the owner’s mindset - imm2016 - the conference mine management conference / brisbane, qld, 22–24...

International Mine Management Conference / Brisbane, Qld, 22–24 August 2016

The Owner’s Mindset

S Biswas1 1. MAusIMM, Managing Director and CEO, Newcrest Mining Ltd, Melbourne 3004.

ABSTRACT

The decade long mining boom saw the price received for Australia’s mineral commodity exports increase more than threefold. At the same time, investment in new projects and project expansions in the minerals sector increased from two per cent of GDP to eight per cent. The flow-on benefits to the Australian economy were substantial with significant increases in both real per capita household disposable income and real wages, and a lowering of the unemployment rate. The increases in commodity prices, however, were not necessarily reflected in a corresponding increase in margins for producers as the cost of key inputs of energy, labour and consumables increased. At the conclusion of the commodity price boom this meant that companies in the mining sector were faced with the substantial challenge of reducing costs and lifting productivity in order to remain competitive. In response to these challenges, Newcrest embarked upon a program called ‘Edge’ to safely drive greater efficiencies at all of its operations, reduce costs, enhance free cash flow and strengthen its balance sheet. This program involves a relentless focus on safety, operational discipline, cash and profitable growth and is grounded on a number of critical ‘people practices’ that are driving employee engagement. This includes encouraging all employees to take an owner’s equity mindset to a publicly listed company. The approach is helping the business identify and realise opportunities for efficiency improvements and value creation in every corner of the business. The operational discipline inherent in Edge has sharpened the organisation’s focus on a strong safety culture. It also contributed to an approximately 27 per cent reduction in Newcrest’s average all-in sustaining cost between FY2013 and FY2015, and enabled the company to strengthen its balance sheet, reducing net debt by over US$1.3 billion in the 22 months to 30 April 2016. The Lihir gold mine in Papua New Guinea has been a major focus for Newcrest and a new operating strategy and improved plant availability have delivered a marked increase in milling rates. Whilst the business improvement strategies were initiated in response to a major shift in the external environment, they are establishing themselves as the way Newcrest manages its business. They are also underpinning the company’s renewed focus on both organic and greenfield growth. The significant challenge of value creation through major M&A transactions is well recognised and for this reason, early stage project entry is Newcrest’s preferred method of growth. The presentation will provide Sandeep’s reflections on the Newcrest transformation journey and some of the essential ingredients for realising a company’s full potential.


Public Reporting – the Ethics of Quality Communication

J Coombes1 1. FAusIMM, Principal, Coombes Capability, Subiaco WA 6008.

ABSTRACT

Public reporting has become the cornerstone of communication between listed entities and investors. Market announcements represent a nexus of legal, business and social interests that are expected to be informed by material and transparent disclosure. This presentation summarises the broad mandatory reporting requirements, highlights the mining industry’s performance issues and explores other emerging reporting issues. The presentation begins by presenting the case for continuous disclosure, as well as describes the connections between statutory requirements and listing rules, which together form mandatory reporting regimes. The presentation then shares the results of a study prompted by the Australian Securities and Investments Commission‘s (ASIC) release of Information Sheet 214, which was designed to consolidate ASIC’s expectations for reporting forward looking statements. This release brought together fragmented reference to portions of the Corporations Act and legal cases, patchy segments from regulatory guidance documents, ASX listing rules and industry codes. Industry response was heated, which highlighted both uncertainty and concern regarding responsible disclosure, particularly around public reporting of Scoping Studies. This led to a review of 52 Scoping Studies that examined the industry’s performance against Information Sheet 214 expectations. The results of this study and the implications for public reporting are presented. The review is complemented with an analysis of the market response to the Scoping Studies for each of the gold, base metal and industrial minerals sectors. Next the presentation examines the concept of a reasonable investor, including expectations of the sorts of material issues that are likely to influence future investors, and the voluntary reporting systems being developed to prepare the mining industry. Here the presentation summarises broader reporting initiatives and links their importance with international corporate governance expectations emerging from the Organisation for Economic Cooperation and Development principles. The presentation closes with a call to industry leaders and mining professionals to prepare themselves for future reasonable investors.


Driving Mine Performance through Communication

F Arboleda1, S Mundell2 and S Jeffrey3 1. Commercial Strategist, acQuire Technology Solutions, Applecross, WA 6153. 2. Director of Product, acQuire Technology Solutions, Applecross, WA 6153. 3. Product Owner, acQuire Technology Solutions, Applecross, WA 6153.

ABSTRACT

In the current cycle of low commodity prices and rising costs, mine managers continue to focus on optimising mine performance and productivity. A critical component of strengthening performance and productivity is ensuring material is routed correctly and efficiently through the core mine production activities of drilling, blasting and grade control. By the time a blast is planned, an enormous amount of intellectual property has been invested in the exploration, resource development, feasibility studies and mine planning activities. The value of that knowledge is either realised or diminished during mine production. Efficient execution of the process is critical and is reflected by the quality and timeliness of the information produced. Multiple teams are involved in the mining extraction process. These teams are all under time pressure to keep the mine equipment operating. One of the root causes of this pressure is the dependencies between the teams. They do not operate in isolation, but are a link in a chain depending on the outcomes of each activity. It is essential communication is efficient so tasks can be completed according to the production schedule. Unfortunately, communication fails when unintegrated systems are used because of:

Different teams seeing different data, hence there is not an overall, up-to-date view of progress and priorities. Lack of cross-functional visibility of data leading to failure to identify errors in time to address or correct issues. Teams tending to be siloed and focusing on their part of the process rather than the overall objective.

With different systems used for the parts of a common goal, supervisors and managers lack visibility of the process. This makes it difficult to identify process improvement opportunities. A streamlined communication approach consolidates all data and activities resulting in improved cooperation between mine production teams. This situation raises the confidence and efficiency of material routing decisions. It also reduces potential impact to mine performance from errors in early stage tasks like drilling and grade control. Having everyone collaborating off the same trusted data, helps teams identify with common goals and find business improvement opportunities as they appear.


Do We Maximise the Value of Our Operations through Our Definition Drilling, Resource Estimation and Mine Planning Strategies?

M L Bloss1, S O’Connell2, A Robertson3 and M Scholz4

1. MAusIMM(CP), Director Mining Studies and Technology, BHP Billiton Olympic Dam. 2. Manager Resource Geology, BHP Billiton Olympic Dam. 3. MAusIMM, Manager Long Term Planning, BHP Billiton Olympic Dam. 4. MAusIMM(CP), Principal Mining Engineer, AMC Consultants Pty Ltd.

ABSTRACT

The value created in any mining operation is a function of the mine plan. The quality of this plan is dependent on the strategies employed during definition drilling, resource estimation and mine planning. This paper presents opportunities to improve the value of an operation through better strategic management of these core activities. Case studies undertaken recently at Olympic Dam are presented to support the conclusions presented in the paper.


Improving Consistency of Delivery at Mt Rawdon Operation

M Boon1 and M Franklin2 1. MAusIMM, General Manager, Evolution Mining, North Burnett Qld 4671. 2.Managing Director, First Principles Consulting, Buddina Qld 4575.

ABSTRACT

This paper outlines the journey of cultural maturation and management system development at the Mt Rawdon (MRO) gold mine from its acquisition by Evolution Mining Limited (Evolution) in late 2011 to 2016. Evolution embarked upon a series of projects that aimed to improve the operational consistency and implementation of change on-site, while leveraging off the existing strengths of the operation. This document describes the gaps that were identified, the processes used to close them, and the resulting cultural change and production outcomes, with a specific focus on how to optimise the culture at any mining operation. MRO had a history of four owners in less than three years when it became a key asset of Evolution. The site leadership team (SLT) decided to influence the culture at MRO by reviewing and upgrading the existing management processes. The first priority was to improve transparency and collaboration at the SLT level, followed by improving competency in project management. The next phase was to strengthen the internal communication using a deliberately designed network of meetings, communication screens and other initiatives. Once there was some traction, the focus moved toward increasing production volume and decreasing cost per unit by improving short-term planning and execution capability. Together with other initiatives, this resulted in improved collaboration between all functions which in turn netted over 37 per cent mining production uplift. Following solid success, a process of prioritisation and alignment management was implemented. This supported the ‘Mine to Mill one operation’ ideal and allowed the SLT to decide month-by-month what actions were to be prioritised. These priorities incorporated production realities and longer term imperatives of the Balanced Business Plan. Much of this work was completed during a period of declining gold prices and a relentlessly strong Australian dollar, making it difficult to justify spending money on improvement projects. This work proved critical for the operation’s long-term survival.


Supervisors and Teams at Work

J Burns1, G Terrey2 and T G Neville3 1. FAusIMM, Managing Director, Management Learning Pty Ltd. 2. FAusIMM, Director/CEO, Mine Resilience Australia Pty Ltd. 3. Operations Manager, Mine Resilience Australia Pty Ltd.

ABSTRACT

This paper explores recent industry training programs and lessons for supervisors. The Belbin team role model was used to increase participants’ awareness of behaviour and its application. The application of the Belbin model to underground, open cut mine and quarry supervisors is discussed. The key to team success may rest with the expertise and experience of its members, but increasingly effectiveness depends on how team members understand, acknowledge and support each other’s behavioural strengths. Discovering strengths is a challenge both for their measurement and for the encouragement of team members to use the knowledge of themselves and others in the team. Using behavioural models provides a constructive approach and a language for supervisors as they build personal motivation and engagement. Prima facie the mineral industry’s work may be too vigourous for teams and their managers could be more prone to use ‘solo’ or traditional management styles. Managers and supervisors must know when work allocated to a team is appropriate or where individual effort should be applauded and rewarded. For practical people with well-developed technical skills, improving the soft skills necessary for a supervisor requires some reflection and effort. The Belbin behavioural model can be an effective tool for recognising characteristics that can assist teams to be more productive. Experiencing the Belbin team role model as part of an industry qualification, is important for supervisors studying to refine their team leadership skills. Data are available for participants to assess the nature of their teams and to confront the appropriateness of the behavioural mix for the work of the team and its individual members. So what are the next steps? All team development must have a place in the strategic thinking and plans of the enterprise. This needs a visible presence of senior managers and supervisors in managing a team culture with practical links to workplace priorities and professional development with continuous improvement.


AGL Energy, Loy Yang and GHD – a Further Case Study in Alliancing: Ten Years on

D Clark1, J Bohan2, P Currie3 and J Missen4 1. FAusIMM(CP), Energy & Resources Market Leader, GHD, Melbourne Vic 3000. 2. Senior Engineer – Mining Services, GHD, Melbourne Vic 3000. 3. MAusIMM, Manager Mining Services, Melbourne Vic 3000. 4. Environment & Earth Sciences Superintendent, AGL Loy Yang, Traralgon South Vic 3844.

ABSTRACT AGL is one of Australia’s leading integrated energy companies and the largest ASX listed owner, operator and developer of renewable energy and thermal generation in the country. AGL owns and operates the 2210 MW Loy Yang A power station and adjacent 30 Mt/a brown coalmine in the Latrobe Valley, Victoria, Australia. It also supplies coal to the nearby 1050 MW Loy Yang B power station owned by the GDF Suez (Engie)/Mitsui partnership. The mine is currently nearly 5 km long, more than 2 km wide at the operating face, and up to 200 m deep. AGL employs a large workforce at Loy Yang and a substantial amount of services are performed on-site by contractors and consultants. GHD provides mine planning, earth sciences, civil/geotechnical engineering, dam surveillance, plant engineering and environmental services to AGL Loy Yang through an alliance framework. GHD is one of the world’s leading professional services companies operating in the global markets of water, energy and resources, environment, property and buildings and transportation. In addition to GHD’s global footprint, the company also has a significant Victorian presence, including a permanent, well-resourced regional office in Traralgon, approximately 10 km from Loy Yang, as well as a permanent site office. A joint paper on the Loy Yang mine professional services alliance model was written for the AusIMM International Mine Management Conference in 2006 by Woods and Wood. Now ten years on, this paper provides an overview of the present relationship and arrangements, including the continued transformation of the alliance model and maturing of the relationship contract. These are challenging times, with increasing cost and regulatory pressure driving change in the broader energy and resources industry, and locally including both the mining and power sectors at Loy Yang. Flexible models to achieve a balance between internal personnel and access to key external skills, whilst achieving value for money and transparency is increasingly critical. The right drivers and performance measures are essential, particularly when confronted with potential major technical and environmental risks (considering significant ground failure and fire events that have occurred elsewhere within the Latrobe Valley over the last decade) within a sector, which is reducing costs and optimising production. This case study discusses the alliance status and changes, reasons behind adjustments and what the future is likely to hold. The paper also explores the validity of the original objectives and the extent to which they have been achieved. The philosophy of the alliance is to continue closely aligning the objectives of the two companies in the best interests of the Loy Yang site and immediate surrounds/stakeholders. Quality of service, costs, timeliness, H&S and some operational activities (aquifer depressurisation) remain important aspects and are reflected in key indicators for which performance is measured.


Resources and Reserve Assurance Processes – a Framework for Improved Governance

L J de Lange1 1. Group Audit Manager, WorleyParsons Ltd.

ABSTRACT As a material asset for mining entities, the resources and reserves (RR) estimation processes are surprisingly underrepresented in the assurance landscape. When press reports expose them being inaccurately reported, or in merger and acquisitions processes, their importance becomes clear. The impact of erroneous RR numbers (both positive and negative) could have a material impact on an entity’s reputation and value. The technical nature and ‘black magic’ connotations of the RR estimation processes are possibly reasons why audit committees are not actively involved with it. Internal auditors avoid the RR processes for similar reasons. Also the traditional approach to obtain assurance on RR is expensive and is therefore only performed when it is absolutely required. However, stakeholders’ expectations of good governance are growing. Part of this increased focus is based on attaining a higher degree of certainty about the current and forecasted position of the entity. Stakeholders are also increasingly more interested in non-financial areas of entities, as the future success of an entity is more than a set of financial metrics. Consequently, the RR estimation processes should be visible on the agendas of audit committees. Monitoring of key controls is required as part of the governance obligations for senior management and the audit committee. So once it is on the audit committee’s agenda, the question then becomes, how will that agenda be supported by an assurance process that is cost-effective? The main objective of the paper is to describe a model of RR assurance that has been effectively applied in some mining companies. The paper discusses this one particular approach that provides an audit committee with the required assurance regarding RR processes. The approach ties the assurance needs of the audit committee to the needs of the technical experts in the entity, therefore involving two important figures. It also offers assurance providers with a model to audit ‘through’ the RR processes rather than ‘around’ them. The paper then discusses top-down and bottom-up approaches that provide assurance at different levels of an entity. A governance audit that focuses on the RR processes is suggested as a top-down approach. A bottom-up approach assesses the design adequacy of internal control processes. A hybrid model is described which meet the needs of diverse stakeholders including the audit committee, and the RR community. The hybrid model combines the expertise of professionals in both internal audit and RR. The right balance of these skills directed by a singular approach ensures that a credible result is achieved. This approach is not as expensive as some verification approaches used in the industry and can as a result be performed on a more regular basis. The last element of the paper looks at implementation of the reporting mechanism. An assurance process aimed at continuous improvement further enhances the robustness and reliability of RR reported by an entity.


Staying in the Game – the Importance of Engineering Based

Decisions

P J Fairfield1 1. FAusIMM CP(Min), Principal Consultant (Project Evaluations), SRK Consulting (Australasia) Pty Ltd, Melbourne Vic 3000.

ABSTRACT

This paper reflects on the author’s experience working in site-based technical and management roles over a 29 year period, and the past 12 years in internal and external consulting roles. It discusses the author’s experiences and observations of operations management and the significant value of the technical specialist’s role in providing management with information on which to base tactical decisions which may or may not be part of a defined strategy. The landscape of mine management changes with the cyclical nature of commodity prices driving operating and capital prudence, as operations change their focus from expansion and growth to staying in the game. The role of the mine manager and management team in navigating through these changing times, attitudes and stages of the project life can influence the success or otherwise of many projects. Technical knowledge is one of the key drivers in realising or destroying the value of a project or operation. As managers focus on people management, management systems and processes, recognising and understanding of the value in the underlying technical knowledge and getting back to the fundamentals/basics can be overlooked. In reaction to the fluctuating commodity cycle, managers implement changes through optimisation, fast tracking or parallel streaming, expansion projects and changes in the application of technology. These responses occur against the background of changes in the appetite for risk, acceptance of project uncertainty and changes in personnel which result in a loss of knowledge and experience – often at critical times. This paper shares the author’s experiences and lessons learnt in dealing with and observing these issues. The author questions whether we really understand our projects and are valuing the most important asset, our people and in particular, the technical specialist and their experience and knowledge.


Is Perception Reality? Evaluating the Fiscal Attractiveness of

International Jurisdictions for Gold Mining Investment

C Gemell1, J P Sykes2,3 and A Trench4,5,6 1. Senior Consultant, Wood Mackenzie, Sydney NSW 2000. 2. MAusIMM, provisional PhD candidate and Adjunct Research Fellow, Centre for Exploration Targeting, School of Earth and Environment, The University of Western Australia, Crawley WA 6009. 3. Director, Greenfields Research, Hunters Chase, Highfield Farm, Hartwith, Harrogate, North Yorkshire HG3 3HA, UK. 4. FAusIMM, Professor of Practice, Business School, The University of Western Australia, Crawley WA 6009. 5. Professor – Progressive Risk and Value, Centre for Exploration Targeting, School of Earth and Environment, The University of Western Australia, Crawley WA 6009. 6. Associate Consultant, CRU Group, Chancery House, 53–64 Chancery Lane, London WC2A 1QS, UK.

ABSTRACT

The perceived and actual impact of government mineral policy upon the government share from gold mining revenues is assessed for ten key countries in which the gold sector is of relevance in advancing economic growth. Five African and five South American jurisdictions are considered, namely Burkina Faso, Ghana, Mali, South Africa and Tanzania from Africa; and Brazil, Chile, Colombia, Guyana and Peru in South America. Both the headline corporate income tax rate and royalty level are identified as poor indicators for the total government share. In addition, significant differences between industry perception and actual government tax levels are identified by this study. The quantitative financial analysis shows that there is no clear relationship between individual taxation rates, taken in isolation, and the overall average effective tax rate (AETR) paid by the project over its life. Neither companies nor governments should use individual taxation rates, or industry perceptions, in isolation to assess the overall competitiveness or equity of a country’s minerals taxation regime – such analysis can be very misleading. In this study, the perceived impact is determined from the well-established Fraser Institute survey published each year, and in 2014 compared 122 minerals jurisdictions globally. The actual impact is determined from quantitative modelling of the financial performance of a hypothetical gold mining project in each country. The technical parameters of the project are held constant; instead the differing mineral policies in each jurisdiction are applied to determine the resultant impact upon the relative share of the economic rents delivered to both private and public sectors. In the quantitative analysis, the total government share varies from 36.3 per cent in South Africa to 66.5 per cent in Ghana.


Stakeholder Engagement: Who Are You, What Do You Stand For and Why?

M D Goodz1 and R M Lonsdale2 1. FAusIMM(CP), Principal Consultant, Goodz & Associates GMC Pty Ltd, Mineral Industry Advisors, PO Box 10488, Kalgoorlie WA 6433. 2. Human Resource Consultant, Goodz & Associates GMC Pty Ltd, Mineral Industry Advisors, PO Box 10488, Kalgoorlie WA 6433.

ABSTRACT With an ever-increasing dynamic business environment, successful stakeholder engagement is becoming more fundamental to achieving desired outcomes in today’s mineral resource industries. It is imperative to be proactive in correctly identifying all stakeholders and initiating early contact. This builds trust relationships which are essential to ensure future decision-making processes are streamlined. Often neglected is a company’s obligation to select the correct team to represent its values and mission. The company requires representation that demonstrates an understanding and commitment to its operations and people, safety and health of the community and environment, and most importantly, represents the decisions makers. Stakeholders need to believe that the engagement process is genuine and that the company representatives are aligned towards targeted outcomes which will benefit all stakeholders in some way. Amongst others, stakeholders include shareholders, staff, families, community, service and supply providers, regulators, land managers, and the political/financial framework. Depending upon the mineral product, stakeholders may include ports, international offtake clients and those along the route. New stakeholders continually evolve during mine life and the engagement process requires an investor–community–public relations (IR/CR/PR) team to anticipate change, and actively scan perception and chatter. Successful communication is more than delivering a message; it is about engaging stakeholders and confirming the feedback loop to ensure the correct message is communicated and the relationship is strengthened. The nature of the mining company’s branding and the public’s perception of company intentions will dictate whether there is willingness to allow the company to follow its desired path. This in turn controls the company’s most scarce resource – time. Timing is fundamental to achieving targeted outcomes with minimal cost and delays, marketing in a peak cycle, and acquiring critical capital for development and growth. Branding and stakeholder engagement effectively controls and extends to the company its social licence to operate.


Winning the Safety Battle

S Hanrahan1 and S McLaughlin2 1. FAusIMM, Principal Consultant, SRK Consulting, 1/10 Richardson St, West Perth WA 6005. 2. Safety Consultant, Safety Services LLC, Utah, USA.

ABSTRACT

A case study is presented that details the safety journey at a North American project involving two major contracts: a 1000 m shaft recovery and rehabilitation, and the development of a drainage gallery in a large open pit operation. In the early stages of the contracts, there were a number of incidents that created tension between the owner and contractor, which resulted in the contractor being placed on a final warning with almost imminent potential termination. As a result of this, it was agreed to initiate a focused safety recovery plan as a ‘last chance’. Over a period of two years, the engagement and consequent performance of the contractor was turned around, steadily working to set it up for success such that in one of the contract work areas, a record of ‘one year LTI-free’ was achieved. The journey involved the owner and the contractor teams working cohesively to educate all parties in the safety requirements and, most importantly, providing the context and understanding for certain requirements being put in place. Early on in the process, it was recognised that the owner team unknowingly was an impediment in that they did not fully understand the safety requirements and so was not able to lead the way for the contractor effectively. The journey to rectify the situation was supported and followed up by focused engagement with the project team, which generated a progressive improvement in a very challenging environment. In particular, the contractor turnaround was significant and of enough value for the contractor to ultimately export the new systems from this site to other contract sites. This demonstrated the ultimate benefit of the contractor understanding and buying into a safety culture and system.


Rethinking Merit for a Sustainable Mining Industry

K Hobbs1 1. MAusIMM, Senior Consultant, First Principles Consulting, Buddina Qld 4575.

ABSTRACT

Mining is experiencing an unprecedented period of low profitability and declining productivity. To achieve sustainability, mining companies are challenged with improving output, quality and safety while decreasing costs. At the same time, organisations are having to manage a workforce in which individuals no longer accept a traditional style of management, employees prefer more flexible employment, and diversity within teams is becoming the expected norm. Increasing organisational diversity has been shown to have a positive impact on performance and therefore sustainability. Gender diversity and equality between working men and women is the area most studied in this regard. Executives are becoming more aware of the correlation between gender diversity and performance with some larger organisations having dedicated resources to increase the number and status of women in their organisations. Despite this, limited improvement in gender equality has been seen globally over the last decade with some industries, including mining, going backwards. So why is this the case and what other strategies are available? In 2015, the United Nations Women National Committee Australia (UN Women NCA) in conjunction with Autopia released a whitepaper discussing the lack of visible change in gender equality despite the widespread implementation of merit-based personnel management strategies. Using research from around the world and thoughts from influential government, educational and business leaders, the paper ‘Rethinking Merit’ debunks the myth of the meritocracy. It provides a number of recommendations for organisations committed to improving their performance and sustainability through diversity, including a variety of real-life company examples, instead of relying solely on merit-based decision-making. This paper takes the recommendations of ‘Rethinking Merit’ and applies them to the mining industry. It shows the relevance that rethinking merit has for the industry and why applying the recommendations can result in an increase in diversity, therefore enabling greater performance and sustainability of mining companies. This paper provides case studies from Aurizon, Iluka Resources and BHP Billiton and, as a guide for managers, a generic diversity strategy designed to be implemented alongside traditional merit-based personnel management techniques.


Reducing Mine Site Extreme Rainfall Vulnerability Using Climate-related Adaptation from Terrain Evaluation Results

J H Hodgkinson1, M Grigorescu2 and M Khanal3 1. Research Scientist, CSIRO, Pullenvale Qld 4069. 2. Project Manager, Geological Survey of Queensland, Brisbane Qld 4001. 3. Research Scientist, CSIRO, Pullenvale Qld 4069.

ABSTRACT The mining industry often needs to operate in remote or climatically harsh locations. The industry has recently been forced to deal with extreme conditions including floods, heatwaves and droughts. As this is becoming progressively frequent occurrence, mines typically build ‘downtime’ into production schedules and expect to incur costs to manage the various risks arising from climate extremes. Importantly, many environmental conditions are becoming more extreme and consequently, risk management based on past data can become increasingly ineffective. Market and shareholder demand for fewer interruptions are another pressure on mines to avoid prolonged or frequent downtime. Hence, adaptation to climate is becoming an important strategic move for many companies, many of whom are using future climate scenarios and alternative risk evaluations. We present here a method that uses commonly available mine site data to assist decision-making for reducing vulnerability to sudden flood. The method, ‘climate-related adaptation from terrain evaluation results’ (CRATER), identifies a mines flood ‘hot-spots’ and presents them as a ‘traffic lights’ warning map. The process then requires a failure analysis process such as fault-tree analysis to identify both the cause of possible failures and a range of possible failure-avoidance adaptations. In the final stage, management can assess the most suitable option for the mine, based on the availability of capital such as time, facilities, labour and money in addition to social acceptability of the options. CRATER has been tested in an open cut mine environment and is now being further developed to identify how subsidence over underground mines may impact on flooding and ponding over the mining life cycle (CRATER II). Further work is continuing to test larger and more complex mine landscapes to deliver a method to extract more knowledge from existing data.


Strategic Sustainable Development – Creating Shared Value in the Mining Industry

A C Keith1, G Corder2 and M Jones3 1. Market Director – Resources; ANZ and Asia, Aurecon, Brisbane Qld. 2. Principal Research Fellow, Sustainable Minerals Institute, University of Queensland, Qld. 3. Regional Manager, Whittle Consulting, Surrey Hills Vic.

ABSTRACT Sustainable development has become an issue of ever increasing importance to the mining industry. The EY mining industry risk radar regularly shows several sustainability elements in the top 10 risks with social license the number three risk in the 2014/15 survey. This is supported by the Fraser Institute survey results of 2013 showing that 36 per cent of responding companies indicated public opposition had affected their permitting and approvals process. Addressing these issues in a strategic way across a mining business that is then translatable to actions at operational level has remained an elusive goal in the industry. In addition the environment and community issues are commonly viewed as somewhat separate from financial and production issues and as compliance cost rather than as a value add. In their Harvard Business Review paper of 2011, ‘Creating Shared Value’, Porter and Kramer outline changes in thinking required for companies to improve their business sustainably through considering the societal issues impacted by their operations and products. Along the lines of ‘doing more with less’ companies’ value chains can be redefined to reduce energy, transport, water or other resource usage leaving additional resource for societal usage and/or reducing environmental impacts. This paper explores the linking of the holistic Five Capitals based approach with the creating shared value (CSV) concept to help business unleash the benefits of innovation. Previous papers have demonstrated the potential for Five Capitals approach to create strategic value through sustainable development. Building on this previous work, this paper provides an overview of the current status of holistic approaches to mine management and presents the application of the CSV concept on an African mine currently undertaking capitals based strategic planning. The paper also demonstrates the value that has been created through utilising this approach and proposes improvements for changing the way the industry tackles and delivers benefits related to sustainability issues.


Organisational Factors in Fatalities and High Potential Incidents

N LaBranche1 and G Callinan2 1. MAusIMM (CP), Principal Mining Engineer, Simtars, Redbank Qld 4301. 2. Inspector of Mines, Department of Natural Resources and Mines, Parkhurst Qld 4701.

ABSTRACT

There has been a reduction in overall workforce in the mining industry during the current downturn, a corresponding reduction in fatalities and high potential incidents (HPIs) has not been observed. The same contributing factors can be seen in the vast majority of these incidents. These include inadequate supervision and lack of adequate risk assessment. How management structures, trains and leads an operation can have a great impact on eliminating these factors and reducing the risk of fatalities and HPIs. Contractors now account for 41 per cent of full-time equivalent employees (FTEs) in the Queensland mining workforce, and are disproportionately represented in the majority of fatalities and HPIs. Having a clear strategy for how contractors are integrated into the workforce is crucial. This talk will include a discussion of the data as collected in the Department of Mines and Natural Resources department database and offer solutions based on this data.


Closure Planning Lessons Learnt from the Century Mine

M Lord1, R Bitencourt2, J Crosbie3 and P Defferrard4 1. MAusIMM, Closure Planning Superintendent, MMG, Garbutt Business Centre, Garbutt Qld 4814. 2. MAusIMM, Group Manager Closure, MMG, Southbank Vic 3006. 3. MAusIMM, Senior Life of Asset and Closure Planner, MMG, Southbank Vic 3006. 4. MAusIMM, Environmental Engineer – Closure, MMG, Garbutt Business Centre, Garbutt Qld 4814.

ABSTRACT The MMG Century mine, which is the largest zinc / lead mine in Australia, began operating in 1999 and ceased mining from the open pit in July 2015, with processing completed in early 2016. Closure plans were developed from 2006, and detailed planning for closure commenced in early 2011 with the appointment of a dedicated closure planning resource. The site will continue to be managed during the active and passive closure phases to complete rehabilitation commitments and demonstrate that closure completion criteria have been achieved. Completion of the mining / processing phase of the project provides an opportunity to reflect on successes, missed opportunities and lessons learnt with respect to planning and execution of mine closure. This paper highlights examples of success at Century and also identifies key learnings and areas for improvement in progressive closure outcomes. Specific examples examine mine planning and execution involving bulk movement of waste rock and construction of permanent waste encapsulation landforms. The paper also provides recommendations for other sites that are planning for closure. Decisions made during the operational phase of the project life can result in a significant increase in closure liability and reduce the likelihood of achieving lease relinquishment. Likewise, it is of paramount importance to assess the consequences and thoroughly understand the risks associated with changes or deferral of closure plans, progressive rehabilitation targets and closure related key performance indicators.


Is Every Mine a Pilot?

G I Lumley1 1. FAusIMM (CP), Director – Mining intelligence and Benchmarking, PricewaterhouseCoopers, Brisbane Qld 4000.

ABSTRACT ‘Every mine is a pilot’ is an attitude which encourages the mining paradox of optimistic mine plans and equipment underperformance; propped up by an environment lacking accountability. The premise that ‘every mine is a pilot’, appears to underlie the development and operating approach to most mines. It is the hypothesis of this paper that many mining companies, development teams and their managers largely ignore what is done elsewhere. Anecdotally, most planners don’t know whether the selected rates are high or low, (rates based on theoretical models tend to be high – certainly higher than what most companies can achieve). Mines then consistently operate the equipment at rates well below targets; often more than 20 per cent below. Further to this paradox, mine performance data demonstrates the average mine is currently operating their equipment at levels of output not much more than half the output of those in the top ten per cent. On the whole mines don’t know the potential of their equipment and therefore don’t put appropriate plans in place to do better. After all, when ‘every mine is a pilot’ there is little reason to look to one’s peers for an indication of potential. This paper will outline why every mine is not a pilot and how mines do value some knowledge, but not as much as they should. This paper proposes a two-pronged approach to address this issue in the area of equipment performance. This approach is:

engage in better forecasting of equipment rates and better subsequent performance through benchmarking against industry standards

provide conditions for more accountability. These parameters are linked and proper implementation of them will address the losses which many shareholders and financiers have incurred when investing in companies with unrealistic mining plans.


Successfully Implementing Technology-driven Change in the Mining Environment

B McCarthy1 1. Principal Consultant – Mining, SRK Consulting, Vancouver, Canada.

ABSTRACT Mining has been typified of late as a boom and bust, cyclical industry operating against a steady decline in the size and quality of mineral deposits. Decreasing deposit grades and increasing costs of traditional mining techniques, all in the face of another commodity downturn, are forcing mining companies more than ever before to seek out new and innovative ways to operate. New technologies are emerging to model, control and track resources through the mining value chain, to move material about mines more efficiently, and to identify and separate ore from gangue early in the extraction process. Discovering such technologies however is only the first challenge for mining companies. Actually implementing technological change successfully has proved to be an even bigger challenge. Like for many industries, fulfilling the promised benefits for the expense and timing envisioned, has not been easy when innovative technologies are introduced. Citing the author’s insights and experiences in a number of emerging technologies, this paper explores barriers to implementing technological change in the mining context. Key elements of a change management framework, first developed for implementing mine management systems, are described to give mining executives insight into how they and their organisations can succeed through technology-driven change.


Costerfield – a Narrow Vein Case Study

M McCarthy1 1. MAusIMM(CP), Mine Manager, Mandalay Costerfield Operations Pty Ltd, Heathcote Vic 3523.

ABSTRACT

Over the last six years Mandalay Resources has increased production rates and improved safety outcomes at its Costerfield mine in Victoria, Australia. This mine is an underground operation utilising narrow mining techniques to extract vertical veins, and produces up to 80 000 equivalent ounces of gold per annum, in both gold and antimony value. The operational challenges of narrow vein mining include controlling overbreak, when veins being mined are only 300 mm wide. The mine has developed methods and modified equipment to suit extraction of these veins. Productivity improvements over the period have involved development of a stoping method and equipment to suit 1.8 m wide development drives. Over the last five years and during a skills shortage, recruitment, training and retention of personnel has been key to keeping corporate knowledge and skills to execute a careful efficient mining technique to minimise overbreak. Managing an underground operation close to nearby residents has unique challenges. Historically Victorian residents had family members work as underground miners; however, in the current day with few underground operations in this jurisdiction, community knowledge of mining has decreased. The Costerfield Operations are only 100 m from the nearest residence and the company values community engagement, partnership and investment with local Heathcote organisations. The mine has invested substantially in executive coaching of its leadership team early, which has paid dividends in problem solving potential of that team and ensuring the operation delivers on its promises to all stakeholders. The operation has become safer and employees are now more aware of their individual contribution in producing safe, efficient gold and antimony that benefit the whole operation, community and the region.


Can We Stop a Black Swan Breeding? Advances in Bowties and Critical Control Management

R Mills1, M Andrew2 and H Reynolds3 1. Principal Risk Consultant, GHD, Melbourne 3000. 2. Principal Risk Consultant, GHD, Melbourne 3000. 3. Senior Principal Risk Consultant, GHD, Melbourne 3000.

ABSTRACT As the global mining industry continues to grapple with ‘black swans’ (high consequence / low frequency events) for health, safety and environmental losses, the focus is shifting from risk assessment of these events to risk management using selected purposeful controls that reduce the risk. Fundamental to critical control management (CCM) is a soundly based rationale for selecting the right controls for each and every risk. The approach should be based on a thorough understanding of the dynamics of the event: What causes it? How frequently will it occur? How likely is the consequence to be realised? This is typically done through a bowtie and methodical numerical risk analysis. Core to this step, then, is the structure and content of the bowtie – specifically, the analytic architecture that is used to construct the bowtie. Different architectures yield different constructions, and bowties are no different. Although bowties for operational health and safety (OHS) hazards appear to have a common architecture, they are not generic. It is important to stress that they contain site specific information, are prepared by site based operational teams, and vary from site to site to reflect each site’s operational conditions. They are often a product of the knowledge and understanding of the operational teams involved, may be prone to human error, and potentially miss latent hazards that may have been embedded early in the planning, design or construction phase of a mine or facility, or within the mining equipment. Overcoming these deficiencies through constant re-evaluation of the risks, and challenging the content on the bowtie will help to minimise the chance that something will be missed. This paper will cover key themes in bowtie architecture, introduce the concept of barrier models for high consequence event (HCE) bowties and present a relevant case study to illustrate the issues that determine quality in bowtie construction and critical control (barrier) selection and management.


Truck Haulage Improvements at the Phu Kham Mine – the Journey to 97 Per Cent Utilisation of Availability

KR Monro1 and SP Young2 1. MAusIMM, Mining Manager, Phu Bia Mining, Phu Kham Mine, Lao. 2. Operations Improvement Manager, PanAust Limited.

ABSTRACT Reducing metal prices have forced mining operations to become more efficient and to innovate in order to do more with the existing base. Much of this effort has focused on improving the efficiency of load and haul operations. The key to this is to understand and quantify where delays and missed opportunities exist. Metrics such as utilisation of availability, efficiency utilisation and asset availability are helpful indicators of performance, however Uptime based time usage models and performance analysis tools using productive operating time models help to identify additional improvement opportunities. Phu Kham is a copper-gold mine operated in the Lao People’s Democratic Republic (Laos) since 2008 by PanAust Limited. The mine is a single large open pit of 450 m depth, running a fleet of 51 100 t class rigid dump trucks and 300 t and 200 t shovels controlled with the aid of a fleet management system in order to achieve ex-pit material movements of 56 Mtpa. Commencing in late 2014, a range of initiatives were implemented in order to improve the efficiency of the mine haulage fleet. These include hot seating of all operator change outs via change out ramps, split shifting of crews to minimise queuing delays, maximising blast volumes and minimising blast event days to reduce blast exclusion delay events including opportune re-fuelling of equipment during blasting events, inspections of trucks during re-fuelling events, implementation of a dedicated haul road services team to help reduce wet weather related delays and infrastructure development for haul path efficiency improvements. These and other initiatives have allowed the mine haulage fleet utilisation of availability (UofA) to be sustainably increased from 85 per cent to 97 per cent (see Figure 1), effeciency utilisation to increase from 85 per cent to 90 per cent, and productive operating time (POT) to increase from 73 per cent to 84 per cent. The corresponding increases in efficiency of the haulage fleet has allowed an equivalent reduction of eight haul trucks from the fleet to meet continuing life-of-mine production requirements.


Organic Management Structure – Its Advantages in a Mining Consultancy

G Pitkin1 and D Sorley2 1. MAusIMM(CP), Principal Consultant, GPPH & Associates, Maitland NSW 2320. 2. Principal Consultant, GPPH & Associates, Maitland NSW 2320.

ABSTRACT The purpose of any consultancy is to provide a superior service for their client. Organisational structure is a key element in providing this service and differentiating between consultants. In an organic organisation the emphasis is on effectiveness, problem solving, responsiveness, flexibility, adaptability, creativity and innovation. Such an organisation is able to respond in a timely manner to change because employees are empowered to be creative, to experiment and to suggest new ideas. The process of innovation is triggered by employees throughout the organisation in a collaborative manner. Problem solving becomes a core competence of the consultancy. A multidisciplined approach arrives at superior solutions that are rigorous, holistic, achievable and often novel. It allows the mining consultancy to extract the most from a very talented and experienced team. This paper highlights the advantages of an organic structure for a mining consultancy and how to implement such a structure. It draws on examples of innovative problem solving drawn from feasibility and strategic studies carried out in Australia and Africa.


Autonomous Haulage Systems in Underground Mining – What is Required for Success?

A G L Pratt1 FAusIMM(CP), Principal, Adrian Pratt Mining Consultancy, Vic 8008.

ABSTRACT The record for autonomous haulage systems in underground mining over the past 15 years is patchy, marked by many trials and attempts, with few examples of sustained operation until relatively recently. The drivers for the introduction of this technology are variously listed as the occupational health and safety of people working in underground mines, reductions in direct operating costs and increases in productivity. This paper reviews the trends for operation of semi-autonomous and autonomous haulage achieved by underground mines and defining features of the technology currently available. The inclusion of autonomous haulage as part of mining studies and the fundamental conditions for its successful application is discussed in the paper. The components required for an autonomous underground haulage system are outlined and the key aspects that need to support its effective implementation are examined together with their associated opportunities and risks. Special note is made of the critical role people, including executive leadership, have in ensuring the successful introduction of this technology. The paper draws on published case study material, equipment supplier information and research findings. The aim is to offer a high level insight into what is required for the application of autonomous haulage technology and its successful implementation in underground mines.


Building Safe, Productive Cultures and Leadership

M I Roberts1 1. MAusIMM; Principal and Co-founder, Conscious Pty Ltd, Pullenvale Brisbane Qld 4069.

ABSTRACT Corporate and workplace culture, as many owners, directors, executives and managers know, is by far the most powerful determinant of productivity. It’s much more significant than buildings and equipment. Yet although no one today would build a building or machine without a plan, few leaders have a plan for building and sustaining a safer and more productive culture. Using practical ways, culture can be planned and shaped as desired. Success requires implementing a project plan for changing the systems that drive behaviours that in turn shape attitudes. The combination of behaviour and culture together with leadership largely shape culture. To improve performance, leaders need to:

improve the organisational systems that drive behaviour action a project plan for improving specific performance metrics demonstrate leadership that is conscious, disciplined, committed and passionate for purposeful use of

human energy. This paper explains all three factors in practical ways with operational and corporate examples. It details understanding and applying the power of fundamental statistical analysis tools to recalibrate, focus and drive proactive leadership that takes responsibility for process improvement, supporting people and ensuring accountability. Experience and practical understanding of human and organisational behaviour confirm that the Measurement • Analysis • Reporting system combined with conscious leadership is by far the most powerful driver of behaviour. This wisdom produces profound changes in leadership style and behaviour. It develops outstanding leadership to create and sustain a safe and highly productive culture reliably producing consistently high quality products. It is the key to developing accountability, employee retention and a sustained competitive advantage.


Using Scenarios to Investigate the Long-term Future of Copper

Mining and Guide Exploration Targeting Strategies

J P Sykes1,2 and A Trench3,4,5 1. MAusIMM, Provisional PhD Candidate and Adjunct Research Fellow, Centre for Exploration Targeting, School of Earth and Environment, The University of Western Australia, Crawley WA 6009. 2. Director, Greenfields Research, Hunters Chase, Highfield Farm, Hartwith, Harrogate, North Yorkshire HG3 3HA, UK. 3. FAusIMM, Professor of Practice, Business School, The University of Western Australia, Crawley WA 6009. 4. Professor – Progressive Risk and Value, Centre for Exploration Targeting, School of Earth and Environment, The University of Western Australia, Crawley WA 6009. 5. Associate Consultant, CRU Group, Chancery House, 53–64 Chancery Lane, London WC2A 1QS, UK.

ABSTRACT

The common-held view of the future of copper mining is one of declining quality of mineral resources and increasingly limited long-term development options. This decline, in turn, is viewed as inevitably leading to increasing economic, socio-political and environmental costs. As a result, new technologies and innovations will be required to mitigate cost escalation. The future is therefore typically summarised as a battle of a ‘below-ground’ declining quality asset base pushing costs upward versus ‘above-ground’ technology and innovation driving costs downward. The role that high quality new mineral discoveries could play in mitigating industry cost pressures is typically understated, if considered at all. New high quality discoveries can be mined at lower cost than existing assets and potentially if discovered in the right locations within a more amenable contemporary environmental and socio-political setting. Such deposits, once discovered, would improve the overall quality of the industry asset base, as well as benefitting their owners substantially through higher margins. However, to target new high quality deposits explorers need some understanding of the nature of high quality copper mines in the long-term future. Conventional scientific and economic techniques for analysing the future of copper supply, generally by studying the project pipeline, ignore as yet undiscovered resources and also struggle to fully incorporate the multiple internal and external factors that could impact upon copper mining practices in the future. Scenario analysis is specifically designed to consider multiple factors interacting in the future, and is thus more creative than simply looking at the visible project pipeline. The use of scenarios is therefore potentially capable of providing insight into aspects of the future of copper mining about which little is currently known or that remains considerably uncertain. In this study, the Oxford University Scenarios methodology was employed to analyse different plausible futures for copper mining and the consequent implications for exploration targeting strategies. The scenario analysis highlights two key dimensions or axes that serve to map out potential industry futures: Firstly the technical and economic optimisation of the existing industry; and secondly the generation of new prospects or ‘search space’ for the copper industry. These two axes in turn frame four different scenarios for the future of the copper mining industry. These copper mining scenarios are then compared to the 20 largest existing copper mines and projects, and their owners, to determine if any represent an appropriately robust exploration targeting proxy: None do. The paper therefore concludes that efforts by industry are required to generate mine concepts that would be viable across all scenarios, and thus act also as exploration targeting proxies. In the interim, companies will have to seek to build portfolios that create an overall robust asset base, out of individually less robust assets. Failure to do this implies that consequential, irreversible strategic decisions lie ahead for the copper mining industry, which may be a threat to both incumbents and the very industry itself. This situation makes strategic exploration targeting in the copper industry very difficult.


How Robust are your Asset Integrity Management

Processes?

J Wallace1, M McCamley2 and R Cannings3 1. Director, Hawcroft Consulting International Group, Valentine NSW 2280. 2. MAusIMM, Director, Hawcroft Consulting International Group, Mackenzie 4156. 3. Hawcroft Consulting International Group, Taringa Qld 4068.

ABSTRACT

The mining industry continues to have major disasters (Bingham Canyon, Pike River, Upper Big Branch, Mount Polley and Samarco), which often have a devastating effect on the enterprise, in terms of personnel deaths and injuries, environmental destruction, and financial and reputational loss. These disasters are not imposed from outside the business or organisation, they are almost always a function of loss of control of the management of the organisation’s critical assets and processes that they contain or to which they are exposed. Asset integrity is discussed as an effective response to business risks in order to mitigate, control and recover from loss scenarios that could expose a mining operation to significant property damage and business interruption, or even total loss. Vital to this process is the identification and control of risks to critical assets. Components of a critical asset assurance program are presented for discussion. Formal risk assessment has a longer history in industries other than mining, eg petrochemical, nuclear, military, aviation and space industries. Risk assessment is a structured, proactive approach to understanding and improving risks, as opposed to a reactive ‘fix-it-when-it breaks’ mentality. Risk assessment techniques were triggered by major public disasters, such as the Flixborough chemical plant disaster (1973), Three Mile Island nuclear plant event (1979) and others. Today, most industries see risk assessment as an inherent part of their business, but do mining sites capture business risks that are related to major loss scenarios which could have a significant impact on the operation?

Does your risk assessment process:

involve a team having the right skill set so that the discussion is both stimulated and technically sound? use generic assessment when a site specific assessment is needed? fail to consider all possible outcomes, including maximum foreseeable loss (MFL)? fail to identify all hazards and controls associated with a particular activity? fail to monitor controls effectively?

This paper addresses the issues identified by these questions and provides some direction for developing a risk management process where business risk associated with critical asset integrity is integrated with other business and safety and health risk processes to provide a robust method for managing your business. Case studies and common findings from critical asset failures are used to support the need to included critical asset assessments as part of business risk management processes.


MMG’s Australian Operating Model – the Implementation, Successes and Learning

R M S Watsford1 and M Davis2 1. FAusIMM, General Manager Australian Operations, MMG Limited, Southbank Vic 3006. 2. MAusIMM, General Manager Operational Excellence, MMG Limited, Southbank Vic 3006.

ABSTRACT In 2015, MMG Limited (MMG) commenced further action to improve operating margins and establish a blueprint for future growth in the Australian environment. This action was taken in the context of weakening metal prices and high input costs that arose during the Australian ‘Minerals Boom’. MMG was formed in June 2009 following the purchase of the majority of assets of OZ Minerals Limited by China Minmetals Corporation (CMC) through its subsidiary China Minmetals Non-ferrous Metals Co. Ltd (CMN). Since formation MMG has been implementing a Business Model to deliver a standard way of operating. The overarching purpose of the Business Model (Business Model) is to enable fast integration of acquired assets to realise improved productivity and performance. CMN established MMG as a vehicle to reach their growth targets through further development or acquisition of mineral assets in jurisdictions external to mainland China. The Business Model is underpinned by the MMG Operating Model (Operating Model). The Operating Model defines how MMG is arranged to deliver the company strategy. This paper describes the application of the Operating Model to the formation of the Australian operations into a single business unit from multiple stand-alone operating sites. The development and impact of the Business Model on MMG’s performance is also presented. The extension of the Operating Model to the Australian operations has led to improvement in safety performance, direct costs and productivity. These improvements have been achieved through reducing duplication, simplification of systems and rapid deployment of improvement initiatives. The successful implementation of the Operating Model to Australian Operations strengthens the platform for further growth. Hence, delivering on the aim of the Business Model.


Making Safety Simple, Useful and Effective

M E Webb1 1. General Manager, MMG Limited, Southbank Vic 3006.

ABSTRACT Safety is a key value in most leading mining companies. Despite years of effort, and significant expense in ‘programs’, operating sites seem to have been left with no real improvement in either the elimination of fatalities or sustained reduction in injuries. Safety systems and processes have grown and evolved, often to the point where they have become overly complicated and marginally useful. MMG Limited, following the consolidation of its Australia operations under a single management structure, undertook a program to effect real and sustained change in its approach to managing safety. The program aimed at improving safety by better engaging its workforce and by making safety processes simple, useful and effective. It defined the role of the supervisor in creating safe work, the role of the people doing work and the role of safe work methods. A safety diagnostic tool was developed to assess site against safety-critical mindsets, behaviours, cultures and systems. The outcome of the diagnostic is considered by the organisation to be the true lead indicator of safety performance. While still a work-in-progress, the program at the Australian Operations of MMG Limited shows that challenging common paradigms in safety management can create real change in safety performance.

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