A Mining Company Optimizes Capex with a Different Way of Working

As it prepared to launch a $20-plus billion capex program, MiningCo* called on us to support its value optimization efforts on a number of flagship projects. As part of this process, MiningCo assembled cross-functional teams and leadership sponsorship to break down silos and change its ways of working, and we provided the methodology, industry best practices, and analytical support.

Our value optimization methodology (applied to projects during the pre-feasibility or early feasibility phases) focuses on challenging user requirements, macro engineering definitions, constructability, and other facets of the project. A major difference in this case was that the project optimization was not, as is typical, outsourced to an engineering company but instead was driven by a multifunctional team from within MiningCo that included engineering; planning and control; construction; health, safety, and environment (HSE); and operations and long-term planning teams. An engineering company provided conceptual designs, cost estimates, and related forms of support. Agile methodology was key to enabling this team to work effectively and make rapid progress.  

Agile in focus

Although this approach was used across several projects, including infrastructure and electromechnical assembly, we’ll focus on one: a $600 million expansion of a tailings dam, which is used to store mining byproducts once copper is separated from minerals that have no commercial value. We mapped out a series of eight optimization sprints, each lasting from one to two weeks and supported by a small (five-to-nine-member) multidisciplinary team. The sprints focused on everything from wall design to road construction to afforestation and land issues to owner and indirect costs.

Sprints involved the project’s multidisciplinary team (engineering, planning and control, construction, etc.), operations, the engineering firm, and the Engineer of Record (EoR). Solutions and ideas were initially validated for their technical feasibility in regard to the safety of the tailings facility and compliance to all applicable norms.

Each sprint focused on a specific aspect of the project, going deep into technical discussions and potential solutions. Regarding roads, for example, the team reassessed the need for each proposed new road, reviewed design criteria such as width and slope, optimized routes, and reviewed infrastructure criteria. As a result, three roads were eliminated or optimized, reducing capex by 33%.

We took a similarly structured Agile approach across the other seven sprints, in each case reducing capex by 15-35%. Throughout the project, MiningCo’s leadership reviewed results at the end of each sprint, demonstrating a high commitment to and involvement with the effort as they set a challenging ambition and aligned the engineering and support teams as needed.

Goals exceeded, and poised for more gains

At the end of the process, results were consolidated to avoid duplication, risks were assessed, and plans were established to fully incorporate the savings into the project. Although the initial goal was to reduce capex by 10%, MiningCo ultimately reduced capex by 15% to 30% across the various projects.

This led MiningCo to structurally change the way it studies projects, taking a much more proactive approach with the owner team to optimize the projects, rather than delegating it to the engineering company. Leadership also changed its way of working, becoming much more involved in helping the team break down silos and challenge project assumptions.

This work also led to the adoption of Agile principles as a tool to help teams make rapid progress, focus on results, and more efficiently engage the multifunctional teams needed to sustainably optimize projects. MiningCo is now committed to multidisciplinary teamwork and a full-potential mindset.

We have deployed this value optimization approach with other mining companies as well, reducing capex by an average of approximately 30% while maintaining or improving the technical integrity and constructability of these complex projects. The new ways of working, supported by our Agile full-potential methodology, consistently prove transformative for our mining clients.