A copper mine owned by a multinational company needed to recover competitiveness in costs after falling to the fourth quartile in the industry. It was initially decided to focus on improving productivity with the aim of achieving results within an aggressive timeframe.
Context
The company suffered from uncompetitive costs due to inefficient management, incompliance of its production plans and lower ore grades. To reverse this situation, the company’s executive team committed itself to achieving costs savings of US$30 million during 2019 by increasing labor productivity.
Circumstances at the mine required drastic changes with an aggressive timeframe of just 14 weeks.
Opportunities detected
Through a detailed benchmark analysis of unitary processes, Matrix identified excess staffing levels of around 25%, concentrated principally in the G&A and mine areas, implying annual savings of around US$65 million.
Excess staffing in the mine was concentrated among transport operations, maintenance staff and a layer of management that did not exist in other mining operations. Excess staffing in the G&A area was concentrated among service contractor personnel.
Proposed Actions
As a result of an intense work in conjunction with the leaders of the productive processes and G&A, Matrix identified a series of initiatives designed to optimize labor productivity which challenged the status-quo of the operation.
Measures to optimize company staff included cutting absenteeism among mine operators, increasing utilization rates of mine equipment, eliminating a layer of management that does not exist in other mines and consolidating maintenance areas.
Actions to optimize external staffing levels in the mine area included partially internalizing transport to inside the pit, increasing the use of auxiliary equipment, optimizing performance management of contractors and terminating contracts with low added value.
Finally, to tackle low labor productivity in G&A, adjustments were proposed to service standards, and the system of transport to and from the mine was optimized.
Each of these recommendations was supported by a robust business case which allowed clear understanding of its economic impact and potential risks and an exhaustive plan of actions for its implementation.
