Mine Reduces Tailings Project Capital By Over 40%
The Problem
A mature mine was planning a new tailings area that was required to provide capacity for continued operation.
During the design phase, the estimated cost for the project increased by almost 50% to near $1BN, an amount that was no longer considered viable.
“We were previously shown under $600M as the cost and this was before a drop in commodity prices. The estimate needs be drastically lower than this,” a leadership team member shared with the project director.
Given the business need to increase tailings capacity and leadership’s stance on capital, the project needed to find significant upside while still delivering a safe and reliable asset.
The project director knew the next funding review was approaching in 3 months, and without approval the project would likely be delayed, potentially putting the mine plan at risk.
Together the project team responded by identifying 40 different opportunities for cost improvement. The challenge was that these only totaled $100M in potential savings, not yet enough to reach the <$600M target.
It was clear more improvement options were needed.
The Solution
The project team engaged Stroud in a nine-week project transformation effort. An integrated team of 30+ members including engineers from external design companies, project representatives, operations, maintenance and estimators were identified to support the initiative.
During the first two weeks, the team focused on playing offence, adding to the opportunity previously identified through Zero-Based Analysis (ZBA).
In five ZBA working sessions, over 180 new opportunities were identified with a total potential savings of over $700M.
The sessions challenged all previous project design and assumptions, developing a “theoretically perfect project” in order to identify all possible opportunities.
The 180 opportunities were then prioritized based on value and complexity, with 18 top evaluation areas selected to pursue that alone had enough potential value to reduce costs below $300M.
This was great: the team could now meet the goal even without needing to lock-in all of the potential options.
The 18 evaluations were each chartered with a leader, team and pre-determined decision criteria. The teams were unleashed with the mindset and alignment to complete the evaluations over the next six weeks.
With support from design engineers, they challenged previous design assumptions, found ways to utilize existing assets on-site and analyzed the risk of all potential options. Once complete, the team selected options with the lowest cost yet still fully acceptable risk from each evaluation, using newly uncovered facts to make the best design decisions.
All decisions were documented, presented to leadership and signed-off by the integrated team and leadership, locking in the changes. The project plans and budget were officially updated with certainty.
The Result
The overall project capital cost was reduced from near $1BN to a new estimate just above $500M, a reduction of >45%. The project was now well below the investment threshold around $600M, and got the approval to proceed!
The team owned the result with strong buy-in from the business that the new design decisions would safely achieve the required operation. All team members, especially the project director, were re-energized to work on the project with a good load of pressure lifted.
As the project moved into detailed design and execution, the invigorated team continued to use their improvement mindsets to evaluate remaining smaller design opportunities and lock-in even more savings.
“The methodology, commitment and attitude Stroud brought to the team was a critical part of our success. I also know how difficult it can be to step into a new team, especially one with 30+ members, and get results. Not only did we get those results, we got them in a collaborative and integrated way.”
- Project Lead
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