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services > reconciliation
 What is Reconciliation?
The MacQuarie Dictionary defines reconciliation as “the act of reconciling (bring into agreement or harmony)”. It also states reconciliation is “the settling of a lingering dispute, grievance, etc., held by one group or society against another”.
In the resource industry, reconciliation sometimes seems to have exactly the opposite meaning. Instead of agreement and harmony, instead of settling disputes, the standard reconciliation approach sets one end of the value chain against the other – for example the mine versus the treatment plant. Why then is so much effort spent on reconciliation?
Well-implemented and managed reconciliation can make a material impact on the bottom line. Understanding the mining value chain and identifying points along the chain where potential value is lost allows corrective action to be taken. Reconciliation is only worthwhile if it results in changes that improve performance. A valuable property of a properly function reconciliation system is that it will measure its own performance and improvement. Thus reconciliation is a cornerstone of continuous improvement in mining – it is difficult to imagine system-wide improvement without good reconciliation systems.
A Systematic Approach
‘Systematic Reconciliation’ is a process where estimates of the available resource and the capacity of the operation are compared at multiple points along the mining value chain. These comparisons are used to determine the precision and accuracy of the various estimates with a view to improving these and thus allowing improved resource utilisation and other business benefits.
The benefits of reconciliation derive from the premise that the performance of a system must be measured if it to be understood and potentially improved. Reconciliation systems identify the most appropriate measurement approaches and the potential management actions associated with the results of these measures.
Components of Reconciliation
There are a number of different types of reconciliation (or comparisons) available to every mining operation. These include:
- Mine claimed versus treatment plant claimed;
- Treatment plant claimed output against the amount of product sold to market;
- The pre-mining Ore Reserve and Mineral Resource versus the mine, treatment plant and marketed product quantities; and
- Planned production performance against achieved performance.
These reconciliation points have both spatial and temporal components. That is, the measures of tonnes and quality taken as a part of the reconciliation system must allow the following to be determined:
1. The location of the tonnes in question; and
2. The time the measurement was taken.
More robust, time-based measures that are typically available in the latter stages of the production process can be compared to the location-based estimates of the resource providing a feedback loop.
Using the Results
In addition to comparing estimates and measures of tonnes and quality, reconciliation systems provide data for an analytical determination of ‘modifying factors’ along the production process. That is, by performing routine reconciliation, factors such as dilution and mining-related losses can be analysed.
For the full benefits of a reconciliation system to be realised, the process must be developed with the key business drivers in mind. It is essential that the reconciliation approach is incorporated into the operational management information system. Reconciliation that does not result in changes to business practices (at whatever level) is a meaningless activity.
QG’s Approach
QG believes that thorough and complete reconciliation is an essential tool for every well managed mining operation. Reconciliation is more than simply accounting for material movements or tracking individual business unit performance. The true value of reconciliation is derived by accepting that there will always be differences between various estimates and measurements. It is important to understand differences, monitor and compare performance trends and, when necessary, take action to address the opportunities. A detailed reconciliation system can identify such opportunities to increase value of the business.
Our approach to reconciliation begins with understanding the value chain of your operation. We can assist you in identifying the important measurement points for your reconciliation system. Once these key points have been determined, we will help you to understand what is noise or natural variation, what is a systematic bias and what is a ‘special cause’ variation. The optimum response for each of these aspects will be different and depends on the operation and its value chain. QG bring high quality skills from a geological and mining background to ensure that your sampling and measurement approaches are adequate to allow meaningful analysis.
Reconciliation is the only tool available to measure the continuous improvement of your resource and reserve modelling practices. It is also vital to ensure the full value of your product is captured and plays an important role in improving the mine planning – mine operations interface.
In summary – if you are serious about meaningful and thorough approaches to reconciliation, you should talk to QG.
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Scott Jackson (left), Scott Dunham (centre), and John Vann (right) are the Directors of Quantitative Group
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