RFID ENABLED GRADE CONTROL MANAGEMENT SYSTEM

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1 RFID ENABLED GRADE CONTROL MANAGEMENT SYSTEM MINE TRIAL EXECUTIVE REPORT CATEGORY A Project CONTRACT NO Approval The following Signatories approve this Project Process Report: NAME ROLE SIGNATURE DATE Dingaan Skosana Project Manager 21/05/2014 Core Review Team NAME ROLE SIGNATURE DATE

2 ABSTRACT This report is an executive summary of the RFID enabled Grade Control Management System (GCMS ) Mine Trial. The GCMS is a real-time multi-disciplinary information system developed for the management and control of tracking grade samples, blast movement and material (ore/waste) from pit to port using RFID technology for improved grade control and plant efficiencies. Based on the Mine Trial, it is clear that the GCMS can automatically identify, manage and track ore bodies, thus improving Grade Control and drastically reducing Ore Losses. The Implementation of the GCMS involves a Cost per Production Tonne (CPT), resulting in a high Return on Investment (ROI). RFID - Mine Trial i

3 1 INTRODUCTION The objective of this report is to provide a Mine Trial Completion Report of the Grade Control Management System undertaken by the RFID Institute.SA (Contract No Implementation and Execution of Plant Trials on Application of RFID Technology in the Mining Environment ). The RFID enabled Grade Control Management System (GCMS ) Mine Trial was held at Kumba Iron Ore s Kolomela and Sishen Mines. The following applications were developed and deployed by the RFID Institute for the Mine Trial and were individually trialled and tested: Grade Control Management Information System Sample Tracking Blast Block Movement Ore Tracking Every mine comprises a different grade and tonnage. During exploration, grade control is a mining process to quality check and control the grade and variability of an ore. The purpose of grade control is for mining companies to understand and document any variability in their sampling and their ore reserve, taking into account the many facets of data collection before mining begins. The mining industry currently faces huge challenges due to increased mining costs and lower metal prices. In addition, current mining practices results in ore losses caused by insufficient sampling, lack of measuring ore movement in blasts as well as hauling and dispatching of ore to waste and waste to ore which all directly impact on the bottom line. 1.1 Problem Statement A Pre-Feasibility study conducted for Kumba Iron Ore on RFID enabled grade control system identified the key areas of concern which impacted on ore losses throughout their mining operations, being: Management Information - The Iron Ore Mining Process is essentially a series of operations, which are interconnected, with the performance of one operation affecting the performance of another. Optimising each stage separately without considering the whole system often causes potential economic benefits and savings to be missed. It is crucial for information sharing to occur across operations to ensure access to real time information. Grade Sampling - Because of the frequency of incidents of lost, misidentified or unidentified samples as well as the quantum of lost time associated with manually tracking and tracing the requisite samples, the capacity of the Geology function is unable to match that of the Mining function resulting in periods of Blind mining. RFID - Mine Trial 1

4 Blast Movement - Controlling ore loss and dilution during blasting is critical for most mining operations. Getting it wrong can result in millions of dollars per year of lost revenue. Ore Tracking - Two of the most important issues mines have to deal with are tracking the ore mined from pit to plant and to test the efficiency of beneficiation equipment. A key issue is that of waste being transported to the crusher and ore being transported to waste. There are various reasons for this ranging from the loss of or incorrect assignment of survey data, to the shifting of the block during blasting, to errors by dispatchers and shovel operators, and being unable to identify the ore grade during hauling and ore transfer. Case studies have shown that by accounting for blast movement, there is a potential to increase mineral output by as much as 25% for individual blasts for only a modest cost of a few cents per tonne. 1.2 Solution GCMS In order to drive productivity through innovation by linking resource and downstream processing, RFID Institute has developed the GCMS System based on RFID technology which tracks material before and after the blast. Blast Movement Technologies (BMT) has developed hardware and software - Blast Movement Monitoring (BMM ) System for measuring movement of the ore during the blast. The combination of these two systems results in increased knowledge of ore body characteristics and behaviour having the potential to efficiently manage ore and optimise the entire mining cycle. In order to sustain our future we need to innovate. Our technical division has spent much of 2013 looking into new technology to help us maximise our available resources (Kumba Iron Ore) Radio Frequency Identification Radio Frequency Identification (RFID) is an automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders (tracers). Utilising radio frequency waves, an RFID tag can be applied to or incorporated into a product / material for the purpose of location and identification. The use of RFID in mining operations has the potential to provide real benefits to grade control, plant efficiencies, and interoperability in an end-to-end integrated environment. RFID Technology facilitates continuous real time measurement of people, process, equipment and materials. New ideas are what make us competitive and allow us to find ways to be sustainable (Kumba Iron Ore). Mining companies worldwide have begun employing RFID technologies to automate manual processes, streamline production and reduce costs (RFID Journal). RFID - Mine Trial 2

5 1.2.2 Blast Movement Monitoring The Blast Movement Monitor (BMM) is a revolutionary system developed by BMT. The system consists of directional transmitters placed within the blast prior to blasting, which are then located after the blast with a special detector. The collected information is then processed with purpose-designed software. Ore boundaries or digging levels are redefined within 1-2 hours of the blast to reflect the measured movement, and hence reduce ore loss and dilution. 2 GCMS HISTORY Kumba management has for some time been interested in the potential value to the business offered by the fact that RFID has the ability to track material from pit to plant and to measure plant efficiency in real time. Kumba Research and Development (R&D) together with the RFID Institute.SA underwent intensive site surveys and workshops involving stakeholders from all divisions throughout the group at all the Kumba operations. A summary of RFID related initiatives and highlights to date runs as follows: : RFID product development / Pilot projects; 2010 RFID Pre-Feasibility Analysis Proof of Concept Testing (Technology evaluation) 2013 Mine Trial (Economic evaluation) Kolomela / Sishen Mine The pre-feasibility analysis undertaken in 2010 found that the deployment of a RFID system to enable the primary applications would generate benefits with an estimated order-ofmagnitude value in excess of R per annum. 3 GCMS DESIGN SCOPE The RFID system designed and installed at Kolomela and Sishen Mines, for a complete mine trial facilitated the principal applications as listed: Development and installation of a Software Host System (GCMS ) Interface to existing systems for information management Resources and facilities were provided to ensure non-disruption of existing work processes RFID reader networks were installed and the necessary processes implemented whereby; 1. Samples were tagged and tracked through the process. 2. Blocks were tagged and their post-blast configurations were established to ensure correct ROM / Waste classification. 3. Mined material was tagged (ore grade) with blast resistant Ore Tracers and tracked throughout the process from pit to plant. RFID - Mine Trial 4

6 4 GCMS MINE TRIAL The Mine Trial involved applying tested RFID technology at a mine, aimed at a continuous run from Sample Identification, Blast Movement Monitoring and Ore Tracking (pit to plant) to consolidate the techno economic benefits of the technology. Blast testing at the University of Cape Town was conducted, and the team monitored four blasts at Kolomela Mine for Blast Movement Monitoring and Ore Tracking. In Addition, Sample Tracking of two blocks was undertaken at Sishen Mine. 4.1 Mine Trial Objectives The objectives of the Mine Trial were to measure the financial benefits that the RFID enabled GCMS would have related to grade control at Kumba Iron Ore mines. Further, to design, deploy and test a means of overcoming the factors that influence the shortfalls affecting: Grade Control Management Information Sampling Blast Movement Monitoring Ore to waste 4.2 Sample Tracking System The objective of the sample tracking system was to reduce the percentage of unaccounted for samples per blast block. Tracking sample bags with the use of RFID labels from source to sample prep has resulted in reduced block classification time arising from faster data capture, more accurate data capture, and faster sample turnaround. The result of this of this improved the current shortfall ratio of 35% to 0% unaccounted for samples during the mine trial period. 4.3 Blast Movement Monitoring The key objectives of the BMM component was to examine the following during the blast process: Horizontal movement Vertical movement Economic data including grades for each ore block Provide accurate pre blast vs post blast block mapping Four blast blocks underwent Blast Movement Monitoring. Of the four blocks, three had ore/waste contacts, and one was entirely ore. The BMM results demonstrate, large losses in ore and large amounts of waste can be introduced if blast movement is not measured and dig lines are not adjusted properly. RFID - Mine Trial 5

7 In Table 1, the three blasts with ore/waste contacts monitored for the mine trial have been compiled to show the total cost benefit using blast movement monitoring for all three blasts is over $1.35 Million dollars with a ROI of 20694%. Table 1: Economic Summary of all Blasts All Blasts Tonnes Change in Revenue Ore Loss $ Dilution $ Monitoring Cost $6 504 Net BMM benefit $ ROI % 4.4 Ore Tracking The objectives of the Ore Tracking component, was to test and evaluate the ability to tag an ore body within the block pre blast and track the ore throughout the mining process from pit to plant and any further strategic location within the ore transfer process. Four blast blocks at Kolomela Mine were seeded with registered Ore Tracers prior to blasting and were tracked from Pit to Plant. Two blast blocks were tagged (chicken fed) with registered Ore Tracers post blast and were tracked from Pit to Plant. Five Finger Stockpiles were tagged (chicken fed) with registered Ore Tracers and were automatically identified and tracked through the Plant. The primary impact of this is reduced ore-to-waste. The estimate for the dumping of ore to waste agreed during the analysis process was 13%. Even assuming that the correct number is 10% this problem results in very significant losses for the group and could be almost entirely eradicated with the implementation of RFID enabled ore tracking. The benefit of this can be quantified using the following methodology: Circa 75% (improvement) on the estimated 10% ore loss base: Total Tons Mined, multiplied by; Revenue Per Ton, multiplied by; 75% (improvement), multiplied by; 10% estimated ore loss. RFID - Mine Trial 6

8 5 GCMS BENEFITS EVALUATION Based on KIO s 2013 production values for Kolomela Mine, using a projected improvement of 10% at a deployment cost of $ (US$0.15 per ton), the Net Benefit of the GCMS system equates to US$ at a Return of Investment of 4 439% (Table 2). Table 2: Cost / Benefit Analysis for Kolomela Mine using the GCMS System Aspect Current GCMS (10%) Benefits Production (tonnes) Unit Cost per tonne $25,05 $25,20 -$0.15 Production Cost $ $ $ Total Revenue $ $ $ Net Income $ $ $ ROI (%) 4439 Note: Cost calculated at $99,95 revenue per tonne Assuming the scenario is the same at Sishen Mine, the Net Benefit of the GCMS system at Sishen Mine equates to US$ at a cost of $ with a Return of Investment of 3 378% (Table 3). Table 3: Cost / Benefit Analysis for Sishen Mine using the GCMS System Aspect Current GCMS (10%) Benefits Production (tonnes) Unit Cost per tonne $33,81 $33,96 -$0.15 Production Cost $ $ $ Total Revenue $ $ $ Net Income $ $ $ ROI (%) 3378 Note: Cost calculated at $91,19 revenue per tonne Based on the Mine Trial results, it is clear that the RFID enabled GCMS has the ability to track samples, measure blast movement, and track ore from Pit to Plant. This will provide substantial reduction in ore losses with an estimated improvement in annual revenue of US$ at Kolomela and Sishen Mines combined without taking into consideration the financial benefits that can be derived from the improved sampling and operational efficiencies offered by the GCMS. 6 CONCLUSIONS The Mine Trial results suggests that the deployment of the GCMS system to enable the primary applications described above would generate benefits more than sufficient to offset the cost of the deployment and that it would significantly enhance operational efficiencies, and reduce ore losses. RFID - Mine Trial 7

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