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Managing the equipment lifecycle

November 21, 2023

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It's typical in mining to have a sizable proportion of your capital tied up in heavy equipment. Managing those tied-up assets, therefore, is critical to long-term financial success, particularly for contractors that bid for mining work. Brian Berkshire, Mining Sales Asset Manager at SMS Equipment, has managed the lifecycles of many of SMS Equipment-owned equipment and all of the supporting parts. In this edition of Experts Corner, he shares some of the essential dos and don'ts of managing those assets.

<u>Do</u> plan ahead for the entire life cycle.

Do plan ahead for the entire life cycle.

Brian: Mines and mining contractors typically write off their equipment over five to seven years, but some companies will extend that to ten years or longer. To ensure that the equipment maintains its value over that period, it's essential to maintain it properly. Equipment components all have benchmarks for hours of operation, and it's important to keep track of each component and plan ahead for replacements and repairs. Unexpected maintenance costs can be incredibly challenging for contractors who can't afford to shut down during a contract and may not have the cash flow for component changeouts during the off-season. The funding for maintaining the asset, therefore, should be factored in when the equipment is purchased. Because components on the equipment have different wear cycles, meticulous record-keeping is also required.

<u>Don't</u> neglect your equipment's maintenance and care.

Don't neglect your equipment's maintenance and care.

Brian: Contractors, in particular, might have a piece of equipment tied up for the duration of a specific contract, with little flexibility for shutdowns. This can cause further damage to worn components. For example, you might face costs for a component rebuild/replacement, but pushing the component replacement further could result in higher costs due to the component becoming beyond repair. So, falling behind can be very risky.

Do consider supply chain issues.

Brian: In today's world, we're dealing with high-interest rates, high shipping costs, and long lead times on equipment, components & parts. This is a double-edged sword – it's expensive to hold inventory, but we're currently running at 9 to 12 months or more lead time to get equipment. At SMS Equipment, we try to mitigate this for our customers by stocking as much gear and parts as possible. Still, there are limits to that, mainly because it's hard to determine what options and configurations would be required when bringing in the equipment for stock.

Don't compromise safety.

Brian: The last thing anybody wants is a fire. Include inspections of Hydraulic Hoses on Equipment in your maintenance schedule. Even if nobody is hurt, fires lead to investigations that can be extremely costly with extensive equipment downtime. Here's a scenario, for example, which is also one of the largest causes of fires when a hydraulic hose bursts. If that happens, there are various causes and effects, such as leaking fluid onto the turbo – the turbo is an extreme heat source and force coming out will cause a massive fire. Another Risk is behind the cab on EDT trucks, where the brake cabinets are mounted, and if that catches fire, the entire cab will likely enflame. The lesson from that is that hydraulic hoses must be inspected & maintained as they only have a three-year life span, so that has to be part of your long-term asset management plan.

Do work with your supplier.

Brian: The challenge for everybody working in remote locations, as much on mining does, always seems to be getting people out there. So our job is to ensure that we can get technicians to service equipment, wherever that may be, and keep their equipment running. But if it gets to the point where the equipment breaks down, unplanned, there are only so many people we can send. When we sell equipment into these locations, we will offer value-added packages with the equipment to ensure we have the people & resources to maintain the customers equipment to reduce downtime entirely. That way, we can allocate people to ensure the maintenance intervals stay current and our customers aren't caught with costly breakdowns.

The Bottom Line

Nobody wants to be caught with malfunctioning or nonfunctioning equipment in the remote regions that define Canadian mining. Meticulous lifecycle management can ensure that equipment is available for the full-service cycle it was designed for, and a strong service relationship with a supplier like SMS Equipment can ensure that help will be on the way when needed.

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