The recently appointed boss of BHP Billiton’s Nickel West division has presented a rare positive message for the unloved business, saying there was “nervous excitement” after a series of internal changes.
The recently appointed boss of BHP Billiton’s Nickel West division has presented a rare positive message for the unloved business, saying there was “nervous excitement” after a series of internal changes.
“Nickel West has embarked on a journey to reinvent itself by adopting the junior miner mindset while remaining inside the world’s largest mining business,” asset president Eduard Haegel told the Australian Nickel Conference today.
“In this way, we believe we can obtain the best of both worlds.”
Mr Haegel said he had introduced two dramatic changes since taking charge of Nickel West.
“The first is to place more emphasis on creating earnings as distinct from just reducing costs,” he said.
Mr Haegel said a key step in this process was restructuring its operations into a series of enterprises.
“The second theme is to pursue world-class performance," he said.
“Nickel West will not be cost cutting itself to oblivion but instead strategically investing in people and equipment, albeit very modestly, to identify and deliver world class performance.”
BHP Billiton sought to sell Nickel West last year but has retained it as a non-core asset after failing to close a deal.
The downturn in nickel prices has put the entire industry under pressure, with listed companies such as Panoramic Resources, Independence Group and Mincor Resources all cutting staff.
Mr Haegel confirmed Nickel West had recently cut 37 positions at its Kambalda smelter, in response to lower ore deliveries from other miners.
The group still has a total of about 2,000 staff and contractors.
He said Nickel West’s integrated structure, across mines, concentrators, smelter and refinery, created opportunities.
For instance, it recently imported concentrate for the first time in its history.
“The high quality of this material allowed a stockpile of off-spec material from a local producer to be blended with it, to create additional value for Nickel West and that local producer,” Mr Haegel said.
He said the people at Nickel West had achieved some big improvements to their operations.
For instance, in the space of four months, the team at Mt Keith had completely reinvented its mining process.
Another positive was exploration and drilling success, with extensions to existing ore bodies and new discoveries, notably at Venus, which he described as “undeniably a wonderful asset”.
Mr Haegel said the company was looking at development opportunities at Venus that utilised existing infrastructure and minimised capex.
“By seeking to develop the pit at a slower rate, one that can be supported by the existing infrastructure, significant amounts of capital ... can be avoided,” he said.
Nickel West has also created a new contract mining model at its Rocky’s Reward mine that takes advantage of the competition among contractors.
“In this model, the contractor was asked to bid a fixed price with complete excavation, with payment made after ore is delivered to the concentrator on a per tonne of ore basis," Mr Haegel said.
“This essentially means the contractor is required to carry the waste stripping cost.
“Eleven contractors were invited to bid, 10 did so, and four met the funding prerequisite.”
The result was a $160 million, 30-month contract awarded to CIMIC Group subsidiary Thiess.
Mr Haegel said it was expected the Rocky’s Reward concentrate would be among the lowest cost concentrate to be delivered to the Kambalda smelter over the next two to three years.
He said this exercise showed Nickel West’s ability to move quickly, with the time from identification of this opportunity to first dirt being four months.
