At a Glance
The cutoff grade is a critical metric used to determine the quality of ore extracted, the profitability of the mine and incentivizes mine plan adherence by operators.
Beyond measuring the volume/tonnage moved, the cutoff grade ensures that the right ore is moved, at the right time, according to mine plans that facilitate the profitability of the mine.
It’s human nature to be driven to meet goals through rewards which incentivize our behaviors. However, if the metrics of success are defined too narrowly or aren’t given clear context, it can result in driving the wrong behaviors – an extremely costly but common misstep made by organizations when defining their KPIs.
This happens when mine operators are rewarded primarily based on tons moved or ounces extracted instead of close adherence to a mine plan. If the wrong ore is moved that does not meet cut-off grades, poor blending at the processing plant and costly ore recovery inevitably follow.
While tonnage moved is a fundamental metric, it fails to incentivize the larger goal of the mine – to extract low-cost ounces that meet profitable cut-off grades. In other words, plan attainment is met, but plan adherence (spatial compliance) is lost. This siloed focus on quantity versus quality of ore becomes counterintuitive to the larger goal of mine profitability. Goodhart’s Law best exemplifies this scenario with the adage “When a measure becomes a target, it ceases to be a good measure”. It emphasizes the pitfalls of using a single indicator to measure complex outcomes.
Equipment operators are not concerned by product spot price or cutoff grade. Instead, they focus on tons, meters, swings, and cycles per hour. This is perfectly logical given the KPIs and incentives that motivate performance that have been set for them at their organizational level – such as tonnage moved.
Ensure mine plan adherence with the cutoff grade
To ensure quality ore is extracted that meets cut-off grades, mine plan adherence is what matters most. Significant deviations from a mine plan must be vetted by leadership and management through a formal escalation process, ensuring the resulting costs of changes are fully understood and will not negatively impact the mine’s bottom line. The cutoff grade is integral to mine planning processes, influencing decisions on resource allocation and, ultimately, Net Present Value, Life of Mine and even final reclamation work.
When departments are incentivized based on KPIs disconnected from larger business goals, teams begin to work in siloes to the detriment of the organization’s mission. Unison Mining can work with your teams during mine planning to align KPIs to larger goals of your mining company. We specialize in facilitating the behavior change needed for sustainable success that endures long after a project’s closeout.
