 3 4 5 6 7 8 9 10+.

Telleloggers Skidder FE Loaders

Haulers MAN Tractors

Fire Tenders Roads

• 77% of 34 production mobile equipment is 4 years old

• Maintenance cost increases with age

Focus on

61%

33%

6%

FY12 Mobile Equip R&M Costs-Actual

Spares Tyres Oils

• Spares

• Quality- rate of

replacement & quality of repair

• Price

• User -reduce

need

• Tyres• Correct spec tyre

for the operation

• State of roads

Major Costs & Strategy

0

2

4

6

8

10

12

14

actual2010 actual 2011 actual 2012 Budget2012 budget2013

Target

Mobile Equip R&M for Plantation($/Ha)

Plantation($/Ha)

• Budget cost• 4 new tractor

engines

• 1 fire tender gearbox

• Target -25% reduction -$13 -$9.8/Ha

• Strategy• Partially rebuild

engines –too old for new engines

• Replace the old tractors in FY14

Major Costs & Strategy

0

1

2

3

4

5

6

7

8

9

10

actual2010 actual 2011 actual 2012Budget2012 budget2013

Target

Mobile Equip R&M for Harvesting($/m3)

Harvesting($/m3)

• Budget cost• 3 new Tellelogger

engines

• 3 new hauler engines

• 4 new Walking Beams

• Target – 30% reduction $9.12 -$6.38/m3

• Strategy

• Spread engine replacement over 2 yrs

• Cover with rebuilds @ a cost 20% of new

0

0.5

1

1.5

2

2.5

3

actual2010 actual 2011 actual 2012Budget2012 budget2013

Target

Mobile Equip R&M for Sawmill($/m3)

Sawmill($/m3)

• Budget

• 1 new FE Loader engine

• Focus on strategies to eliminate FE double handling at the deck to save on fuel consumption

0

5

10

15

20

25

actual2010 actual 2011 actual 2012 Budget2012 budget 2013 Target

Sawmill R&M ($/m3)

Sawmill R&M ($/m3)

Sawmill R & M costs Reduction Strategy

Aim -30% reduction in R&M cost from $10.51 to $8.4/m3

Labour utilisation – moving towards TPM….50% reduction in units

Integration of first-line maintenance personnel into production teams

Reliability cost -rate of breakdown

Spares quality –at least 60% reduction in premature bearing collapse when we fitted SKF bearing in the plant

Adhere to the planned maintenance schedule

Equipment ZESA grid instability protection – reduce the rate of electric motor rewinding

Quality of repairs work to reduce rework -retain and train key skills –PLC; SCADA; High Voltage Switchgear Services

Spares cost Buy quality from the manufacturer –eliminate the middleman

Transport cost –Lathe & Milling Machine on site will reduce the cost machined spares sourcing by at least 2 Mutare-Chimanimani-trips cost

0

2

4

6

8

10

12

14

actual2010 actual 2011 actual 2012 Budget2012 budget 2013 Target

Power($/m3)

Power($/m3)

Power Costs Reduction Strategy

Aim – 27% reduction in power cost from $8.71 to $7.5/,3

Spilling engine generator Consistently run in grid mode @ 450kW – 40% of sawmill power need @ $0.05/kWH

compared to ZESA @ $0.13/kWH & diesel generator @ $0.32/kWH

Timely spares procurement to reduce its down time

Power Factor monitoring-maintain it at unit

Maximum demand management- Daily checklist in place

Lighting cost –phase-out and replace ordinary light bulbs with equivalent

energy savers in the Region

FY12 Structure

34

Engineer

WkshopSupt

Autoelec+ Asst

3 mechs

5 Svcmen

Welder Chghand

Svcman

Bike mechTrailer mech

3 tyrefitters

WkshopClerk

Project Welder

Planner23 heads

Workshops FY13