All images: MMG. 

BY ELIZABETH FABRI

FIRST zinc concentrate production began in November last year at the $US570 million Dugald River mine. Since then, the MMG team and its contractors have been working at warp speed to reach the next milestone; commercial production. We spoke with Dugald River general manager Pierre Malan about how a “leap of faith” during the downturn enabled the project to be achieved ahead of schedule and under budget.

 

Q. How is ramp up progressing and how close you are to reaching commercial production?

 

The project has been going really well. With commissioning ahead of schedule last year, we are, overall, still tracking under budget and ahead of schedule.

Late last year we started production of zinc concentrate, which was very pleasing ahead of schedule, and so far in 2018 we have been able to commission our plant.

We’ve also been able to progress the production of our lead concentrate, and shortly will be looking at shipping our first lead concentrate out of the Port of Townsville.

Overall, we’ve been focusing on ramping up both throughput and recovery, and happy to report that the ramp up on both those metrics have also been progressing ahead of schedule.  In combination with that we have been working hard at ramping up the mine, and all production from the mine is in line with our plan and our schedule that will see us able to sustainably feed the processing plant.

 

 

Q. What strategies were put in place to deliver the project under budget and ahead of schedule?

 

We haven’t done too much reflection, but what we have done is try and make sure we can learn from this experience so we can repeat it with projects going forward. There are a few things that stood out for me that I’m happy to share.

Firstly, I think having the right people, and arguably the best people, working on the project and on the team has been a significant contributor to this success we have had to date.

In projects like this there are so many variables; things change, things happen, and you cannot plan for everything.

So what you need is the right people on the ground in decision making positions to respond appropriately when those things happen, or when those changes occur.  I believe that’s one of the strengths we had.

The other thing in our favour was the timing of the project; being able to develop a mine in a counter cyclical fashion when others had significantly cut back on capital expenditure due to a metal price downturn.

That enabled us to get access to some of the best people and some of the best contractors that were fit for purpose for our project.

Together with that you have an opportunity to get [contractors] at a good price. The competitive environment for contracting during a down cycle is much different to the middle of a boom, where contractors are generally committed to other mining projects that could potentially be offering more money than we would be willing to.

That timing aspect and the access to the people and contractors as a result of that was important.

Lastly, the support we had from our major shareholder China Minmetals certainly contributed to the success of the project and, to a large extent, enabled us to finance this project at a time when metal prices were down and when others were struggling.

 

 

Q. In a speech last year, MMG CEO Jerry Jiao described the decision to proceed with Dugald River several years ago as a leap of faith”. Has this been a key pillar to your success, when others in the industry were more cautious?

 

It was important.

A leap of faith would certainly be one way to express it because at that specific point in time metal prices were extremely low. However, we were able to present a business case to the major shareholder that was clearly convincing, otherwise they wouldn’t have come to the party.

We used a lot of very solid market fundamentals driving supply and demand and resultant price at the time to justify why that price was not a long term price, and therefore why it was appropriate to proceed with this project at that point in time.

It’s great that our major shareholder and the Chinese banks were able to understand the position we held and were convinced. Now, despite not being in commercial production yet, we’re able to demonstrate the thinking was sound and it wasn’t a gamble.

 

 

Q. How have the new laws banning 100 per cent fly-in, fly-out workforces in QLD impacted operations and your procurement plans? Do you support the new laws?

 

We are certainly supportive of the law, and I’d have to say the law hasn’t had any impact on our operation and we’re not expecting it to have any impact going forward.

We have always stated that our preference is to employ locally, and we are committed to the local community and local Indigenous population.

We are doing everything in our power to preference local employment and also to facilitate the relocation of people into the region.

So while this law, which came into existence well after our local employment plans were already in place, doesn’t really have any impact on us, we do fundamentally agree with it –demonstrated by the fact that we have been following the labour practices proposed by the law long before it was ever even conceived.

 

Q. Late last year, Cloncurry Mayor Greg Campbell said only two Dugald River staff at the time were locals and “more needed to be done to improve that figure”. How do you respond to this?

 

At the time, the Cloncurry Mayor may not have had all the information at his disposal to comment fully on local employment at Dugald River.

We have a contract mining arrangement with Barminco as well as other large contracting partners on site, like ESS, performing works for us.

Irrespective of whether a person working at Dugald River is employed by MMG directly or through a contractor, they are still Dugald River people and therefore should be counted into our overall employee numbers.

When you include contractors, as we should for a contractor mining operation, it’s clear that the number of locals both from Cloncurry and from Mt Isa are well in excess of that number quoted by the Mayor.

Overall about 9 per cent of our workforce is employed locally from within the Mt Isa, Cloncurry region.

That would be somewhere in the order of close to 30 people at this point in time, and there is very strong plans in place to continue to grow that number through apprenticeships, traineeships, and ongoing training plans and recruitment strategies to help push that number as high as we can get it sustainably down the track.

 

Q. Do you think local procurement is a challenge when some of the required skillsets are just not available?

 

Yes, it’s a challenge but it’s not a unique challenge; it is something that is part-and-parcel of our industry.

We are not only comfortable that we can compete with other mines in the region for skills, but that we can contribute to [upskilling] through training and development of locals and by assisting people to come into the local area through relocation.

 

Q. You’ve mentioned that Dugald River will initially be a follower in the technology space. Do you see more opportunity to get involved in new technologies/innovations?

 

The opportunity is certainly there, but we are not anticipating changing our strategy of being a follower.

We believe it’s appropriate for MMG and Dugald River to minimise risk and cost by allowing others to do the expensive and time consuming R&D work in the technology space.

We will be keeping an eye on that, and then implementing technology once proven it’s suitable at our site.

At this stage our focus remains on making sure that when we do put infrastructure in place, that infrastructure is compatible with future technology trends so we can capitalise on those developments as they get proven and commercialised by others.

 

 

 

Q. Has the team also undertaken any further studies into the potential of debottlenecking the operation and processing plant to boost volume above nameplate?

 

It’s a little bit early in the piece for that. We need to walk before we can run, and at this stage our technical team is highly focused and engaged in ramping up the plant towards nameplate.

We still have a little bit to go before we can achieve our nameplate capacity, [but] once we do that will be the appropriate time to shift the focus; to maintain that momentum and drive through the nameplate capacity ceiling towards what is the ultimate maximum sustainable performance.

 

Q. How important are your partnerships with the local community and stakeholders?

 

We have had very encouraging and successful conversations with our key contract partners throughout the course of the construction phase and ramp up.

There’s also been very positive collaboration with other stakeholders including local communities, local Government, State Government; a very supportive and encouraging collaboration that has enabled Dugald River to not only be constructed in record time, but also be ramping up in record time.

We don’t want to underplay those relationships and those collaborations because Dugald River and MMG couldn’t have done this on our own.

 

Advertisement