mining services

Orica
Kooragang Island and Kurri Kurri
Site Visit 2013
1
Mining Services Australia Pacific
Business Overview
James Bonnor – GM Mining Services APAC
30th July 2013
© Orica Limited Group
Mining Services AusPac Regional
Contribution and Commodity Exposure
Coal has traditionally dominated Orica’s commodity exposure in Australia Pacific, given
the scale of customers and AN plant locations in the North East and South East Regions.
As mining operations in the Pilbara continue to expand, so too will Orica’s relative
exposure to iron ore.
AusPac Business:
Regional Revenue Contribution FY2012*
AusPac Business:
Commodity Exposure FY2012*
2%
Q&C
Pilbara
5%
5%
6%
Ground Support
9%
Western Australia
and South Australia
(ex. Pilbara)
New Zealand
5%
Mining Chemicals
2%
5%
31%
7%
Coal - Thermal
Coal - Coking
18%
Gold
Iron Ore
8%
Other
South East
24%
Q&C
Copper
Nickel
North East
30%
19%
23%
Source : Orica FY2012 Restated Full Year Results
.
Slide 3
AusPac
Exposure by Commodity and Segment
The Open Cut segment accounted for a clear majority of revenue in FY2012, although regional exposure
to the Underground segment has increased as a consequence of the integration of the Ground Support
and Mining Chemicals businesses.
AusPac Business:
Revenue Contribution by Market Segment FY2012*
10%
AusPac Business:
Revenue Contribution by Market Segment FY2012*
11%
5%
5%
Underground
Open Cut
Q&C
Mining Chemicals
Ground Support
69%
Coal- Thermal 31%
CoalCoking
23%
Gold
19%
Other 7% Q&C Nickel
2%
5%
Iron Ore Copper
5%
8%
Source : Orica FY2012 Restated Full Year Results
Slide 4
Mining Services Operations
Australia Pacific
Mining Services has 133 downstream operations sites across explosives.
5
7
3
8
2
69
3
12
11
13
Ammonium Nitrate/AN Storage
Distribution
ANE Manufacturing Bulk Site
Emulsion Manufacturing Plants
Head Office/Mag (PNG)
Open Cut DTH/TBS/ROG/BMS
Packaged/Amex Plants
Quarry & Construction Plants
Underground
Underground Applications
Slide 5
Australia - Manufacturing and Supply
Chain Infrastructure
Mining Services has numerous manufacturing sites along with dedicated storage
facilities strategically located across the region.
Initiating Systems
Manufacturing Facility
Packaged Explosives
Manufacturing Facility
Port Hedland
AN Import
Limit 3,600mt
Wyndham
AN Import
Limit
5,000mt
Port Alma
AN Import/Export
Limit
6,500/14,000mt
Ammonium Nitrate
Emulsion Facility
Major Ammonium
Nitrate Storage
Facility
Yarwun
Ammonium Nitrate
Manufacturing &
Storage Facility
Magazine – Initiating
Systems, EBS & Packaged
Explosive Storage
Port – Break Bulk
Port – Initiating Systems,
EBS & Packaged
Explosive Storage
Helidon
Kalgoorlie
Yamba
Liddell
Kooragang
Island
Kurri Kurri
Kwinana
Newcastle Port
AN
Import/Export
Limit
3,000/6,000mt
Tocumwal
Melbourne
Eden
Sydney
Heybridge
Slide 6
Total AN Imports Into Australia Are
Declining
Tonnes
AN Imports Into Australia
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Monthly Volume
Bontang Imports
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Feb-12
Jan-12
Dec-11
Nov-11
Oct-11
Sep-11
Aug-11
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
-
3 Month Moving Average Volume
Source: ABS
Slide 7
Chinese AN Imports
Contentsvolumes prior to Moranbah commissioning,
Increasing
now trending lower
Chinese AN Imports Into Australia
Tonnes
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
Monthly Volume
3 Month Moving Average Volume
Source: ABS
Slide 8
Mining Services AusPac –
Maufacturing and Key Sourcing
Orica has a manufacturing and soucing base that is unrivalled across the region which is essential for
market competitiveness, supply flexibility and contingency
Facility
Product
Capacity (tonnes)
Facility
Product
Capacity (tonnes)
Kooragang Island
Ammonium Nitrate
430,000
Yarwun
Emulsion
210,000
Yarwun
Ammonium Nitrate
530,000
Kurri Kurri
Emulsion
250,000
Bontang (Indonesia)
Ammonium Nitrate
60,000*
Liddell
Emulsion
110,000
Kalgoorlie
Emulsion
110,000
Pippingarra
(Port Hedland)
Emulsion
75,000
*Imports into Australia.
In addition, third party AN supply arrangements from WA supplier.
AN prill is the main feed source for the emulsion plants .
Product
Primary Source
Country
Non Electric Dets
Helidon
Australia
Boosters
Limay
Philippines
400g Boosters
Yinguang
China
Ikon
Brownsburg
Canada
Unitronic
Brownsburg
Canada
Cord
EHM
Chile
Packaged Explosives
Kalgoorlie
Australia
Slide 9
Mining Services Aus Pac Operational
Dimensions
Orica has a significant investment in infrastructure, equipment and people to support a downstream
services business which is in excess of $280m revenue per annum.
133 Operational & Down Stream Manufacturing Sites
213 Mobile Manufacturing Units (MMU’s) – Open Cut
16
Mobile Charging Units (MCU’s) - Underground
52
Hypercharge Drive Units (HCD’s) – Underground
974 Direct customer facing operational personnel
107 Down stream manufacturing personnel
64
Operational Management, Asset/Field Engineering Support, Statutory Liaison personnel
1145 Total Operational Personnel
Slide 10
Mobile Units
281 Mobile Units in open cut and underground mines across the region, loading approximately 1.15m
tonnes of blended explosives per annum
Slide 11
Mining Services AusPac – Services Mix
More than 84% of explosive product contracts, have a services component
Do It Yourself/Product Only (DIY) + Customer Operated Systems
(HCD’s)
• Contract to/or sell product only or product and lease HCD’s to
customers.
FY12 Sales by Service Type
Hole Loading Service (DTH)
• Contract/sell product delivered by MS down a customer prepared
blast hole.
Blast Loading Service (BLS)
• Contracted for MS preparation of blast holes, loading product,
manage and fire the blast.
Advanced
Blasting
Services
1%
Product Only
13%
Blast Management Service (BMS)
• Contracted for MS technical design, preparation of blast holes,
loading product, prepare and fire the blast.
Advanced Blasting Service Solutions, Rock On Ground ™ (ROG), Hole Loading
Rock To Specification ™ (R2S)
Service
48%
• MS Contracted for varying levels of technical design and
measurement, preparation of blast holes, loading product,
prepare and fire the blast.
UG
Applications
4%
Blast Loading
Service
26%
Blast
Management
Service
5%
Customer
Operated
System
3%
UG Applications DIY & Services
• Contracted to UG Coal mines for ventilation, powders & injection
chemicals service.
Slide 12
On Bench Operations
Orica supports over 84% of its product contracts with loading services on a daily basis
This product and services mix provides the ideal platform for the selling of more advanced
tecnological solutions aligned with customer needs
Slide 13
Products, Services, Technology, Tools
And Design Solutions To Meet Customer
Needs
Customer Needs
Productivity and/or
cost improvements
•Cost downs
•Increased productivity
in mining, excavation,
milling, mineral
processing, quarrying,
construction
•Rapid advance
Recovery (of coal/
mineral)
•Reduced coal /
mineral loss
•Ore recovery
Safe and efficient
operations
Environmental impact
•Airblast/ Vibration
control (proximity
blasting)
•Fume risk reduction
•Dust control
•Quality control
•Hot/ reactive ground
•Ventilation control
•Safety of employees
and communities
Reliability, Flexibility
and speed
•Security and reliability
of supply
•Supplement customer
capability
Orica Value to meet customer needs
Products
Services Delivery,
storage and
loading
Blasting
services
Technology
and tools
Advanced
design
solutions
Quality
services
(e.g.
courses,
audits)
Slide 14
Products – Part Of The Bundle To Provide
Customer Value
Mining Chemicals
Ground support
Resin capsules, bolting systems,
specialised cement grouts, ground
injection resins, ventilation systems
Mining services to open cut and underground mining, tunnelling, quarrying and civil construction
Bulk Explosives – systems for:
•
•
•
•
•
•
•
•
Dry to dewatered to wet holes
Soft ground to very hard ground
Mildly to highly reactive ground
Hot ground, hot and reactive ground
Fume prone ground
Deep customer holes
Challenging applications (sleep time)
Underground including upholes
Packaged Explosives
• Bagged and cartridged explosives
Bulk
explosive
Detonator
Booster
Initiating Systems and
Electronic Blasting Systems
Technology / blasting
services
•
•
•
•
• Blast design software
• Blast based services
Boosters
Detonators
Electronic detonators
Electronic blasting detonators
used for the most precise and
demanding blasting.
Products, services and solutions to provide blasting outcomes for
customer
Slide 15
Products And Services From Mining
Services – Innovative Solutions To Meet
Customer Needs
Open Cut
Underground
Civil Tunnelling
Quarries and Construction
Bulk and Packaged Explosives
Coal, Advantage, Deep, Eclipse,
Eclipse Plus, Extra, Xtreme,
Vulcan, Vulcan Plus, Clear,
Marathon
Charge, Velcro, Control,
Eclipse
Extend, Eclipse, Gold
Coal, Advantage, Eclipse,
Clear
Coal, Advantage, Eclipse,
Eclipse Plus, Extra, Xtreme,
Initiating Systems and Electronic Blasting Systems
Technology and Blasting Services
Slide 16
Value In Use
Nigel Pereira – Regional Services Manager APAC
30th July 2013
© Orica Limited Group
Content
Challenges facing our customers industry ?
Why is Orica uniquely positioned ?
How are we assisting customers ?
What is different today ?
Slide 18
Key Issues Facing The Mining Industry
•
Many mining deposits are becoming
deeper and more complex:
- Higher strip ratios
- Declining ore grades
•
Larger equipment is demanding higher
productivity and faster rates of
advance.
•
Miners are continually striving to
reduce Total Cost of Ownership (TCO).
•
Mining productivity is being
challenged in Australia like never
before.
•
Community and regulatory pressure is
placing greater emphasis on licence to
operate issues.
Slide 19
Well Positioned To Meet These
Challenges
•
Blasting has significant influence on
mine performance.
•
Our offer is uniquely positioned to meet
mining needs, such as:
•
•
blast emission reductions
•
rapid advance / development
•
reduced production volatility
•
management of broken stocks
•
improved recovery
•
improved asset utilisation
•
increased mill throughput
•
improved sustainability
•
information for optimisation
mining services
bulk & packaged explosives
electronic blasting systems
mining chemical systems
ground support
Integrated
Solutions
Mining
Services
Differentiated
Products
Sustainable customer partnerships and
standards of service excellence.
The offer is underpinned by a range of
integrated products and services.
20
Slide 20
Meeting Customer Needs Through
Integrated Products, Services and
Solutions
Slide 21
Differentiated Product Range
We look at bulk products through a customer needs lens.
Wall control
Minimum damage,
maximum control
Minimum fines
Caprock control
Minimum energy,
wet or dry
Metal mines ore processing
Maximising drilling efficiency
‘Commoditised’
blasting
Standard products
High fragmentation energy
Coal mines muckpile shaping
Maximising drilling efficiency
High heave energy
Slide 22
Differentiated Product Range
A differentiated product range matched to customer needs.
Wall control
Minimum fines
Caprock control
‘Commoditised’
Blasting
Metal mines ore processing
Maximising drilling efficiency
Coal mines muckpile shaping
Maximising drilling efficiency
Slide 23
In 2010 the Australian Explosives Industry Safety
Group (AEISG) members released the first code
of practice for the prevention and management of
blast generated nitrogen oxide gases in surface
blasting.
Slide 24
Recognised Leadership In Blast Emission
Reductions
Background
• community and regulatory pressure to reduce
post blast fume events in QLD & NSW
• major contributor to industry code of practice
• development of integrated approach to fume
mitigation
Critical Success Factors Implemented
• engagement process with customers
• benchmarking sites for fume
• product and service range to reduce events
Results
• industry recognised leader
• significant growth in differentiated bulk
product range
Slide 25
Coal Loss Inefficiencies
Many mining deposits are becoming more
complex.
Equipment is getting bigger and
hungrier.
However the industry is experiencing
large coal loss inefficiencies.
Slide 26
Case Study - Coal Loss & Productivity
Slide 27
Case Study - Coal Loss & Productivity
Results
•
no fume or other environmental exceedances
•
112% coal recovery against mine target
•
washery yield improved from ~74% to 82%
•
dragline saving of 6 days per 1.3km strike length
Slide 28
Industry trending towards underground, low
cost and mass production caving methods.
Slide 29
Case Study - Block Cave Progression
Reduction in cost and time.
2
3
1
Major
Apex
Drawbell
Major
Apex
Drawbell
Drawbell
Double Undercut
1
Drawbell
Single Undercut
2
No Undercut or
Single-Level
Novel Technique
Slide 30
Case Study - Block Cave Progression
Previous Process
Novel Technique
Slide 31
Case Study - Block Cave Progression
Voice of the Customer
“I wanted to let you know the undercut shot was a great success.
I want to congratulate the Orica team for all their efforts and time spent to
develop this concept and make it happen. I especially want to let you know how
professional your team was in the loading process and what a pleasure it was
to work with all of them.”
Slide 32
Significant Payback Ratios
Payback ratios from drill and blast spend in open
cut metal mines are significant.
4x
9x
17x
Slide 33
Step Change Products And Novel
Blasting Techniques For Open Cut
Metal Mines
In existing patterns, SAG mill feed has increased to up to 70% using the Ultra
High Intensity Blasting (UHIB) technique.
Last 12 months
Mine to Plant
contract
200
250
Ultrablast
150
Relative Bulk Strength
Loading
Service
contract
20-30% < 25mm
35-45% < 25mm
40-65% < 25mm
>70% < 25mm
Target SAG Feed Size
Slide 34
Product Developments To Meet
Customer Needs – High Energy Bulk
35
Slide 35
Novel Blasting Techniques To Meet
Customer Needs – Ultra High Intensity
Blasting
Throughput / Revenue Advantages
28%
increase in
mill
throughput
for powder
factor
increase
of 4 X.
Significant gains in energy per ton, throughput and revenue are very likely.
Slide 36
Novel Blasting Techniques To Meet
Customer Needs – Ultra High Intensity
Blasting
High Energy using traditional blast design.
Same Energy using Novel blast design.
Slide 37
Novel Blasting Techniques To Meet
Customer Needs - Ultra-High Intensity
Blasting
Field trials are
validating results.
Slide 38
Alignment of strategy & structure to
customer drivers.
Slide 39
How Orica’s Approach To Value In Use
Is Different Today
Strategy
1. clear and aligned strategy
2. organisation alignment
250
Mine to Plant
contract
4. customer outcome focus
Last 12 months
Ultrablast
5. offer point of difference
200
Loading
Service
contract
150
Relative Bulk Strength
3. commercialisation
process and management
20-30% < 25mm
35-45% < 25mm
40-65% < 25mm
>70% < 25mm
Target SAG Feed Size
Slide 40
Kooragang Island
Ammonia and Ammonium Nitrate Plant
Greg Holmes – General Manager Kooragang Site
30th July 2013
© Orica Limited Group
Agenda
Your Safety at KI
KI Operations
KI Improvement Program
Ammonia Risk Reduction
Your Safety
Potential Onsite Hazards
•
•
•
•
heavy vehicle traffic
uneven ground
operating equipment
toxic gases (ammonia, nitrogen oxide, chlorine)
In the event of a site emergency
•
•
A siren will sound.
•
Once inside the safe house, remain calm and await instructions.
Upon hearing the siren move to the nearest safe house
(your guide will know the way).
Always remain with your guide
Orica in the Hunter Region
Orica employs around 650 people in manufacturing, sales and marketing, operations and
research and development teams across a number of sites.
During normal operation, Kooragang Island employs 220 permanent employees and
around 80 contractors. During site maintenance, these numbers are much greater.
Ron Douglas
Global Head Projects and Technology
Orica in the Hunter Region
Ammonium Nitrate
•
Raw material for
explosives
~430kt
Ammonia
Nitric Acid
•
Ammonium nitrate
•
Cleaning in dairy sector
CO2
•
Nitric acid and ammonium •
nitrate
KI supplies 50% of the
NSW Market
•
Fertiliser
•
Water treatment
Carbonated drinks and
beer
•
Pollution control in power •
stations
•
•
Refrigeration
•
Medical gas
Dry ice for food industry
Manufacturing Excellence
A deep dive has been performed into Kooragang Island operations
•
•
Structural, operational and process improvements underway and key
deliverables identified for the next 12 months.
Plant improvements implemented to reduce the risk of major incidents.
Results already achieved include:
•
All maintenance measures improving month by month.
•
•
Enhanced safety and environmental performance.
Plant production more stable.
Kooragang Island Operations
AN Plants
Ammonia
Nitric Acid
Ammonia
Nitric Acid Plants
Ammonia Plant
Natural Gas
Ammonium Nitrate
Site Improvement Programme
Improvements in SHEC performance to progress the site towards world class
People
• Organisation restructure including new management roles
• Operational restructure in progress
Process
• Improvements to Permit to Work, Management of Change
• Improvements to Projects
– doing the right job & doing it right.
Plant
Community
• DCS upgrade Project in Implementation
• Safety Instrumented Systems assessment
• Ammonia Risk Reduction Program
• Environmental Infrastructure Improvements
• Increased focus on Community Reference Group
• Information sessions & site tours
• Air quality monitoring
Plant Improvements Projects
Improvement Capital Spend
KI Sustenance Capital Spend
•
2011 $20M
•
2012 $35M
•
2013 $75M (budgeted)
•
2014 decline in expenditure
Ammonia Risk Reduction 2012/2013
•
$5M spent in implementation of immediate improvements
•
$8M spent in Engineering Planning on new programmes
•
2013 forecast of $16M on improvement initiatives
Other Major Improvement Projects in 2013
•
Distributed Control System (DCS) upgrade $17M
•
AN Reclaim environmental upgrade $11M
•
Demineralised environmental upgrade $9M
•
N2O Abatement - $4M
Annual Spend (M)
100
80
60
40
20
0
2006 2007 2008 2009 2010 2011 2012 2013
KI Management Process
General
Manager
KI Projects
Manager
Area
Project
Leads
Project
Engineers
KI Management Process
Maintenance Measurable Results
$9.1M Of Ideas In Pipeline
$9.1M
Overdue Equipment Inspections Reduced To 0
600
Annualised Value
Forecast overdue SI
5.6
Production
Increase
1.1
Capital
2.4
Fixed Costs
•
•
•
•
•
•
increase schedule compliance
consolidate outages
implement RCA process
optimise contractor usage
in source contractors
implement contractor
management system
450
Actual Overdue SI
300
150
0
May-12 Jul-12
Schedule Compliance Increased By 20%
100%
Target
Total Site
Sep-12 Nov-12 Jan-13 Mar-13 May-13
Wiring Has Improved Since July 2012
Visible
leadership
5%
90%
Continuous
Improvement
2%
80%
Sustaining
disciplines
41%
70%
Alignment and
motivation
12%
60%
50%
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Operating disciplines
-16%
Operating strategy
37%
KI Maintenance
area only