Mining Equipment Supplier Selection - Mine Management Questions and Answers Series (7)

Morobe Mining  Joint Venture (MMJV) is developing the Hidden Valley mine and the mine is considering several suppliers of machinery and equipment and continual service at the mine site. From experience and data available, the premier suppliers are Caterpillar, UWM Machinery and Hasting Deering. The manager identified the criterion for selecting the best service providers are based on cost, product quality, productivity and life/durability. The manager develops the following pairwise comparison matrices for each of the three four criteria.

X = CAT,Y= UWM,Z=Hastings Deering.

		Cost			P/Quality				Productivity				Life/Durability
	X	Y	Z		X	Y	Z		X	Y	Z		X	Y	Z
X	1	2	5	X	1	0.25	0.2	X	1	5	4	X	1	0.143	0.2
Y	0.5	1	7	Y	4	1	0.125	Y	0.2	1	3	Y	7	1	0.125
Z	0.2	0.1429	1	Z	5	8	1	Z	0.25	0.333	1	Z	5	8	1

From the above table, the cost matrix shows that supplier  X is “ equally to strongly preferred ” to supplier Z, but supplier Z is “equally to very strongly preferred” to supplier Y. Diagonally, it is equally preferred as it has the value of 1 which indicates one supplier is compared to itself.

The suppliers are prioritized within each criterion. For example, the manager intend to know which is the most preferred supplier, the second, third  within each of the four criteria. Mathematically, it is complex but it only employ approximation method to estimate preference scores. The first step is to sum the values in each column of pairwise comparison matrix as shown below for cost matrix(a).

Step  1	(a)				(b)
		Cost					Cost
Supplier	X	Y	Z		Supplier	X	Y	Z		Row Average
X	1	2	5		X	0.588	0.6364	0.3846		0.5364
Y	0.5	1	7		Y	0.294	0.3182	0.5385		0.3836
Z	0.2	0.1429	1		Z	0.118	0.0455	0.0769		0.08
Sum	1.7	3.143	13						Sum	1

In (a) the cost synthetization is done by adding cost pairwise comparison rating matrix. In (b) each column of cost pairwise comparison rating matrix is divided by the corresponding column sums (i.e. 0.5/1.7 = 0.294). it is also notice that at (b), each column sums to 1. Next, the values in each row are averaged as shown on the right hand side of the table above. Also column sum is 1 for the average values.

Step 2. Compare qualities.

The procedures applied above in cost comparison matrix is applied to the other comparison criterion and only the results (row averages) are tabulated for each supplier as given below. The row averages provide the company with its preferences for each criterion. For example, for the cost criterion, supplier  X is most preferred followed by supplier Y and supplier Z.

Supplier	Cost	P/Quality	Productivity	Life/Durability
X	0.5364	0.0927	0.6597	0.0812
Y	0.3836	0.2008	0.2236	0.2474
Z	0.08	0.7065	0.1167	0.6714
Sum	1	1	1	1

The prioritized decision criteria according to pairwise comparisons are shown below. Note that the corresponding columns are summed.

Criteria	Cost	P/Quality	Productivity	Life/Durability
Cost	1	0.1667	0.25	0.125
p/Quality	6	1	0.1429	0.1111
Productivity	4	7	1	6
Life/Durability	8	9	0.1667	1
Sum	19	17.167	1.5595	7.2361

 The column values of the above table have been divided by the column sums correspondingly and then averaged the rows as shown below.

Criteria	Cost	P/Quality	Productivity	Life/Durability	Row Average
Cost	0.05263	0.0097	0.1603	0.0173	0.05998
P /Quality	0.31579	0.0583	0.0916	0.0154	0.12025
Productivity	0.21053	0.4078	0.6412	0.8292	0.52217
Life/Durability	0.42105	0.5243	0.1069	0.1382	0.2976
Sum					1

The preference vector for the criteria consists of the row averages.

	Criteria
Cost	0.05998
P /Quality	0.12025
Productivity	0.52217
Life/Durability	0.2976

It can be clearly seen that the productivity of machines is the most important criterion with its life/durability the second in decision making. The overall score for each supplier is obtained by multiplying the matrix summarizing MMJV’s preference for each supplier criterion which was developed previously by the preference vector for the four criteria above. This is illustrated  in the table below.

Criteria
Supplier	Cost	P/Quality	Productivity	Life /Durability			Criteria
X	0.5364	0.0927	0.6597	0.0812		Cost	0.05998
Y	0.38359	0.2008	0.2236	0.2474	x	P/Quality	0.12025
Z	0.08001	0.7065	0.1167	0.6714		Productivity	0.52217
						Life/Durability	0.2976

Below are the scores each supplier was rated.

Supplier	Score		Order  of score
X- CAT	0.411952		X- CAT	0.412
Y-UWM	0.237541		Y-UWM	0.3505
Z-Hasting Deering	0.350507		Z-Hasting Deering	0.2375

By seeing the scores above, CAT is the most preferred supplier of machineries for MMJV. MMJV must be confidence in the judgements made in pairwise comparisons if MMJV will rely on the result above. But even if the company doesn’t make its selection based on the analytical hierarchy process (AHP) result, following this process results in identifying appropriate and reliable supplier to meet company’s production needs. Hence, AHP can help identify and prioritize the criteria, and examine strengths and weaknesses of different suppliers.

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Wafi-Golpu Mining Warden Hearing at Wenebele and Bawaga Villages.

The Mining Warden Hearing for Wafi-Golpu Support tenements for SML 10 application commenced on Monday the 2^nd of July 2018 at Wenebele and Bawaga Villages.

The Wenebele village of Yanta clan and Bawaga Village of Hengambu comprising of Elemu Gwagu and Demagu clans and Wonkins Village of Babuaf Clans are the primary landowners of the SML area and together with the LMPs and MEs under application for the Wafi-Golpu Joint Venture.

Yanta clan have four groups while Hengambu has three Landowner groups/clans have turned up during the meeting in numbers and gave their views in regards to the tenement applications.

Firstly, the Community Affaires superintendent of Wafi-Golpu Joint Venture, Mr.David Masani introduced the warden hearing team to the landowners and opened with a word of prayer to commence hearing. Then handed over to chief Mining Warden of Papua New Guinea, Mr, and Andrew to actually proceed into the Mining Warden Hearing.

The Chief Warden , Mr, Andrew Gunua conducted the Mining Warden Hearing  for Mining Easements comprise of ME 91, Me 93, ME 94. He explained the process of application with displays of posters and explained simplified illustrations with the flow chats of how an SML and supporting tenements are granted following due processes.

He further explained the warden hearing procedure and order of hearing.

The Chief Warden then allowed the company representative to explain to the warden hearing parties of the amendment to the orginal applications and the new work plans and David Masani explained exactly the company’s intention for the three amended ME applications.

The Chief Warden after recording the company’s work plan, he allowed the landowners to give their views whether they support the company’s application or object the applications. The people raised few concerns and asked few questions for the benefit of doubts of which the Chief Warden provided response which were of satisfactory to them.

The Chief Warden then closed the meeting upon satisfying all the requirements under the Mining Act 1992 regarding wardens hearing.

Further questions regarding benefits and other agreement meetings were raised after the meeting and the landowners were advised that, there will be a Development Forum of which the Mining Minister will officially open for them to further discuss matters of this regard.

The Project Coordinator Moses Mambu briefly explained the Development Forum to the landowners and the landowners were looking forward to the Development Forum later during the month.

The same procedure was followed at the Bawaga Village and warden hearings for ME 91, me 93 and ME 94 at both venues were successfully completed. These conclude the Mining Warden Hearing for the First Day and the warden hearing team anticipates  to complete the rest of the hearings in the remaining days.



Chief Mining Warden, Mr.Andrew Gunua Explaining the Flow Chat for SML Application Process at Yanta Community Hall

Landowner Acting Deputy President of Yanta, Mr.Johnson Ruben Responded during the Warden Hearing at Wenebele(Yanta Community Hall)

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