Global Challenges in Mining Supply and Procurement A Gold Fields Case Study x Ben Ludik Group Strategic Sourcing. 02 November 2009

Transcription

1 Global Challenges in Mining Supply and Procurement A Gold Fields Case Study x Ben Ludik Group Strategic Sourcing 02 November 2009

2 Gold Fields Introduction Gold Fields Limited is one of the world s largest unhedged producers of gold with attributable production of almost 4 million ounces per annum from nine operating mines in South Africa, Ghana, Australia and Peru. West Africa Growth Target: 1 moz Ghana Tarkwa Damang. Peru Cerro Corona South America Growth Target: 1 moz South Africa Base load: 2 moz South Africa Driefontein Kloof Beatrix South Deep Uranium Project Australia St Ives Agnew Australasia Growth Target: 1 moz To be the global leader in sustainable gold mining 2

3 Global Economic Climate and Strategic Context Global Economic Slowdown and correction resulting in cost baselines being reviewed to support new sustainable growth strategies 3

4 Strategic Partnering Model / Principles s $ Partnering = WIN WIN 5 4 Partnering Model that secures vendor a fixed margin and results in Typically a Input Typical true costs win pricing pricing win fluctuate outcome of of products with with with where the commodity contract significant is cycles, lowest bought margin, total technology with reaping cost intention and large to productivity profits gain value during improvements from input variations cost downward but and improved generally cycles. returns Constant increase through increase over time input using cost standard downward rise mechanisms cycles Total $ 3 2 Pricing 1 Actual Input cost Buoyant Market Competitive Market Partner Model KPI Driven Technology / Productivity Improvements (Shared Risk & Reward) Time/Years 4

5 Key Challenges and Strategic Considerations Demand/Market volatility, inflation and tight supply cycles Mine planning and forecasting unpredictability Effort and complexity of total costs visibility and measurement Complexity of benchmarking, standardization and conditional factors Economic, technical (QAQC), operational and productivity integration Equipment/asset replacement effectiveness and capital spend limitations Indirect risks and costs of labour, power, exchange rates, credit, etc. 5

6 Group Sourcing Contracts and Integrated Supply Chain - Decentralized Supported Model Central Group Support Ghana GFGS CFO Decentralized Contracts and Integrated Supply Chain Regional Services Aus Peru - Sourcing & Contracts Review/Standards/Best Practice Synergies/Benchmarks - Knowledge Sharing - Consolidated Spend & Intelligence - Group/Cross Region Contracts - Sustainability Guidelines - Group Logistics New Ops New (Projects) SA 6

7 Strategic Sourcing, Contracts and Integrated Supply Chain - Strategic Focus Areas Value Proposition Optimizing sustainable value from sourcing, contracts, logistics and supply chain, in support of Gold Fields operations, through an integrated and collaborative approach Strategic Alignment / Focus Areas People / Structure = Decentralized Supported Model (Central Intelligence, Proven Practices and Group Synergies Support) Productivity Value Add = Guaranteed Supply and Efficiencies GOLD FIELDS STRATEGIC INTENT To be the Global Leader in Sustainable Gold Mining Operational Excellence Growing Gold Fields Securing Our Future Safety and Compliance contribution = Quality and Standards Control = Total of Ownership and Efficiencies Organic Growth = Ops Excellence Contributions New Mines / Projects = Decentralized / Shared Supported Model Leverage License to Operate = Local Supplier / Community Development Risk = Economical, Quality and Sustainable Guaranteed Supply Sustainable Development = Strategic Supplier / Contract Collaboration and Integrated Supply Chain / Ops Teams Corporate Governance = Code of Ethics, Approval Framework and Integrated Supply Chain Alignment 7

8 Gold Fields Group Strategic Sourcing and Supply Value Revenue Value Revenue Incl. Capex Price Optimisation: TCO: Productivity / Efficiency: Value / Benefits Supply rationalisation Volume aggregation Competitive price benchmarking and tendering Shift from spot buying to fixed term contracts avoidance Increases/Contingency scrutinize and inflation claw-backs Total cost of ownership (TCO) = Optimise total cost of material supply or over life of asset / equipment Visibility and Controls Standardisation, quality, improved specifications and service model Risk exposure capping / covering (e.g. Forex and supplier health / sustainability) Energy and emissions efficiencies Align supplier incentives through partnerships and collaboration Optimise usage and reduce wastage Equipment efficiency benchmark and improve Asset/equipment, investment, availabilities performance and return on investment FY09/10-12 FY05-09 Continuous Improvement Guaranteed Supply Total Quality Efficiency 8

9 Gold Fields Case Investment and Efficiency Illustrative Mining Equipment Investment and Efficiencies Analysis $ (48.1%) Operations (US$/hr) $2.19 (0.4%) $58.54 (10.5%) $ (37.1%) Labour (fixed) Consumables (Lubes, GET) Energy (Fuel) $ Total Loading (US$/hr) $209.6 (37.7%) Maintenance (US$/hr) $74.52 (13.4%) $ (24.3%) MMF Consumables (SMU Rate) $0.357 Loading Rate (US$/tonne) $78.77 (14.1%) Capital (US$/hr) Amortised over equipment life 88.6% 1,755 Availability (%) Capacity (tonnes/hr) 9