BHP Billiton

Rocks in a hard placeThrough the experience of executives at the EKATI Diamond Mine, Martin Ashcroft discovers how specific incremental improvement programs in individual businesses within BHP Billiton have evolved into a business excellence program where best practices from around the world are replicated across the organization. To say that this place is remote is somewhat of an understatement. The city of Yellowknife, capital of CanadaÔÇÖs Northwest Territories, lies almost 200 miles (300 kilometers) south-west. To the north, the Arctic Circle is considerably closer than that. With an area one and a half times the size of Texas, the total population of the Northwest Territories numbers a little over 40,000 hardy souls, around half of whom reside in Yellowknife. They would be lost in the crowd at the Astrodome. What could you possibly find up there that would require the employment of some 1800 people in a hostile climate, miles from anywhere? Diamonds. A modern day ÔÇ£diamond rushÔÇØ has been sparked by the discovery of prospectors Chuck Fipke and Dr. Stewart Blusson, in the Lac de Gras area in 1991. The area around the EKATI mine is known as ÔÇ£eÔÇÖkatiÔÇØ (literally ÔÇ£fat lakeÔÇØ) by the Dogrib people of the Northwest Territories, referring to the white quartz rock which is said to resemble the caribou fat prized by the Aboriginal people. Lac de Gras, incidentally, means the same thing in French (for non-French speakers, think Mardi Gras ÔÇô Fat Tuesday). EKATI was the first diamond mine to open, in October 1998 (and Fipke and Blusson each retain a ten percent share). Others have followed. The Diavik Diamond Mine, operated by a subsidiary of the Rio Tinto group, began production in 2003, and De BeersÔÇÖ ÔÇ£Snap LakeÔÇØ project received its final approval and funding in 2005, with plans to commence production next year. The other 80 percent of EKATI then belonged to the global natural resources company BHP, one of AustraliaÔÇÖs oldest and largest companies with a diversified portfolio that includes minerals, oil, gas and (at that time) steel. The first diamond mine in Canada was also BHPÔÇÖs first (and to date, only) venture into diamonds. BHPÔÇÖs merger with UK-based Billiton PLC in 2001 created the worldÔÇÖs largest diversified resources company and gave it the name it now uses, BHP Billiton.Diamonds at the EKATI site are found in kimberlite pipes between 45 and 62 million years old. Formed under intense pressure and high temperature at depths in excess of 90 miles, diamonds come to the surface embedded in the kimberlite, which is propelled gradually upwards by magma from deep volcanic eruptions. The name kimberlite, incidentally, was given to the diamond-bearing rock after the first recognized deposits were found in Kimberley, South Africa in the 1870s. And while weÔÇÖre on names, BHP derives its name from the first mine the company opened in Australia at Broken Hill, New South Wales, becoming incorporated in 1885 as the Broken Hill Proprietary Company. Not to be outdone, Billiton has an equally exotic origin. The companyÔÇÖs ancestry dates to 1860 when its Dutch founders acquired the mineral rights to the tin-rich island of Billiton in the Indonesian archipelago, off the eastern coast of Sumatra.In less than ten years, the output from the EKATI Diamond Mine has grown to three percent of total world production by volume, and six percent by value. Even so, you donÔÇÖt trip over them on a trek through the tundra. Even where diamonds can be found in relative abundance, they are still like needles in a haystack. You have the advantage of knowing they are in there somewhere, but you still have to take the haystack apart to find them. ÔÇ£We process about 12,000 tons of material a day,ÔÇØ says health and safety manager Richard Weishaupt, ÔÇ£and out of that we get about a coffee can of product.ÔÇØDiamonds, unlike mineral ores, are not chemically attached to anything, so collecting them is a benign operation, more like harvesting than processing, exploiting their inherent properties to isolate them. ÔÇ£First you break up the rock gently so you donÔÇÖt damage any of the stones,ÔÇØ explains Weishaupt. ÔÇ£The diamonds pop right out of the rock. We use three or four properties of the diamonds to collect them; one theyÔÇÖre heavy; two, they fluoresce when bombarded with x-rays; three, theyÔÇÖre very hydrophobic, and four theyÔÇÖre hard, so you use those properties but you donÔÇÖt have to add any chemicals.ÔÇØ After processing, the coarse kimberlite is tipped out into small hills, and the fine process kimberlite is put into a containment facility where the water drains off to be used again. ÔÇ£You take the rock, you wash it and screen it, break it up a little bit, extract the diamonds and put the rock into long term waste rock storage areas,ÔÇØ says Weishaupt.In 2000, EKATI embarked on the Operating Excellence Program that the then BHP chief executive Paul Anderson had introduced in the companyÔÇÖs facilities around the world, concentrating on incremental improvements in productivity, maintenance, improving processes and eliminating waste based around six sigma. It was aimed, says business development manager David Scott, at ÔÇ£getting the widgets per hour moving faster.ÔÇØA component of the program was knowledge sharing. Networks began to spring up through peer to peer communication between businesses. Soon there was a global maintenance network, a mine planning network, a processing network, a safety network and a global supply network, among others. The networks provide tools to identify leading practice from all parts of the organization and then to share or replicate them. ÔÇ£All these individual networks were functioning as peer to peer communication groups, with support supplied from the corporate Operating Excellence team,ÔÇØ says Scott.Effective as that program was, it has now evolved into a more holistic Business Excellence Program. ÔÇ£Instead of improving parts of individual businesses,ÔÇØ said Weishaupt, the vision was ÔÇ£to improve the whole business under a strong umbrella, so operating excellence has morphed into what we call business excellence.ÔÇØ As a member of the mine planning network and the mine operations network, Scott has experienced the transition. ÔÇ£We started out doing incremental improvements at the asset level, fixing individual machines; then we started getting people who had the same machines talking about how to fix them; now weÔÇÖve started to connect all those dots and moved up to a different level, getting the whole business singing off the same song sheet, using the tools and improvement projects that were developed in the previous couple of years.ÔÇØ Supporting the networks are what he refers to as communities of practice, ÔÇ£individual groups of technical competence,ÔÇØ which promote common standards throughout the whole business. He lists the geotechnical community of practice, the heavy media separation community of practice, resource management community of practice, and the electrical community of practice as examples. A former EKATI colleague, Jim Keenan, he notes, has been promoted to be global leader of the electrical community of practice.Safety is a paramount concern in the mining industry, and one of the areas standardized in the electrical sphere is working with high voltage (above 600 volts). ÔÇ£The whole high voltage process has been revamped and all the learning shared and standards created to ensure that everyone works to the same standards,ÔÇØ says safety manager Weishaupt. ÔÇ£When you work on high voltage you have to ground it,ÔÇØ he explains, because thereÔÇÖs always the potential for residual voltage after the power has been turned off. So grounding standards have been incorporated around the world, so that everybody tests for dead in the same way, as well as specifications for the personal protective equipment that employees use to avoid injury if the voltage has not been completely dissipated. Taking best practices from around the world and applying them everywhere has meant changes for EKATI in ÔÇ£pretty much everything we do,ÔÇØ admits Weishaupt. Has anything gone the other way? Which practices has EKATI exported to its colleagues? Impressively, out of the top 40 improvement ideas recently selected from around the world, EKATI was responsible for five. One such initiative resulted in increased mine productivity through standardized operator training and dedicated shift crews. Another reduced plant shutdown overruns and costs, and a third increased plant conveyor reliability. Yet another improved reclaim apron feeder reliability and the fifth was improved haul road maintenance, which increased mine productivity and decreased tire wear, which was more important than you might think.There is a world shortage of large tires for heavy equipment at the moment, Weishaupt points out. ÔÇ£You can buy the equipment, but you get it without tires.ÔÇØ With six tires per truck on a Caterpillar 793C (a 240 ton haul truck), costing $22,500 each, any improvement in tire management is welcome in this climate. Even more so, when you consider ÔÇ£climateÔÇØ in its more literal sense. While temperatures might soar to a spring-like 60 degrees in July and August, the EKATI average is below freezing for seven months of the year. And the road runs out in Yellowknife. The prodigious number of rivers and lakes that have to be crossed on the way to EKATI renders the construction of a permanent road completely impractical. And when the end product of a weekÔÇÖs work can be flown out from its own airstrip in a briefcase, why would you need a road? Because the size of some of the equipment (including tires), makes it impossible to fly them in. The Caterpillar 793 takes a 57 inch tire, but that is merely the rim diameter. The tires stand over ten feet high. ÔÇ£There isnÔÇÖt an aircraft available in Canada or the US that could transport a tire that size to our site,ÔÇØ says Weishaupt. ÔÇ£We use a C 130 Hercules aircraft and the door opening is about nine feet by nine feet, and these tires will not physically fit in there. ÔÇ£We have some challenges,ÔÇØ he continues, with an understatement befitting his experience, ÔÇ£because we physically canÔÇÖt transport a tire other than a few weeks of the year up the winter road. So if we get it wrong weÔÇÖre in big trouble.ÔÇØ The physical limitations of aircraft mean that the EKATI Diamond Mine (and others in the area) must concentrate their road deliveries into a ten week window in the winter when the rivers and lakes freeze deeply enough for heavy traffic to cross them on the ice road. While the airstrip can handle the comings and goings of the workforce and its subsistence needs, the winter road is their lifeline for the huge volumes of fuel, cement and explosives they need to operate. ItÔÇÖs no surprise, then, that EKATI people are good at planning. They have to be. ÔÇ£If you need a large piece of equipment,ÔÇØ says Weishaupt, ÔÇ£youÔÇÖve got to get it up during the winter road season. ThereÔÇÖs no other way to get it in. You have to do lots of preplanning because there are many things we canÔÇÖt fly. If we donÔÇÖt get them up the winter road, we donÔÇÖt have them.ÔÇØ Having said that, flexibility and improvisation are qualities that complement planning, and they are used on a needs-must basis. The life expectancy of the winter road is difficult to predict, and the last winter road season was the most challenging EKATI has ever had, with a mere 32 days available for transport, due to unusually poor ice conditions. But EKATI saw it coming, and expedited the delivery of most of its supplies and equipment to Yellowknife so they were ready to haul when the road opened. ÔÇ£But we saw some interesting aircraft over here out of Yellowknife to aid with the backload of freight for the diamond mines and other exploration projects,ÔÇØ Weishaupt remembers. ÔÇ£We had the largest helicopter in the world come over from Russia to bring in special air freight.ÔÇØThe focus on planning becomes sharper as the mine continues to expand. An underground test mine in the Koala North pipe has led to further underground activity in the Panda and Koala pipes, for which new equipment was required. ÔÇ£WeÔÇÖve just built one underground mine and are building a second, so we have brought in a substantial number of pieces of underground equipment,ÔÇØ says Scott. ÔÇ£In last yearÔÇÖs winter road season we might have had 30 or 40 pieces of equipment.ÔÇØ Here, flexibility is part of the planning process, as some of the underground equipment was deliberately brought in by air. ÔÇ£It was more cost effective to pull them apart and rebuild them here so we could get them earlier, rather than defer the development of the project.ÔÇØ A corporate best practice from the global maintenance network, a program called FLAC (fuel, lubricants, air and coolants), has been around for about five years, and has developed into a complete package with its own training course. David Scott had first hand experience of this in a major construction project at the mine where he worked a few years ago. ÔÇ£We built a new workshop,ÔÇØ he remembers, ÔÇ£and when we finished it, the mine had a FLAC champions course and I discovered that the specifications we put on the pumping systems and the filters and screens (while at the time I was assured they were of a high standard), were still well below the FLAC standards. So we had to pull all the filters and pumps out and put bigger pumps in. And yes, that cost us some money, but itÔÇÖs changed the life we get on our major components.ÔÇØ At the dizzy height of the FLAC standard is BHP BillitonÔÇÖs practice of filtering all its oil before use, even brand new oil straight from the manufacturer, because it extends equipment life.Another example of what the company calls ÔÇ£replication,ÔÇØ and Scott, an ex-pat Aussie, refers to as ÔÇ£shamelessly stealing other peopleÔÇÖs expertise and applying it yourself,ÔÇØ is a piece of collaboration between BHP BillitonÔÇÖs coal and alumina facilities in Australia, which both used a certain amount of similar equipment. Discovering that the alumina plant was employing world best practices in the operation of this equipment, the coal people invited them into their plant to ÔÇ£fine tuneÔÇØ theirs, giving them ÔÇ£a step change in performance.ÔÇØHuman resources are an issue for many best practice programs, but even more so at EKATI. With a limited population, three diamond mines in the area and the oil producers in the tar sands not too far away, competition for labor is intense, so one of the mineÔÇÖs key challenges is to attract and retain skilled workers. With a two-week-on, two-week-off rotation system, people do fly in to work from as far away as Texas, but EKATI has a commitment to employ 62 percent northerners, half of whom are Aboriginal Northerners. ÔÇ£The bottom line is, thereÔÇÖs barely any unemployment in the Northwest Territories,ÔÇØ emphasized Scott.EKATI has around 700 direct employees, and up to 1100 contractors. ItÔÇÖs a 24-hour operation, 365 days a year, and the rotation system means that, at any one time, there will be about 750 people on site. On shift change day, there could be as many as 10 flights carrying people in and out. The accommodation is ÔÇ£a major living complexÔÇØ, to quote Weishaupt, a 900 bed ÔÇ£hotelÔÇØ with saunas and a gymnasium, full sized basketball court, running track, and entertainment (including visiting comedians and other acts) arranged by a full time special events coordinator. ÔÇ£ItÔÇÖs a regular little town,ÔÇØ comments Weishaupt.From a business excellence point of view, EKATI is also committed to a visual workplace. ÔÇ£In the front hall when you arrive on site weÔÇÖve got three plasma screens,ÔÇØ says Scott. One might be showing an awareness video or corporate message, another would show the mineÔÇÖs monthly KPI performance report, with the site scorecard and individual department managersÔÇÖ scorecards, performance graphs, etc. The third displays the truck dispatch system, showing where all the trucks are on the mine site. ÔÇ£WeÔÇÖve come a long way with our performance culture, due to the quality of the people we have at EKATI,ÔÇØ he says. ÔÇ£We are on a journey which is part of the BHP Billiton improvement imperative.ÔÇØ Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á * First published November 2006