Sierra Gorda Mine-to-Mill

Lean Pull Strategy

Value Stream Management
Alfonso Muñoz V., Germán Labarca, Dianne Pizarro and Laura Mottola
Business Improvement Team Sierra Gorda S.C.M., Antofagasta, Chile
Gregory Gonzalez
Business Improvement Manager, KGHM International, Toronto, Canada
 Agenda
• Sierra Gorda Location
• Sierra Gorda Flowsheet
• Sierra Gorda Background
• Operational Excellence Model
• Value Stream Management Methodology
• Main Findings
• Conclusions and Action Plan
Sierra Gorda Location
• Sierra Gorda is located in the Atacama Desert,
North of Chile
• 140 km NE of Antofagasta
• 60 km SW of Calama
• 4.5 km SW of Sierra Gorda village
• Elevation is 1,700 m over sea level
• The project consists of the Catalina and
Salvadora copper deposits with significant
molybdenum content
• A mineral processing plant is under
construction to process 110 ktpd, with start-
up in 2Qtr2014.
Sierra Gorda Process

Proceso_productivo.swf
 Sierra Gorda Background
• 55% KGHM Polska Miedz S.A.
• 45% Sumitomo
• Operated by KGHM International
• Mine pre-stripping started in Mar 2013
• Rarely does one mine become the game
changer for an entire industry. Sierra Gorda is
that once-in-a century supply source that will
redefine the molybdenum industry
• Now under construction and scheduled for
production in 2014
 Concentrator Plant OpEx Model
“Show the world how it can be done”
”
Consistent and Sustainable Results
Gradual and Progressive Change

VALUE STREAM MANAGEMENT

Process

Accountability
Strategic
Management

Discipline &
Performance
Standard

Problem
Process

Solving
Deployment
Visual

Management

People Behaviors – Competences (Skills & Knowledge) Value Stream

Management

Driven Results
through the
Teamwork
Zero Harm

Work Teams
Courage
Success

• Kaizen Excellence
• Operational Process
Reliability
Deployment
Strategic Basis
Aggressive Grown Technical Capacity Take Risks
(Technical, instead Political)
 Value Definition
Sale Price – Cost = Profit

Activities Controlled Internally

External Forces
Value Added Activities No Value Added Activities

Essentials No Essentials

Copper
Molybdenum
Energy
Reduce Variability Reduce Eliminate
Diesel
Eliminate Waste
Material Raw
Identify Std. Practices
Etc.
Simplify the Process
 Define Scope
Sierra Gorda VSM Methodology
Team Training on
& Cross-Funcional Change Needs based Lean Mining & VSM
Mgmt. Team Foundation on Market Treaths Methodology
Approval
Develop Material
Flow Mapping

Develop High Level Develop SIPOC by Develop RACI

SIPOC Mapping Process Stage Matrix for Variables

Confirm KPI’s & Data Gathering from

Develop Value Design Criteria Develop Information
Brainstorming Assumptions
Driver Tree Flow Mapping
Statement KPI’s calculations

Develop RACI Modeling & Identify Integration

Matrix for Activities Simulation of Information
VSM Estado Required
Actual

VSM
Gap Analysis &
Conclusions & Estado Future
Opportunities Finantial Analysis Recommendations & Value Chain
Identification
Alignment
 Concentrator Plant VSM Scope
• Identify bottlenecks and action plan to guarantee the Ramp-
Up will be achieved successfully
• Define an integrated action plan from Mine-to-Market, and
supporting areas to ensure the 2 year production budget is
achieved with minimal variation
• Increase grinding performance / average throughput from 110
to 115 ktpd
Stochastic Simulations
 ROM Fragmentation Improvement
Parameter Design Current
Top size, inches 48 24
Size F80, inches 20 11
Coarse size > 3.5" 75% 58%
3.5" > Middle size > 1" 12% 17%
Fine size < 1" 13% 25%

• Fine material increases significantly

Feed Grades – High Variability
 Sierra Gorda VSM Findings
The simulations show that the improvement projects to be
developed are:
1. Reducing mine fragmentation
2. Optimization of frequency of trucks arrival to primary crusher
3. Maximizing the use of the installed capacity in secondary crushing
4. Liners design improvement at primary and secondary crushing
5. Optimizing the efficiency of classification of fine crushing circuit
6. Maximizing the asset efficiency of grinding
7. Reducing variability in finest Cu and Mo fed to flotation
8. Improving the concentrate grade and recovery of Molybdenum in bulk circuit
9. Improving the concentrate grade and recovery of Molybdenum in selective circuit
 Road Map to Sierra Gorda Improvement
• Develop a mine-to-mill integrated size reduction model to identify the process
parameters required to achieve high-quality particle size distribution (top size of
24 inches and F80 of 11 inches) and throughput
• Develop and deploy a TPM model to support the maximization of grinding asset
efficiency, focusing on the Autonomous Maintenance pillar
• Improve mine planning and mill operation strategy to avoid unmanageable grade
variation (loss of Cu and Mo) to develop an effective blending strategy (maximum
capacity 550 tpd fine Cu or 120 tpd fine Mo)
• The combined efforts to reduce ore grade variability and Primary Crusher feed
particle size distribution have the potential to positively impact revenues by about
$250 million dollars
 Action Plan
• Develop ROM fragmentation and Comminution Circuit Modeling
• Implement Lean Pull Production System for Mine-to-Flotation Process (supported
by integration of technologies)
• Conduct daily Kaizen meeting at Primary Crusher and Bulk Flotation Circuit as pilot
program (based on the Kaizen dashboard)
• Deploy the SPC process throughout the facility, based on reportability and on-line
tools
• Initially institute the Six Sigma philosophy in the Moly Flotation Plant due to severe
penalties for high impurity levels
• Develop and deploy Kaizen Teams to solve problems daily or weekly shift (formed
by frontline Operators & Maintainers)
• Develop and deploy Operational Reliability (OR) Teams (formed by Supervisors)
based on the standard OR model to support the Kaizen Teams