Contents

Introduction ................................................................................................................................................... 2
Resource management .................................................................................................................................. 3
Corporate resource management process ...................................................................................................... 3
Resource plan ................................................................................................................................................ 5
Resources breakdown structure .................................................................................................................... 5
Responsibility Assignment matrix ................................................................................................................ 5
Mineral Resources Management ................................................................................................................... 6
A business model for mining .................................................................................................................... 6
A model for the mining business .............................................................................................................. 7
The business strategy .................................................................................................................................... 8
Conclusion .................................................................................................................................................. 14
References ................................................................................................................................................... 15
Introduction
On that work I will talk about resource management that are , resource management is the
efficient and effective development of an organization's resources when they are needed. Also I
will talk about Mineral resource management to see the influence of the resource management on
mining industry.

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Resource management
Resource - is a stock or supply of money, materials, staff, and other assets that can be drawn on
by a person or organization in order to function effectively.

Management - is the administration of an organization, whether it is a business, not-for-profit

organization, or government body. Management includes the activities of setting the strategy of
an organization and coordinating the efforts of its employees,

Resource Management

In organizational studies, resource management is the efficient and effective development of an

organization's resources when they are needed. Such resources may include financial resources,
inventory, human skills, production resources, or information technology (IT) and natural
resources.

Resource management is a key element to activity resource estimating and project human
resource management. Both are essential components of a comprehensive project management
plan to execute and monitor a project successfully. As is the case with the larger discipline of
project management, there are resource management software tools available that automate and
assist the process of resource allocation to projects and portfolio resource transparency including
supply and demand of resources. The goal of these tools typically is to ensure that: (i) there are
employees within our organization with required specific skill set and desired profile required for
a project, (ii) decide the number and skill sets of new employees to hire, and (iii) allocate the
workforce to various projects. Within professional services and consulting organizations, the
effectiveness of these tools and processes is typically monitored by measuring billable utilization
rate.

Corporate resource management process

Large organizations usually have a defined corporate resource management process which
mainly guarantees that resources are never over-allocated across multiple projects. Peter Drucker
wrote of the need to focus resources, abandoning a less promising initiative for every new project
taken on, as fragmentation inhibits results.

Techniques

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One resource management technique is resource leveling . It aims at smoothing the stock of
resources on hand, reducing both excess inventories and shortages.

The required data are: the demands for various resources, forecast by time period into the
future as far as is reasonable, as well as the resources' configurations required in those demands,
and the supply of the resources, again forecast by time period into the future as far as is
reasonable.

The goal is to achieve 100% utilization but that is very unlikely, when weighted by important
metrics and subject to constraints, for example: meeting a minimum service level, but otherwise
minimizing cost. A Project Resource Allocation Matrix (PRAM) is maintained to visualize the
resource allocations against various projects.

The principle is to invest in resources as stored capabilities, and then unleash the capabilities as
demanded.

A dimension of resource development is included in resource management by which investment

in resources can be retained by a smaller additional investment to develop a new capability that
is demanded, at a lower investment than disposing of the current resource and replacing it with
another that has the demanded capability.

In conservation, resource management is a set of practices pertaining to maintaining natural

systems integrity. Examples of this form of management are air resource management, soil
conservation, forestry, wildlife management and water resource management. The broad term for
this type of resource management is natural resource management (NRM).

In addition, we can use Ishikawa diagram to analyze Man, Money, Material and Machine
needed.

In a nutshell, resource management is the process of finding the answers to the question – how
to use available resources efficiently, effectively and economically.

Key terms

To get a clear picture of resource management, it’s essential to understand the different terms
and processes, associated with it.

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Resource plan
Just like every other step in project management, resource management starts with a well laid-
out plan. The resource plan includes a detailed and comprehensive list of all the resources
required for the successful completion of a project. This process involves the senior team
members and project managers.

Resources breakdown structure

The resource plan gives you a clear picture of the required resources. The next step is to create
hierarchies among the resources. This is known as Resources Breakdown Structure or RBS in
short. Generally, the RBS identifies and orders resources according to reporting structure, team
hierarchy or by geography.

Keep in mind that RBS is different from the WBS (Work Breakdown Structure). The latter
defines the tasks associated with each phase of the project, while the former arranges resources
in different hierarchies.

Responsibility Assignment matrix

This involves assigning responsibilities to each resource in the resource plan for completion of
the project. This is where you define the following:

 Who is responsible for which task;

 Who owns a particular task;
 Who can help resources if there are queries regarding the task;
 Who needs to stay informed about the progress of the task.

The RAM makes use of the following symbols:

R: Responsible

A: Accountable

C: Consulted

I: Informed

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Resource over-allocation

As the term implies, it denotes a particular resource has been allocated too much work. When
resource over-allocation occurs, the person will not be able to complete the allocated tasks within
the scheduled time.

Resource over-allocation can have several negative impacts like – overtime of projects, stressing
out employees, over-shooting project budgets and even derail a project. To avoid all these, it’s
essential that your resources are balanced and allocated optimally.

Resources histogram

This gives a visual representation of resource allocation. It helps everyone concerned – from
project managers to employees – stay in the loop. It’s a quick and easy way to see – who is
working on what, when and reports to whom.

Some advanced resource scheduling tools do more than providing you with a graphical
representation of resources. It shows your real-time allocation of resources, helping you re-
schedule resource allocation. This helps you resolve conflicts and avoid under or over allocation.

Resource dependency

This refers to the principle that an organization should guard against depending on a particular
resource or team of resources for all projects. Over-reliance on a particular sub-set of resources
causes workload bottlenecks and resource shortages.

You can avoid resource dependency by distribution the work across multiple resources, or by
having a back-up plan. For instance, if a particular team member has been allocated several tasks
simultaneously, he/she could be blocking other’s work.

Mineral Resources Management

A business model for mining

Mineral resource management is aimed at making the exploitation of a mineral resource a more
profitable business. It brings together the existing knowledge in management and mining.

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Management is seen as a tool to make this knowledge productive. Mining is seen as the business
of separating the valuable content of a mineral deposit in the most effective and efficient way.
The mineral resource management could be used in many of the world’s largest mine, such as
Antofagasta Minerals’ Los Pelambres copper mine in Chile.

A conceptual model that captures the essence of mineral resource management is presented in
Fig. 1. It takes elements from the various management schools — from the classical approach to
more recent management theories. The model considers the technology, market, mineral resource
features and the legal framework as given factors that make up the business environment.

The business performance is the dependent variable. It is determined by the actions resulting
from two core variables that are under the firm’s control: the business strategy and the
organizational design.

The business strategy defines the organizational goals and how the mining firm intends to
respond to its business environment. Organizational design addresses such questions as how the
mining firm is structured, how people are compensated, how performance is measured, and how
people are hired, trained and developed. A central concern is the linkage of these two core
variables. The assertion is that both aspects have to be perfectly aligned for the firm to be able to
accomplish its goals. Indeed, the misalignment of both variables is claimed to be a major cause
of the dysfunctional practices observed in many mining operations.

A model for the mining business.

Fig 1

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The business strategy
In tackling the business strategy, the organizational goal issue is addressed first. The stated goal
is then coupled with the finite feature of mineral resources. This coupling sheds light on the
intrinsic economic principles inherent in mining economics. These principles are then linked
with the technical variables that make up the mining strategy.

Organizational goals. The basic premise of this approach is that a mining organization comes to
life when the entity that possesses the property rights over a mineral deposit mandates its
exploitation. This decision suggests that the owner is better off by mining the deposit than selling
or keeping it for future use. The surplus is what economists name residual income or, simply,
economic profit. To operate in a competitive market, the overriding goal must be financial;
otherwise, the mining organization would jeopardize its own existence and become a target for
takeover. The declared goal then is to maximize the economic value of a mineral resource. In
mining, this only occurs when the ongoing economic profit and the long-term value are
maximized simultaneously.

Mining economics. Mineral resources are usually referred to as finite, non-renewable resources.
This is in the sense that, for a particular deposit, there is a limited amount of the resource in the
ground. And once removed, it cannot be replaced. The development of the optimum exploitation
strategy, therefore, is a problem of dynamic allocation. This relates to the way in which, and the
pace at which, the deposit is mined. In practice, it means dealing with certain technical variables
that affect the life of the mine and, therefore, the economics of the business (the methods of
mining and processing, the rate of extraction, the mining sequence and the selective cutoffs that
separate the worthy part of the deposit). Time is important in the analysis because a unit of
resource extracted today means that less is available for tomorrow. This, in turn, implies that
each period is different because the size of the remaining reserves changes as the deposit is
exploited.

The mining strategy. From the point of view of mineral resource management, the important
feature of a mineral resource is the variability and distribution of the valuable minerals within its
confines. Thus, the whole mining process can be regarded as the business of managing two
fundamental, intertwined activities— the way and sequence in which the deposit is exploited and
the progressive separation of its valuable content.

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Mine planning is all about this process. So to deal with these activities, two types of mine
planning are defined: strategic mine planning and tactical mine planning. The former deals with
the controllable factors that largely determine the value of a mineral resource. The latter is
concerned with the operational tasks to actually achieve that value. Both types of planning
advance in tandem. So, while one sets up the mining strategy, the other follows and transforms it
into specific production targets whose realization creates the feedback to update the strategic
mine plans. An important ongoing task in strategic mine planning is the geologic reconnaissance
of the mineral resource. The other major tasks are the determination and monitoring of five
variables. These include the method of mining, the processing route, the scale of operation, the
mining sequence and the selective cutoffs that separate the valuable content of the deposit, until
obtaining the final saleable product. These variables are intertwined in that none of them can be
determined in isolation. Moreover, all have to be established taking into account the opportunity
cost discussed earlier.

The design of the organization. To this point, mineral resource management has focused on the
business strategy. This task is at the core of the mining business. But it may become difficult,
perhaps even distorted, if the organizational issue is not properly addressed. This subject refers to
the way people are organized to create the business strategy from scratch and later monitor and
improve it throughout the mine’s life.

The proposition here is that the design of the organization matters in the achievement of
organizational goals. It must support and be harmonious with the business strategy in at least
four aspects. These include the organizational structure, the reward system, the technical and
control systems, and the selection, training and development of people.

Organizational structure. The traditional mining organization is known as a hybrid

organization. It is made up of line functional areas to carry out the technical activities, coupled
with a divisional staff to execute nonline functions, such as human resource management and
finance. In this form of organization, mine planning is often executed through a planning or
engineering subunit, which informally interacts with other units . To perform the strategic tasks
already discussed, the proposition is to create a special unit, working in an overlay structure
within the traditional organization. This structure is an adaptive form that is common in

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consulting firms where technically proficient and trained professionals interact with few formal
rules and little supervision.

The argument to support this proposition is based on the so-called Gresham’s law of planning.
This law asserts that routine or operational activities always drive out nonroutine or strategic
activities. This structure is then an attempt to highlight and move up certain critical tasks that are
supposedly executed down in the organization.

One specific duty of this new unit is to develop the strategic mine plans and steer the mining of
the deposit according to these plans. This task should be done in compliance with corporate
objectives and in harmony with the state of the operations and available resources.

To ensure the easy functioning of the group’s activities, it should be overseen by a standing
committee led by the top executive and integrated by key members of all functional units plus
the relevant staff.

This organizational form overcomes the intrinsic flaw of the purely functional grouping — its
inability to manage efficiently the complex problems of coordination, appraisal and policy
formulation. Moreover, it also offsets the problems of the divisional grouping. This is the lack of
capabilities to integrate technical aspects that are not general but specific to mining. In fact, this
new form makes use of the advantages of both forms of grouping. This is because it uses
functional groupings for the technical activities that require specialization and divisional
groupings to manage the interactions among units.

Reward and penalty system. The reward and penalty system should support the business
strategy and be consistent with the structure already defined. The business strategy indicates
what the organization is supposed to accomplish, the capabilities that are needed and the kind of
performance measurements that are required to be effective. The structure of the organization, on
the other hand, specifies how the firm is supposed to divide the work and assign decision rights.3
All of these aspects should be in harmony with the pay system if the organization is expected to
succeed in achieving its goals.

Payment schemes must be designed to support the desired organizational behavior. In practice, it
means a pay system based on performance. This is a radical change with respect to traditional

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reward schemes. They are fixed and based on the premise that employees’ goals are aligned with
organizational goals.

The proposition of linking the level of compensation to business performance is based on Jensen
and Meckling’s (1976) agency theory. Among other things, it asserts that business people in
organizations will not act to maximize the long-term economic returns unless an appropriate
governance structure and economic incentives are implemented. The idea is to make managers
behave as if they were owners. That is, they should show a sense of urgency for the short-term as
well as a sense of vision for the longer term. This integrative view is essential at the time of
devising the mining strategy. Converting managers into owners, though, is not straightforward. It
implies the design of a reward scheme that balances four simple, although conflicting, objectives:

• Alignment. Giving management incentives to think and act like owners so they can choose
strategies and investments opportunities that add value.

• Leverage. Giving management an incentive to keep an eye on the long term, take the necessary
risks and make unpleasant decisions, such as closing, temporarily or permanently, an operation
and laying off staff to maximize shareholder value.

• Retention. Giving managers sufficient compensation to retain them in the firm, particularly
during periods of poor financial performance due to downturns.

• Shareholder cost. Limiting the cost of management compensation to levels within market
ranges, to maximize the wealth of current shareholders.

In a mining company, reward schemes for certain key people can be based on the firm’s stock
grants or stock options. If this is not possible, they could be linked to the creation of economic
value.

In this case, to deter short-term actions that could harm economic value and to encourage the
long-term view emphasized here, the proposition is to create a bonus account reserve. This is an
individual’s notional bank account managed by the firm, which is intended to work as a savings
account. The idea is to divert part of the compensation to this account so that the balance is at
risk and can grow (or shrink) in tandem with company’s profits (or losses) before being
withdrawn according to a prearranged schedule. The purpose is to filter large bonus swings and

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defer the impact of short-term improvements until it has been determined that the bonuses are
associated with permanent changes in shareholder wealth.

It is important to stress that the underlying message here is not that only money spurs the
creativity of people in organizations. Rather, it is the sense of ownership of the enterprise to
which they give their attention.

Technical and control systems. The term ―system‖ refers to the mechanisms to monitor the
activities that any firm must have in order to be effective. But it also includes the special tools
that are required to make possible the management of mineral resources. These are intended to
facilitate the enactment, implementation and monitoring of the mining strategy.

The first group of systems is the technical ones. They are aimed at gathering, editing and
working the ongoing geologic information, which are judged to be crucial to the planning of
mines. Current commercial applications are not intended to solve all the multifaceted problems
that usually appear in complex mining operations. But they can assist in the developing of
mining strategies.

The other group is related to the ongoing financial information of the business and the
individual’s bonus accounts. Almost all mining decisions included in strategic mine planning
consider an opportunity cost. It is often estimated from the present value of future cash flows and
the cost of capital.

Selection, training and development of people. The proper selection and training of people to
perform mineral resource management is critical in the organization’s design. The reward system
is important because it influences people’s behavior in the organization. But it is also important
because it conditions the type of people who remain and are attracted to the organization.

The same can be said about the other variables of the business model. Thus, a good business
strategy, a sound organizational structure, and a proper system to monitor and control the
organization’s activities are all to be perfectly fitted if one expects to boost the initiative and
creativity of people.

The need for training and development of people appears clear. Many mining firms, however,
underestimate the training requirements of work redesign. And they fail to put in place

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appropriate systems and practices to support the higher training demands. Mining firms,
therefore, have to be aware that training needs to extend beyond the startup phase and that people
need to be taught skills that help the group develop over time.

One key aspect to execute mineral resource management is the availability of qualified people.
This is because the perspective about the mining business as presented here is not as common as
it should be. This contention is not only relevant to corporate mining but also to the educational
institutions that prepare mining professionals and to government agencies that regulate the sector.

The mining industry, in general, focuses too much attention on technicalities. It gives less
consideration to the managerial aspects of the business. This means that to take advantage of
mineral resource management, the mining industry will first have to produce the right
professionals. This is going to take some time. So in the interim, mining firms should look for
the most suitable individuals and tailor specific training programs according to their needs.

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Conclusion
That work is the proper definition of profit in mining. As shown, profit or value added is not the
value attributable to an in situ mineral resource, which the owner can realize even without mining.
Rather, it is the value that miners add to the in situ resource value by the use of their ingenuity and
intelligence. To succeed in this task, mining leaders must realize that mining is a peculiar business
that requires an extra managerial function the management of the mineral resources.

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References
Camus, J.P., Management of Mineral Resources: Creating Value in the Mining Business, to be
published by the Society for Mining, Metallurgy, and Exploration, Littleton, CO.

Carnegie, A., 1903, ―The secret of business is the management of men,‖ World’s Work, June.

Gray, L.C., 1914, ―Rent under the assumption of exhaustibility,‖

Quarterly Journal of Economics, May, pp. 471-472.

Hotelling, H., 1931, ―The economics of exhaustible resources,‖ Journal of Political Economy, Vol.
39, No. 2, pp. 137-165.

Jensen, M.C., and Meckling, W.H., 1976, Theory of the firm: Managerial behavior, agency cost
and ownership structure,‖ Journal of Financial Economics, Vol. 3, pp. 305- 360

Lane, K.F., 1997, The Economic definition of Ore, Mining JournalBooks, London, England, 160
pp.

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