How to Avoid Project Delays Like Hindustan Copper Ltd's Latest
Hindustan Copper Limited (HCL), a public sector enterprise of the Government of India and a Mini Ratna-I CPSE, signed a Memorandum of Understanding (MoU) with the Ministry of Mines, Government of India, in New Delhi on March 25th of this year. The MoU outlines the business plan for the financial year 2014-15. The company stated a goal of 35,000 MT of metal production from their mines.
Mandatory Approvals Cause Delay
As it stands their current goal states an increase in their production capacity to 12.41-million tons per year. This represents an increase of almost four times their current output. However, it appears that Hindustan Copper Limited is probably going to fall short of the deadline for this significant increase set for 2017/2018. Delays in securing mandatory approvals have been identified as the deadline killer for this vertically integrated copper producing company.
HCL’s plans for the large increase in production involved the impressive investment of approximately $580 million. A significant contingency of the plan was dependent on the expansion of Malanjkhand, the company’s largest copper-producing facility, in the central Indian province of Madhya Pradesh. The Malanjkhand mines comprise over 70 percent of India’s overall copper reserves, representing a wholly necessary component of the mining company’s plans to increase its production.
Malanjkhand is situated very near to the Kanha National Park, and herein lies the problem. The National Wildlife Board (NWB) never provided their approval for expansion of the Malanjkhand mines, leaving the appeal stagnant for over two years.
Approvals and Comprehensive Due Diligence
HCL is a majority government owned and managed miner, and therefore its investments were approved by the Cabinet Committee for Economic Affairs, and the company had also approached the Project Monitoring Group which is supposed to address stalled projects. While HCL did execute due diligence in some areas, it did move forward when it shouldn’t have in other areas, such as awarding contracts to various venders without the required approvals in place. Comprehensive due diligence across the board, improved communication, and improved policy based project management may have helped HCL stay on target with their increased production plans.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.