Practical Applications Of Recent Techniques To Mobile Equipment Replacement

The difficulties encountered in justifying replacements for over-age mobile mine equipment at the Gay Mine are common to most mining operations. More critical management reviews, resulting from ever rising capital expenses, increased such difficulties. These increased difficulties are especially apparent to those who are primarily operators and are not statisticians, mathematicians, or computer oriented. The Gay Mine is located 17 miles east of the town of Fort Hall in southern Idaho. This open pit operation annually supplies the J. R. Simplot Company and the FMC Corporation with 1.5 MM - 2.0 MM tons of phosphate ore. Stripping ratios average approximately three bank cubic yards of waste per ton of ore mined. The mobile mine equipment fleet consists of ten 24 yard scrapers; twenty-one 30-50 ton end dump trucks; four 32 42 yard shovels; fifteen dozers in the D-8 and D-9 classes; and three road patrols. Equipment replacement is based on the results of evaluations made on individual units. Authorization of capital expenditures for equipment replacement is dependent upon a favorable profitability index (true rate of return on investment) plus a favorable payout time. The system is based on cash flows and requires the determination of (1) the net cash outflows in the form of capital expenses plus (2) the expected cash inflows resulting from reduced expenses and depreciation tax credits. After adjustments for taxes and the time value of money, the net amounts are used to calculate the required indices. The basic elements for the system related to the replacement of mobile mine equipment include: (1) the determination of dollar penalties to be expected from the continued use of aging equipment; (2) the selection of equipment that will provide the greatest return on the investment dollars; (3) the quantification of the expected savings; and (4) the calculations of the prescribed indices. Inadequacies inherent in previous evaluating methods led to the search for more