Major Projects Challenges and Opportunities
Transcript of Major Projects Challenges and Opportunities
• Global mining company, headquartered in Rio de Janeiro, Brazil and present in 5 continents.
• Focused on excellence, innovation, diversity and sustainability in all its activities.
• Steelmaking, Logistics, Fertilizers and Energy: supporting business which enable our continuous growth
• Socio-environmental responsibility is of strategic importance. In 2011 investments in corporate social responsibility reached about US$ 1.49B, of which about US $1B was for environmental protection.
• Approximately 130,000 employees around the world
• Historic results in 2011: Operating revenues of US$60.4 billion
Vale
Diversified Portfolio: sourcing, processing and commercialization
Coal Copper Steel Energy
Global leader in iron ore and pellets production Logistics Fertilizers
2nd biggest nickel producer
February 2012 December 31, 1997
US$ 139 billion US$ 7.4 billion
Fast growth and significant shareholder value creation consolidated our position as the world’s second largest mining company Market capitalization
Focus on organic growth. Massive investment in the development of world-class assets supported by the expansion of our infrastructure.
Enhancement of competitiveness in the Asian market. Development of an asset base in Africa.
Confidence in long-term global fundamentals underlies the continuity of our strategy to deliver strong and steady growth and value
Investments 2008-2010 US$ billion
19.4
12.7
10.3
Continuing to build up our growth platform guided by a long-term view of minerals and metals fundamentals
Brownfield
Greenfield
2012 2011 2013 2015
Conceição Itabiritos Carajás 40 Mtpy
Teluk Rubiah
Salobo
Tubarão VIII
Estreito
Karebbe Long-Harbour
Serra Sul (S11D) Rio Colorado Moatize
Totten
Simandou I
Biofuels
Konkola North
Vargem Grande Itabiritos
Salobo II
ALPA
CSP
CSU
Iron ore & pellets Nickel Coal Copper Fertilizers Logistics Energy Steel
2014
Serra Leste
Bayovar II
CLN 150 Mtpy Cauê Itabiritos
Moatize II
Conceição Itabiritos II
CLN S11D
Ellensfield
Apolo
Nacala
Cristalino
Salitre
Simandou II
From 2011 to 2015, 33 major projects will be delivered, contributing to significant shareholder value creation
•The mine & concentrator has been established at Voisey’s Bay, Labrador
•The hydromet demonstration plant was built at Argentia and the processing plant is being built at Long Harbour
•These sites required extensive infrastructure - port facilities, power supply, water supply & roads, accommodations and an airport at Voisey’s Bay
Voisey’s Bay Project – Development Configuration
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• New processing technology developed by Vale in Canada
• Significant Capital Investment ~ US$ 3.6 billion
• Construction Phase Employment > 10 million person-hours
• ~ 500 permanent jobs supporting operations
Project Status Project released from Environmental Assessment in July 2008
Initial Construction began April 2009
Overall Project: 66% complete
• Engineering: essentially complete
• Construction: ~ 50%
Employment: • >10 million person-hours of employment generated since initial work began
in April 2009
– 78% of person-hours in Newfoundland & Labrador – 3600 at construction site – Skilled trades availability is a major concern
Procurement • Substaintaly complete
Safety Performance
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Long Harbour Project
Project hours worked Person hours worked (Site)
11,040,202 8,250,193
Hours without Lost Time 193,803
Frequencies Comparisons
Lost Time .07
Medical Aid .53
First Aid 9.09
Provincial Frequency 2010
Long Harbour Lost Time (LT) 1.8
Provincial Construction Lost Time (LT) 2.6
Project operates under a ‘Zero Harm’ target Significant efforts are undertaken such as planning, training and mentoring to maximize maintain highest standards of safety
A multi-phased US$200 million R&D program was conducted to extend the application of hydromet technology to process Voisey’s Bay nickel concentrate
Full Scale Plant
2003-2004 2005-2008 2006-2013
Studies, design, engineering, and construction
Mini-pilot Plant Demonstration Plant Laboratory
Bench Scale 1/10,000 1/100 1/1
Research and Development
Global Forces Impacting Mining & Project Investments
• Ever changing commodity markets • Global economic pressures • Mature operations are mining deeper and processing lower grades • New developments occurring in remote areas • Societal pressures to reduce environmental footprint • Product substitution
• Competition for human resources • Exponential cost growth
Challenges
• Project planning not aligned with execution realities • Human resources shortages • Contractor and supplier base shrinking • Competitive bidding becoming less effective • Productivity underestimated
• As a result projects invariably take longer to execute and cost more than
planned.
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Challenges
• Human resource shortages • Market is very tight (and getting worse) globally • Team formation is always underestimated
• Project pipeline clogged
• Competition for scarce resources • Costs for labour, professionals and contractors are escalating
• Shrinking contractor and supplier base
• Consolidation amongst contractors and suppliers of engineered equipment
• Robust project pipeline globally is making competitive bidding less effective • Contractors becoming risk averse and are demanding high premiums
if forced to submit lump sum bids
Challenges
• Declining engineering and construction productivity • Increased complexity combined with loss of expertise • Global demographic trends leading to limit supply of labour
• Volatile market making it difficult to plan ahead
• Market demands are growing • Economic outlook is questionable – diverse views
• Project planning suffering from poor scope and execution definition
• Best practices often create a false sense of confidence • Results in pressure for cost reductions
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Other Notable Challenges • Remoteness
• Projects are occurring in more remote areas which require self-sufficiency • Additional work and poor expertise; air-strips, roads, communications
• Problems increase with project size and complexity
• Communication channels increase exponentially • Reliance on processes rather than direct personal input
• SH&E expectations
• We must hold ourselves to the highest standards of all when it comes to employee safety, social responsibility and environmental protection
• Additional medical concerns due to aging workforce • Remote operating areas require significant training resources • Overlapping jurisdictions leading to delays or competing regulatory
requirements
How can we address the challenges?
• Processes are robust enough to plan long term but we need to have a more stable and sequenced project pipeline
• Build in house capability rather than relying on contractors
• Build more flexibility into labour agreements that will allow increased use of travel permits and temporary foreign workers
• Work closely with government and labour to ensure more transparency on craft demand/supply
• Examine ways to increase modularization which will allow proponents to source globally
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