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FEL Aplication in Mining Capital Projects
FEL Aplication in Mining Capital Projects
SIGEMIN
Lima, 09 Agosto 2013
Introduction
Concept Study
Pre-Feasibility Study
Feasibility Study
Execution Stage
Conclusions
Source: http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/
Costs + 82%
Productivity + 36%
50
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Cost of Manpower Index
Adjusted Productivity Index (1)
(1) Grade and stripping ratio is sustained during that period
Source: Cochilco, Mc Kinsey analysis
Production Costs
(cUS$/lb)
400
100%
350
300
250
200
150
100
50
255
229
299
257
80%
343
60%
40%
15%
26%
15%
8%
0
High Grade /
Mid Grade /
Low Grade /
High Scale
High Scale
High Scale
Production Cost
Long Term Price
20%
7%
Low Grade /
0%
Low Grade /
Mid Scale
Low Scale
Domestic Production Share
Introduction
Concept Study
Pre-Feasibility Study
Feasibility Study
Execution Stage
Conclusions
10
Potential Value
Good project
definition
Concept
Pre-Feasibility
Feasibility
Execution
Operation
Level of Uncertainty
SIGEMIN, Lima 09 August 2013
11
Easy to distinguish
between outcomes
Improved Process
Difficult to distinguish
between outcomes
- ve
+ ve
12
Introduction
Concept Study
Pre-Feasibility Study
Feasibility Study
Execution Stage
Conclusions
13
Concept
Pre-Feasibility
Feasibility
Execution
Operation
14
Key Questions
Is this the right investment? Why?
Is there sufficient potential value associated to justify
further analysis?
Does the investment fit with the current business
strategy?
Is there an adequate go-forward plan for the PreFeasibility Study?
What are the potential major risks that could negate the
investment value?
15
Common Mistakes
Doing more than is necessary. Eg: detailed
engineering
Opportunity is not fully aligned or contradicts the
business strategy
Investment opportunities are based on the solution,
rather than a broader objective
Belief that the solution is known
Not completing the documentation
16
Introduction
Concept Study
Pre-Feasibility Study
Feasibility Study
Execution Stage
Conclusions
17
Concept
Pre-Feasibility
Feasibility
Execution
Operation
18
Mining Method
Open Pit
Underground
Plant Size
100 tkpd
75 ktpd
50 ktpd
Product
Transport
Pipeline
Trucks
Train
19
Mining Method
Open Pit
Underground
Plant Size
100 tkpd
75 ktpd
50 ktpd
Product
Transport
Pipeline
Trucks
Train
20
Mining
Method
Open Pit
Underground
Mining
Technology
Conventional
Trucks
Autonomous
Trucks
Large
Conveyors
Plant Size
1 x 100 tkpd
2 x 50 ktpd
1 x 75 ktpd
Plant
Technology
SAG
HPGR
Other
Product
Transport
Pipeline
Trucks
Train
21
Mining
Method
Open Pit
Underground
Mining
Technology
Conventional
Trucks
Autonomous
Trucks
Large
Conveyors
Plant Size
100 tkpd
75 ktpd
50 ktpd
Plant
Technology
SAG
HPGR
Other
Product
Transport
Pipeline
Trucks
Train
22
Mining
Method
Open Pit
Underground
Mining
Technology
Conventional
Trucks
Autonomous
Trucks
Large
Conveyors
Plant Size
1 x 100 tkpd
2 x 50 ktpd
1 x 75 ktpd
Plant
Technology
SAG
HPGR
Other
Product
Transport
Pipeline
Trucks
Train
23
Many Alternatives
Best
Alternative
Time
SIGEMIN, Lima 09 August 2013
24
Autonomous
Large Conveyors (with InPit crushing units)
Operations
Power regeneration
Minimum water consumption
Modularity concept
Maintenance
Use of robots
25
Key Questions
Have all reasonable alternatives been properly
considered and reviewed equally?
What criteria were used to select the best alternative?
Does the investment still fit with the current business
strategy?
Are the major risks and possible controls identified?
Does the potential value of the investment continue to
justify further analysis?
Is there an adequate plan for the Feasibility Study?
26
Common Mistakes
Not starting with a divergent set of alternatives
Lack of understanding of the problem at early stage of
Pre-Feasibility (or at the end of Concept Study)
Studying only a narrow set of alternatives.
Studying too many alternatives right up to the final stage
Belief from an early stage that the go-forward case is
known. Eg we know that the business needs
Fast track the project
Doing more than is necessary
Not completing the relevant documentation
27
Introduction
Concept Study
Pre-Feasibility Study
Feasibility Study
Execution Stage
Conclusions
28
Concept
Pre-Feasibility
Feasibility
Execution
Operation
29
Key Questions
Is there an accurate understanding of the value and risks
of the investment prior to moving to project execution?
Does the investment still fit with the current business
strategy?
Have all reasonable optimisation opportunities been
pursued?
Are the risk control action plans in place?
Is there an optimal project execution plan?
Is approval recommended?
30
Common Mistakes
Continuing with alternative selection type of work
Allowing significant scope changes (beyond optimization purposes)
Underestimate the time frame for legal / environmental approvals
Not ensuring completion of critical information to support the
investment decision
Belief that because the project is in Definition Phase it is 100% sure
that it will be executed
Belief that gaps from prior phases can be fixed in Definition Phase
31
Introduction
Concept Study
Pre-Feasibility Study
Feasibility Study
Execution Stage
Conclusions
32
Concept
Pre-Feasibility
Feasibility
Execution
Operation
33
Introduction
Concept Study
Pre-Feasibility Study
Feasibility Study
Execution Stage
Conclusions
34
Each study phase has its own purpose and should not be
mixed, nor rushed; because might jeopardize project value
The most important value on Front End Loading is captured
during Pre-Feasibility. Therefore, multiple scenarios about
low cost and operational efficiency must be captured here
Although, FEL can be considered a long and rigorous process,
it will ensure that a sound decision is being made
Application of FEL must be complemented with judgment to
avoid group thinking
35
Ramiro Zuiga
SIGEMIN
Lima, 09 Agosto 2013