May 15, 2006

1

Phelps Dodge Mining Company

Mine Technology Group

Challenges in moving from ad-hoc to planned mine technology innovation

May 15, 20062

Why Innovate in Mining?

• Obvious, right?

• Increase productivity and profitability

• Improve safety and ergonomics

• Improve our environmental record and eliminate liabilities

• Implement process control methodology

• Introduce information systems technology to gain control

• Low hanging fruit

• Reference

• Heather Ednie, Innovation CIM Magazine Feb. 2006

• Peck & Skinner, Getting better bang for your buck with technology

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Issues

• Most new mine technology today has been dependant on OEM/OTM innovation

• Super Haul trucks (CAT 797, Liebherr T282B, Komatsu 930/960E)

• GPS Technology (CAT CAES, Aquila Drill Manager, etc)

• Fleet Management Systems (CAT MineStar, Modular Intellimine)

• New Technology usually evaluated by the chief engineer at an individual mine, in his spare time

• Acceptance usually hindered by “fear of change”.

• Implementation usually hindered by:

• Lack of funding

• Management support

• Operational constraints

• Availability of manpower (local site champions)

• Integration with legacy systems

• Not invented here

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PDMC Mine Technology

• Formally established in 2003

• General charter:

• Improving mine safety

• Protecting the environment

• Increasing productivity and efficiency

• Enhancing machine availability

• Reduce operating costs and capitalization

• Key Focus Areas

• Smart machine technology

• Smart systems

• Automation and autonomous mining systems

• Bulk material handling

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PDMC Mine Technology

• Technology development through five steps:

• Technology identification & business justification

• Lab testing through third party participants• CRC Mining, Universities, entrepreneurial companies

• Field testing utilizing any of ten active mine sites• Technology distributed across most sites

• PDMC mine implementation – Budget inclusion

• Commercialization where appropriate

• IP evaluation and protection throughout process

• MTG includes:

• Seven full-time project managers / SME’s

• Management of over 30 active technology projects

• Benchmarking technology and methods

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PDMC Mine Technology

• Typical projects include:

• Safety:

• Equipment mount/dismount technology

• Driver fatigue monitoring

• Proximity Warning

• 3-Point operator seats

• Advanced operator simulation training

• Radar-Lidar slope and ore pass monitoring/warning system development

• Jolt-jar driver evaluation

• Environmental:

• Blast vibration monitoring and control.

• Dust suppression.

• Operator ergonomics.

• Used oil in ANFO.

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PDMC Mine Technology – Projects Continued

• Other:

• Pit slope optimization.• Advanced controlled blasting.

• CAES for precision ore control.

• Mine management system evaluation.

• Drilling:

• Drill - autonomy

• Water-jet assisted drilling

• Blasting:

• E-det utilization

• SPLIT fragmentation monitoring

• Optimal blast design

• Loading:

• Shovel payload system

• Shovel operator feedback system

• Optimal shovel control

• Adaptor sensing and control

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PDMC Mine Technology

• Haulage• Large scale truck evaluation

• Cat 797B vs. KAC 930E

• Autonomous haulage systems• Mass material transport • New engine technology – Cat HD (LNG interest)• Tire sensing, monitoring and management• Ultra-light bed testing• Oil contamination control – component optimization• Navigation control / peer-to-peer wireless data management

May 15, 20069

Biggest Challenges and Industry Needs

Integration of technologies

• Operating systems

• Proprietary hardware/software

• Operator interfaces (displays)

• Communication systems

Connectivity and Technology Standards Vision (Skinner & Bartlett)

• Major mining equipment should be configured by the OEM/OTM to be a natural extension of the mine operators Local Area Network.

• Hardware technology should be designed to be “plug & play” regardless of its intrinsic proprietary nature.

• Third-party applications can be readily integrated and cohabitate with, OEM software and application architecture.

• In all cases, data generated by an application is the sole property of the owner/operators while respecting the confidential nature thereof.

• Accessibility to the data will be freely provided without the need for additional interface programming

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Slope Stability Radar

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Slope Stability Radar

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Simulator Utilization

New Operator Training

• 1100 Operators Trained In Last 2 Years

• Control Familiarization

• Reduces Time Required In Field

• Proper Operating Procedures

• Reinforces Classroom Instruction

• Emergency Procedures

• Provides Opportunity To Practice Emergency Responses That Would Otherwise Be Unavailable

May 15, 200613

Morenci Simulator Results

Baseline Findings

• Emergency Procedures

• 80% Failed To Successfully Respond To Fire

• 60% Failed To Successfully Respond To Loss Of Brakes

• Equipment Abuse

• 85% Had Some Form Of Brake Misuse

• 40% Indicated Misuse Of Transmission

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Conclusions

• Mining R&D with Corporate mandate provides support for internal innovation

• More projects can be evaluated and successful projects have business case

• $ available to find solutions

• Encourages sameness and alignment of technology

• Benefits accrue to all properties

• Better networking with other industry representatives

• Vendor channel established to be heard

• Can generally stay abreast with OEM/OTM developments

• Allows us to coordinate and represent industry-level efforts