Leadership, Risk and Value - UNSW Faculty of Engineering€¦ · Leadership, Risk and Value . 22...

Leadership, Risk and Value

22 May 2014

University of New South Wales

Mitsubishi Lecture

1

Who is MMG ?

2

• Explores, develops and mines base metals deposits around the world.

• Aims to be the next generation’s leading mid tier global diversified minerals and metals company.

• Majority shareholder is China Minmetals (about 70%);

• Institutional and retail shareholders hold remaining Hong Kong Stock Exchange listed shares.

• International management team led by CEO Andrew Michelmore.

• Uniquely positioned to invest and grow.

• One of six business centres within China Minmetals Corporation (CMC)

• CMN is the managing and operating platform for CMC’s non ferrous businesses

• CMN is focused on “China strong” and “China weak” non ferrous metals

• Strategic objective to grow to one of the top ten mining and metals companies in ten years

• CMN is seeking to establish integrated and value accretive industry chain for “China strong” commodities (e.g. tungsten and rare earths) and secure upstream resources for “China weak” commodities (e.g. copper, zinc and nickel)

MMG is CMN’s flagship for overseas upstream nonferrous

metal

MMG’s remit includes: • Securing financial exposure to non-ferrous minerals

where China has a supply deficit • Enhancing China’s reputation as a global business

operator • Building mining capability transferrable to CMN

China Minmetals Nonferrous Holdings

China Minmetals Corporation (CMC)

Ferrous Trading

Ferrous Mining

~73.69% ownership

MMG Limited

4 other listed entities

3 Diversified Business Centres

China Minmetals Nonferrous

Metals (CMN)

State owned Assets Supervision and Administration

Commission

25 Ministries and 38 Centrally

Administered Government Orgs.

State Council

Standing Committee of the NPC

National People’s Congress (NPC)

President

Who is MMG ?

MMG’s footprint

copper/gold/lead/ silver/zinc

Golden Grove

copper/gold/lead/ silver/zinc

Rosebery

zinc/lead/silver

Century

zinc/lead/silver

Dugald River

copper

Sepon

copper Kinsevere

copper/lead/silver/zinc

Izok Corridor

Operating assets

Development assets

Exploration areas

copper/molybdenum/gold/silver

Las Bambas

At MMG, we mine for progress. • What does progress mean to us?

• It is the everyday progress our employees make – each contributing to our ultimate goal;

• It is the opportunities for personal progress – diversifying our skills, attempting new challenges and striving for continuous improvement and development;

• It is the progress that provides real and lasting benefits to the communities in which we operate; and

• It is humanity’s progress as the world develops and evolves using the metals we produce.

MMG’s belief

5

MMG’s approach to business

Century coarse ore stockpile

6

• To operate its assets in a safe, efficient and cost-effective manner.

• To use its existing assets to provide a platform for future growth.

• To create a simple and scalable business.

• To seek value accretive growth opportunities.

• To continue to pursue MMG’s long-term strategy and vision.

MMG’s Queensland Operations

7

Century zinc-lead-silver mine mining and processing operations at Lawn Hill and port facility at Karumba

Dugald River project underground mine development project

A number of questions

8

Who thinks they will be a leader ?

Who thinks they will be a CEO ?

Who thinks they can make their world (whether big or small) a better place ?

What is leadership ?

9

Leadership is ultimately about having a vision for the future

not a nostalgic longing for the past…..


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All men dream, but not equally. Those who dream by night in the dusty recesses of their minds wake in the day

to find it was vanity, but the dreamers of the day are dangerous men for they may act their dreams

with open eyes to make it possible

T E Lawrence The Seven Pillars of Wisdom 1921


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We can all be a leader and make a difference

It is about turning ‘whingers’ into ‘winners’

Risk and Value

12

Mining is a hazardous business

It cannot be a high risk business

Incr

easi

ng A

dver

se C

onse

quen

ce o

f Ev

ent

Increasing Number of Events

High frequency low impact

Low

frequ

ency

hig

h im

pact

Managing People Risk

14

Century Hazards Identified and Rectified

• Q1 2014 95% hazards rectified at time of identification

• Q1 99% hazards rectified within one week

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

200

400

600

800

1,000

1,200

Jan-

12Fe

b -1

2M

ar-1

2A

pr-1

2M

ay-1

2Ju

ne-1

2Ju

ly-1

2A

ug-1

2S

ept-1

2O

ct-1

2N

ov-1

2D

ec-1

2Ja

n-13

Feb-

13M

ar-1

3A

pril-

13M

ay-1

3Ju

ne-1

3Ju

ly-1

3A

ug-1

3S

ept-1

3O

ct-1

3N

ov-1

3D

ec-1

3Ja

n-14

Feb-

14M

ar-1

4A

pr-1

4

Hazards rectified at tim

e of identification

Haz

ards

Rec

ogni

sed

Hazards Recognised % Rectified at time of identification

15

0

3

6

9

12

15

0

5

10

15

20

25

30

35

40

45

50

2006

2007

2008

2009

2010

2011

2012

2013

2014

YTD

Total Recordable Frequency rate per m

illion hours worked

Num

ber o

f inj

urie

s by

yea

r

RWI MTI LTI TRIFR (RH Scale) Glide Path (RH Scale)

Century TRIFR 2006 thru 2014

0

2

4

6

8

10

12

14

16

0

5

10

15

20

25

30

35

4020

09

2010

2011

2012

2013

2014

YTD

Serious Significant Incident Frequency rate per million hours w

orked N

umbe

r of S

igni

fican

t Inj

urie

s by

yea

r

SSI Classification 4 SSI Classification 3 SSI Classification 2

SSI Total (Unclassified) SIFR (RH Scale) Glide Path (RH Scale)

16

Century Serious Significant Incidents 2009 thru 2014

Increasing Level of Geological

Knowledge and Confidence

Consideration of Mining, Metallurgical, Economic, Marketing, Legal, Environmental, Social and Government factors

(The “Modifying Factors”)

Exploration Results

Mineral Resources

Inferred

Indicated Probable

Measured Proven

General Relationship between Exploration Results, Mineral Resources and Ore Reserves JORC Code Figure 1

Consideration of Mining, Metallurgical, Economic, Marketing, Legal, Environmental, Social and Government factors

(The “Modifying Factors”)

Exploration Results

Mineral Resources

Inferred

Indicated Probable

Measured Proven

Increasing Level of Geological

Knowledge and Confidence

Decreasing technical and sustainability risks

Dec

reas

ing

geol

ogic

al ri

sk

General Relationship between Exploration Results, Mineral Resources and Ore Reserves JORC Code Figure 1 with a risk overlay

Exploration Results

Mineral Resources

Inferred

Indicated Probable

Measured Proven

Decreasing Technical & Sustainability Risk

Increasing Knowledge of and Confidence in Modifying Factors

Incr

easi

ng L

evel

of G

eolo

gica

l Kno

wle

dge

and

Con

fiden

ce

Dec

reas

ing

Geo

logi

cal R

isk

General Relationship between Exploration Results, Mineral Resources and Ore Reserves JORC Code Figure 1 with a risk overlay

Prospect Identification EXPLORATION TARGET

EXPLORATION RESULTS/Prospect Testing

Exploration Target Confirmation

INFERRED MINERAL RESOURCE Scoping Reserve

INDICATED MINERAL RESOURCE

PROBABLE ORE RESERVE

MEASURED MINERAL RESOURCE

PROVED ORE RESERVE

Residual Resource Risk Production

High Medium Low

Incr

easi

ng L

evel

of G

eolo

gica

l Kno

wle

dge

and

Con

fiden

ce

Dec

reas

ing

Geo

logi

cal R

isk



Prospect Identification EXPLORATION TARGET

EXPLORATION RESULTS Exploration Target Confirmation

INFERRED MINERAL RESOURCE Scoping Reserve

INDICATED MINERAL RESOURCE

PROBABLE ORE RESERVE

MEASURED MINERAL RESOURCE

PROVED ORE RESERVE

Residual Resource Risk Production

Incr

easi

ng L

evel

of G

eolo

gica

l Kno

wle

dge

and

Con

fiden

ce

Dec

reas

ing

Geo

logi

cal R

isk



Silver King

Eastern Fault Block

Silver Hills Silver Star

Watson’s Lode

Union Jack

Anglo American

Zinc Hills NE Limestone

Bald Hills Greater Britain

Stars & Stripes

High Medium Low

Century Stage 11

Big Banner

North Mitton

Lone Hill Epsilon

Century Tailings

Dam

Horseshoe

Lamington Black Snake

Lilydale

Delta Dorothy

Silver Pigeon

Little Wonder Fig Tree

Cassowary Annulus Centre

Wattle

Thistle

Edith

Sirdar

Leek

Plastic Sparrow

Quinlan’s Lode

Wooden Duck

Prince Charles

Ian’s Knob

Coglan Creek

MacGregor

The Federal

Widdalion

Anglo Australian Burke

Copper Mine

Mt Jennifer Base Metals

Unnamed 368397

Kamarga Road

Riversleigh Unnamed 388203

Unnamed 379382

Riversleigh Lineament Corridor

Phoenix Anomaly

12

Century Stage 8/10

Century Managing Production Risk

Risk isn’t static it changes ………….

0

10

20

30

40

50

60

0

5

10

15

20

25

30

Rai

n (m

m/d

ay)

Wal

l Vel

ocity

(mm

/h)

rainfall 1 2 3 4 5 6 7

TARP RED – No Mining

TARP GREEN – Mining With Controls

TARP AMBER – Mining With Controls

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FAILURE

ONSET OF PERFORMANCE DEGRADATION

EARLY REPLACEMENT

HIGH MAINTENANCE

COST LOW

OPERATIONAL RISK

LOSS OF VALUE

Managing Maintenance Risk

25

Century Managing Maintenance Risk

Acknowledged M Albertson Mainstream May 2014

26

Century Managing Maintenance Risk resulting in………….


27 Acknowledged M Albertson Mainstream May 2014


28

$30,000,000

$50,000,000

$70,000,000

$90,000,000

$110,000,000

$130,000,000

$150,000,000

2013 2014 2015 (Jan - Aug)

Annu

al E

xpen

ditu

re A

$

2013 Budget forecast

2104 Budget forecast



Record breaking underground development

100 person Accommodation Village completed in 2013

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• 14,078m of underground mine development and 45,157m of diamond drilling

• Completed

• Accommodation village

• Main and village access roads, including emergency airstrip

• Five-day metallurgical test of Dugald River ore at Century in late 2013

• Identified:

• Ground conditions which were more challenging than prior assumptions similar to George Fisher

• Significant ore body complexity

Project halted and construction suspended

Dugald River Managing Business Risk

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South Mine North Mine

• MMG Board approved trial stoping program for 2014

• The purpose of the program is to: • Confirm the preferred mining method • Gain practical mining experience –

establish revised geotechnical and mine design parameters

• Optimise underground mine design • Determine mine productive capacity

• A$55m programme



Highly instrumented trial • Aiming to measure rock mass

response to blasting and mining to maximise safety, productivity and mine economics

Downhole camera survey

Installed Instrumentation & Data Logger Blast Monitoring

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• ELOS indicates degree of overbreak; higher ELOS lower grade.

• First three stopes’ performance as predicted along 15m stope span vertical line

• Programme now to progressively expand stope span to 25m

• Positive for project; overbreak (ELOS) remains constant for increasing stope spans. Minimises safety and business risk

• Negative for project; overbreak (ELOS) increases for increasing stoping spans

15 m stope span

25 m stope span


Young Leaders Managing Risk and Value

Leadership is about making a difference

We manage risk and maximise value every day

of our working lives

Hope is not a method

One and one always make two, not three when it is production tonnes and one when it is their cost

Leaving you with………….

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Leadership, Risk and Value - UNSW Faculty of Engineering€¦ · Leadership, Risk and Value . 22...

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