Best Practice for Metal Accounting
This article is divided in Four parts:
- Overview of Metal Accounting
- Best Practice in Metal Accounting (AMIRA P754 project)
- Case Study of how SAP becomes a key driver in adopting above best practice.
- Overview of Metal Accounting
Metal accounting is an ongoing process that involves sampling, analyzing, and accounting for the gold or other commodities that are part of your metallurgical circuit. Just as financial accounting provides the necessary framework for financial decisions; metal accounting provides the diagnostic information required for effective metallurgical decisions. Properly designed metal accounting procedures are a powerful tool that can provide insight, help monitor and address remedial measures for:
- Production variability
- Unexplained material losses and gains in pay metals
- Process inefficiencies
- Production forecasting problems.
2 Best Practice in Metal Accounting
In 2003 AMIRA (an independent association of minerals companies which develops, brokers and facilitates collaborative research projects.) initiated their P754 research project: Improving Metal Accounting.As a result of global research work, the Code for Metal Accounting was published in its current version in 2007.
The primary objective of the project was to provide tools for improving the auditability and transparency of metal accounting from mine to product, and to facilitate good corporate governance.The Code is based on a set of ten Principles of Metal Accounting, which were agreed by the development team in consultation with the accounting profession and the sponsors of the project and which cover accurate measurements of mass and metal content, transparency, documentation and calculation procedures, internal and external audits, reporting, procedures and levels of authorization for the replacement of provisional or rogue data; data verification and reconciliation, target mass measurement and sampling and analysis accuracies, physical stock-takes and the treatment of unaccounted losses or gains, and the rapid identification of any bias that may occur.
where an operation cannot comply with these prescribed standards an exception report must be prepared, setting out the reasons for non-compliance (cost, risk, etc.). The exception report must be signed off by a competent person and submitted to the company’s audit committee for approval. In this way, decisions related to metal accounting that could have a significant impact on the company’s reported results and on its metallurgical efficiencies are brought to the attention of senior management and, where appropriate, to the board of directors. Such decisions are therefore handled in a transparent manner, subject to review by the company’s financial auditors, and incorporate a formal review of the risks associated with non-compliance with the Code.Below figure provide an overview of entire system.
3. Metallurgical Accounting at the Strathcona Mill-Case Study.
- Overview of a Company
The Strathcona flotation plant is part the Sudbury operations of Xstrata Nickel which also include the Nickel Rim South mine, the Fraser mine and the Sudbury nickel smelter. Strathcona is currently a custom milling operation and processes ores from Xstrata and non-Xstrata mining sites. Its two main products are a nickel-copper and a copper concentrates
Given that the plant must report coherent metal production balances to different customers (including their own management) and that blending between feed sources may at times be required to maximize plant feed rate, metal accounting at Strathcona is somewhat more challenging than at a typical single-feed flotation plant.
- Main Components of Metal Accounting System
- The Problem
Common Excel spreadsheets were used to collect, store and process metallurgical accounting data. Daily and month-end reports were generated by copying-and-pasting data into different worksheets or were channeled through dynamic linking to other Excel workbooks. Although such spreadsheets were considered fine at the time, they raised security and auditability issues in the multiple-user environment. Information could be changed at any time, without a trace and anonymously. Because multiple copies of the metallurgical accounting dataset could be made and modified independently, the system could not protect the integrity of reported data. The spreadsheet-based metallurgical accounting system was not integrated with management information systems and therefore, was not satisfying AMIRA Best Practices code.
- Driver for Transformation
The Xstrata Nickel corporate-wide adoption of SAP business management software was probably the main agent of change for metal accounting practices at the Strathcona mill. This was driven by a corporate ambition to increase the accuracy of key performance indicators across the whole business unit. As illustrated in Figure below sales contract negotiations and production planning are both based on achieved metal balances. Improving trading reactivity needed improvements in production planning which strongly relied on improved metallurgical accounting.
A SAP module integrating the entire production chain was put in place thereby imposing production numbers to be declared on a daily basis. However, due to unavoidable laboratory turn-around delays, the daily declaration has to be done on a differed basis. As providing provisional numbers to the SAP system was not an option, the Strathcona mill had to speed up and enhance its metallurgical accounting procedures. PGM production could no longer be accounted only on a monthly basis. The need for shorter assaying delays triggered the search for faster analytical techniques.
Another driver for change was the need for better understanding the flotation response of non-Xstrata Nickel ores. With Xstrata Nickel ores, achieved production results could always be compared to historical performance datasets. However, given the very limited operating experience and knowledge of Strathcona with some non-Xstrata Nickel ores, data redundancy and statistical reconciliation would provide the metallurgists with a powerful means to validate the metallurgical balances to report to their customers. There were also metallurgical accounting issues related to metal ownership when blending ores from multiple stockpiles prior to feeding the mill. These situations, even when the reported feed tonnage split was acknowledged by the owners, were challenging because each feed type has different ore properties, grades, contaminants and therefore, different expected recovery.
The metallurgical accounting practices were formalized in a commercial system application (Metallurgical Accountant )which was able to provide the data required by the SAP system. An essential component of the entire metal accounting system was the automatic generation of reports that summarize metal accounting results and other plant performance indicators. Key reporting features were implemented that greatly enhanced flexibility and speed of the system. For example, a new reporting service was installed to allow plant personnel to modify the report structure by them. The OLAP cube technology was also embedded in the system to speed up data handling within the database