Sustainability through Operations and Maintenance contract

High up in the Andes, some 150 km northeast of the Chilean capital, Santiago, lies one of the world’s most efficiently run copper mines, Minera Los Pelambres. Since 1999, the maintenance of the minerals processing plant has been outsourced to FLSmidth Minerals. Over the years a close relationship has developed between the mining company and the service provider based on a common understanding of sustainability and business performance.

Minera Los Pelambres (MLP) considers sustainability a keyword in all its activities. This is reflected in the day-to-day operation of the plant as well as its impact on the surrounding environment and its relations with the workers and the local community.

Commenting on the 2009 1st quarter results, MLP Group Chairman Jean-Paul Luksic said: “Wherever the Group operates or is looking to grow, sustainability is at the heart of what we do. Our aim is to create better economic, social and environmental conditions, and to play a beneficial role in the communities where we operate, while seeking profitable returns on our investments.”

Sustainability focuses both on the plant and on its environment

Internally, sustainability means constantly monitoring the condition of the plant, planning service overhauls to maximise availability and minimise maintenance costs. It also involves safety campaigns to reduce the number and severity of accidents and recognising the employees’ achievements when targeted results are achieved.

Externally, MLP supports agricultural projects, funds the refurbishment of family houses and contributes to educational programmes for school children. It balances such social involvement with taking environmental responsibility, notably the protection of water resources and bioversity through effective waste management.

MLP recently received the “Primero Carlos Vial Espantoso Año 2009” award for building relations of trust and valuing the contribution of individuals.

Innovative service contract

Today, it is more than ten years since MLP signed a contract with FLSmidth to provide a complete maintenance package including training of the personnel. At the time, FLSmidth was the main supplier of the crushing and milling equipment and also provided erection and commissioning support for the new copper processing facility. Since this was the most critical equipment to achieving the desired results, the mining company, therefore, considered FLSmidth ideally suited to take responsibility for the day-to-day functioning of the machinery. Little did anyone know that eight years later FLSmidth would purchase Dorr Oliver Eimco and Krebs making it the technology owner of all of the primary process equipment in the plant.

Jean-Paul Luksic comments, “Largescale mining projects are subject to increased analysis of their environmental and social impact, and these factors are critical in assessing the viability and likely timescale of potential projects.”

Successfully aligning strategy with operations

Over the past decade, the partnership between minerals producer and technology provider has developed successfully and gradually expanded in scale and scope. Today, FLSmidth employs a permanent workforce of 300 to maintain and service the plant.

This strong relationship is firmly based on a Balanced Scorecard*) process which helps MLP align its business activities to its vision and strategy, to improve internal and external communications, and to monitor the organisation’s performance against strategic goals.

Major shutdowns

Once every four months all equipment in the production line must be inspected and serviced. FLSmidth has full responsibility for the Major Maintenance (MM) which is carried out by the various functions as follows:

  • Planning collects information on equipment failure and non-conformity. Based on manufacturer specifications, defined inspection routes and history records of wear parts replacement, Planning defines the initial MM activities list.
  • Spare Parts and Logistics makes sure that all items needed for the MM activities are available. It coordinates with MLP Procurement and verifies stocks of spare parts.
  • Maintenance Operation quantifies the size of the activities and defines the key personnel needed.
  • Quality and Risk makes exhaustive analyses of the risks involved. It also revises instructions and verifies the availability of facilities to perform the MM activities.

FLSmidth and MLP make every effort to avoid accidents and carry out the activities on or before schedule within the planned budget, ensuring that the plant will remain operational and reliable until the next scheduled shutdown. So far, these efforts have been successful.

A few numbers

  • MLP has two production lines. Major Maintenance requires 60 – 80 hours per production line and takes 5 to 7 days.
  • During the overhaul some 20,000 parts are replaced.
  • 1,200 personnel are involved, 90% of them being provided by FLSmidth.

Safety campaigns

Both FLSmidth and MLP are committed to keeping the mining plant a safe place to work. Managers hold regular meetings to make sure that safety standards are understood and complied with by the workforce. These efforts also include road safety and are part of MLP’s commitment to protect the local communities.

A special campaign focuses on avoiding serious accidents. Bad practices that have had or may have a significant impact on persons, properties or the client are highlighted and changed. Should a serious accident occur, special meetings are held to inform everyone of the cause and how it could have been avoided.
Finally, a waste control campaign is held to handle waste (such as oil and grease) generated by maintenance in a systematic and safe way.

Similar concept adopted in Mexico

The successful O&M concept is now being copied by a Mexican mining company, Minera Peñasquito, S.A. DE C.V., which is owned by Canadian-based Goldcorp Inc.

The partnership includes an ambitious guarantee of plant availability. This is based on lifelong sustainability of the plant, emphasising social and environmental conditions. The two parties see these efforts as prerequisite for achieving optimal profitability.

The results and experience developed over the past 10 years are now being transferred by having key personnel from Chile conduct staff recruitment, training and the ramp up of the entire operation in Mexico.

*) The Balanced Scorecard (BSC) is a strategic performance management tool for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy.

By focusing not only on financial outcomes but also on the operational, marketing and developmental inputs to these, the Balanced Scorecard helps provide a more comprehensive view of a business, which in turn helps organizations act in their best long-term interests.
(source: Wikipedia, the Free Encyclopedia)

Operation and Maintenance – also in Cement

FLSmidth recently signed a contract to supply expertise and spare parts for the operation and maintenance of a new cement plant in Libya. The production equipment at the Al Burg plant, which is owned by Arab Union Contracting Company (AUCC), was designed and provided by FLSmidth.

Under a contract with SSBIL, a local operation and maintenance company, FLSmidth will take part in production and maintenance services for the plant including recruitment of key staff, training of up to 200 local employees, sourcing and inventory control of spare parts and lubricants. The scope of activity also includes control and management of clay and limestone quarry operations and optimisation of the plant’s two production lines. The contract has been signed for a period of four years.

The Peñasquito project in brief

During the engineering stage, Minera Peñasquito purchased the primary crusher and two mill lines with two 38x20’ SAG mills and four 24.5x37’ ball mills from FLSmidth. Besides, Minera Peñasquito purchased cyclone clusters from Krebs, flotation cells from Dorr Oliver Eimco and press filters from Pneumapress, companies that today are part of FLSmidth.

In 2006-2007 Minera Peñasquito held talks with FLSmidth Chile about possible outsourcing of maintenance based on the experience obtained from Minera Los Pelambres and other contracts FLSmidth was managing in Chile. Minera Peñasquito is the first plant of its size in Mexico, with 65,000 tonnes per day planned for stage one and 130,000 tonnes per day for stage two. In addition the oxides plant provides 40,000 refined gold ounces each year.

For the sulphides plant, Minera Peñasquito decided that commissioning and start-up was also to be performed by FLSmidth. This has allowed good integration of construction (mechanical completion) with commissioning and start-up. The whole maintenance team was involved in the commissioning, and this came to be a great source of knowledge. It helped staff to get well acquainted with the plant, identify maintenance interferences and design improvements and was also fundamental for securing satisfactory plant start-up.

Two load tests have been completed in the Sulphides Line I - one SAG and two ball mills - with only minor issues to be resolved.

Final operation start-up of the plant took place on 19 September 2009.