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VIDEO: Mick Davis had five core principles in developing Xstrata

May 02, 2013 - 10:48 GMT Location: London

KEYWORDS: Xstrata , Glencore , merger , Mick Davis

Xstrata operated its business on five core principles. Ceo Mick Davis – who will leave the merged Glencore Xstrata later this year after completing a consultancy role – tells Metal Bulletin what they were and why they were central in creating a $50 billion mining company.



Xstrata operated its business on five core principles. Ceo Mick Davis - who will leave the merged Glencore Xstrata later this year after completing a consultancy role - tells Metal Bulletin what they were and why they were central in creating a $50 billion mining company.

Andrea Hotter
ahotter@metalbulletin.com
Twitter: @andreahotter

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Comments
  • Don’t let the Greenfield sites scare you away

    The comments by Mick Davis, former CEO of Xstrata, as reported in Metal Bulletin for May 3, 2013, concern where Glencore-Xstrata should go in deciding on future projects. He said, “We’ve seen capital overruns at greenfield projects. We will focus on easy brownfield projects. We don’t want to have the big capital blowout risks that have been experienced in the mining industry in the last few years.”

    I think simply stated this means such projects have not been well enough defined to reduce those risks. That is not how it used to be.

    In reviewing past projects representing a step out in new feed stocks being processed, new technologies and new geographical areas, all “Greenfield” situations, there are many examples of companies and their staffs who were not scared off by such considerations, and found a way to succeed. In comparing their efforts to current such “Greenfield” projects, one sees that they addressed the “blowout risks” in an orderly, objective, creative and cost-effective manner.

    Many such companies today, and their engineering consultants, do not seem to be prepared or indeed willing to develop their projects with as much or as detailed upfront effort as was committed in the past. In previous times it was recognized that the small scale was the place to find out how a process worked, and that “build it and we will make it run” was a formula for failure. On the really big scale.

    Part of the reason for this difference is that metals companies then were largely made up of people who had been close enough to actual operations to understand technological and operational risks and what was required to resolve them. Thus everyone inherently understood the need to dig into all aspects of the project in sufficient detail to minimize the risk in going ahead.

    Over the first 60 years of the 20th century four such projects in Cuba demonstrated what I am talking about. Would that the first 60 years of this century could see such innovation succeed, for these earlier examples fought the battles of difficult geography, complicated ores, unproven technology, and political and climate uncertainties which the current century encounters.

    These will only be summarized here, but fuller details have been (or will be) presented at recent conferences. The projects are making iron from Cuban brown ores (does this qualify as a “brownfield” project?), and from similar materials one recovering manganese and two projects making nickel. All of these had highly variable ore bodies, difficult operating conditions, and complex, untried processes.

    One even had to contend with three major floods in the first 10 years, an earthquake and a reduction in tariff for a competitor’s product that required the plant to develop and modify changes that kept it competitive. That plant, in its development pilot plant testing, used samples from all horizons of the orebody, and typical flood waters with v

    Larry Southwick | 04 May 2013

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