Strategic Operations Issues - OZ Minerals Limited - Case Study Example

Strategic Operations Issues (OZ Minerals Limited) Name Institution Name Date Table of Contents Table of Contents 2 Executive Summary 3 Introduction 4 Company Description 4 Specific Operations Issue (Production issues in Open Pit Mines) 6 Problem Analysis 7 Recommendations 9 Conclusion 10 References 11 Executive Summary Operations management is a key component of any corporate organization and without it a company risks performing poorly. Proper and sound operations management help the organization in achieving its corporate objectives. Using OZ Minerals, this paper discusses operational issues; for instance, the paper provides and in-depth company description. Similarly, OZ Minerals has production issues particularly in its open pit mines; the paper describes and analyses these issues. Accordingly, recommendations as to what OZ Minerals should do in the future to ensure it meets its production objectives have also been give. Introduction OZ Minerals is an Australian based copper mining company; the main company activities are operated in the high quality new Prominent Hill copper-gold mine in South Australia (OZ Minerals 2013). The company is building a pipeline project that is singularly aimed at delivering superior returns in the medium term through organic developments, acquisitions as well through its intensive commitment to exploration including existing projects and for new opportunities identification (Nemetz 2013). The company has a stable financial capacity, highly skilled personnel including mining industry professionals; more importantly, OZ Minerals is committed to respect, action, integrity and results. Regardless of the described company strategic positioning the OZ Mineral has various operational issues that must be sorted out in order for the company to holistically achieve its strategic goals. For instance, some of these issues include: production problems, remuneration issues, safety performance issues, among others. This paper discusses production issues at OZ Minerals. Company Description OZ Minerals a modern Australian based copper mining company. The company owns and operates Prominent Hill copper-gold mine comprising of Malu Open Pit, Malu Underground, and Ankata Underground. Similarly, the company owns Carrapateena copper gold-project. Prominent Hill and Carrapateena are strategically located in South Australia’s mining jurisdiction (OZ Minerals 2013). The business model of OZ Minerals is tasked with generating shareholder value through discovery and development of copper deposits together with the production and sale of copper concentrate (Rankin 2011). For example, Prominent Hill is associated with the production of high-grade copper concentrate that contains copper, gold, and silver which are mainly sold to Europe and Asia. The company is aimed at increasing its production; for this reason, project evaluations particularly at Carrapateena are being conducted. Similarly, the company continuously conducts exploration activities to identify new deposits. According to OZ Minerals Annual Report 2013, the company market capitalization was $955.9 million, direct workforce of 380 employees (OZ Minerals 2013). The Prominent Hill facility had approximately 1,400 employees whereby most of them were contractor’s employees. The company is a modern business and thus significantly facilitates the organizational culture that embraces diversity. The believe that a workforce that is inclusive of both men and women as well as people of all generations and cultures massively add value to its core business is true. OZ Minerals is also strongly focused on environmental sustainability; this has ensured that company operational activities add value to its people, the community within which it operates, and the larger environment. OZ Minerals main objective is to deliver superior shareholder returns built upon a foundation of Governance and Zero Harm. The following are the specific strategic objectives: Focus on Copper Build a project pipeline Maximise potential of Assets Invest in exploration Exercise discipline capital management Specific Operations Issue (Production issues in Open Pit Mines) The company’s open pit mine operations are significantly challenged by various issues. For instance, the company’s efforts to increase and/or maximize production of ore yield inefficient results as compared to what is expected within the pit. This is largely attributed to sub-optimal use of mining equipments (Rankin 2011). For instance, in 2013, the company attempted to maximize ore production, but this led to more inefficiencies within the pit with multiple branches of mining, reduced productivity, and sub-optimal use of equipments (Walters & Rainbird 2007). However, the company is taking considering various measures to try and maximize value the open pit that is remaining; this is particularly aimed at increasing space for equipments to be efficiently operated, significantly reduce congestion in the pit as well as provide space for demobilization of equipments. The company is currently realizing progress; however, there is still a long way to re-establish the production required; there are delays in uplifting ore tones and grades (OZ Minerals 2013). Accordingly, the copper stockpiles that were previously available to supplement production are also depleted. Due to this, OZ Minerals mine plan, open pit mining is now directed towards the core of Malu Open Pit ore-body. This plan is mainly based on reserves; it also incorporates a certain percentage of the mined ore from Inferred Resources (Lowson 2003). Accordingly, the decrease in waste movement by the two excavators together with the associated truck fleets will be demobilized. Accordingly, the trip ratio is largely expected to progressively decrease as time goes by into the subsequent years. For instance, the company’s production in 2013 was between 70,000t to 75,000t of copper and 120,000oz to 130,000oz of gold. The production for 2014 is expected to be between 75,000t to 80,000t of copper and 130,000oz to 140,000oz of gold (OZ Minerals 2013). Problem Analysis According to ‘Operations and Process Management’ there are five key aspects of operations performance that are significantly important. These aspects include; Quality – this involves ensuring that operations within the company are done rightly and to the highest possible standards while at the same time avoiding errors to enhance production (Lawson 2003). OZ Minerals can ensure quality work by enhancing production in open pit mining operations. This can be achieved through easing congestion in the pit, creating more space to ensure that equipments have enough space to support their operations (Tan & Matthews 2009). Cost – working within the planned cost of operation and without compromising product or service quality; it is important to strictly stick to the budget. Given this understanding OZ Minerals must regularly review its production budget with a singular objective of controlling production expenses. Speed – the rate at which the company meets its operation’s schedules without delaying and more importantly making no errors (Tan & Matthews 2009). OZ Minerals in this regard must come up with means through which the production schedules should be met like increasing the waste movement, increase trip ratios, ensure availability of copper stockpiles to supplement production. Flexibility – the company’s ability to adapt to the client’s needs; by OZ minerals working to meet is production strategic goals it will significantly and flexibly meet their customers demands (Rankin 2011). Dependability– this is mainly associated with operating on agreed schedules and doing things on time. The company should ensure that it remains dependable by making sure that their production operations are standard and professional. OZ Minerals must work to produce and meet their production targets. In order to meet the company’s production objectives the must overcome its operational difficulties. OZ Minerals must improve the efficiency of the flow of waste materials particularly in their open pit mining operations like in the Malu Open Pit mine. In this regard future planning for the life of open pit together with waste movement should be undertaken. For instance, it was also established that open pit operations were largely impacted by a slip in a section at the top of South Wall; this had an access restriction effect to the main area below (OZ Minerals 2013). The reconstruction of this slip is a must in order re-quarantine mining areas to improve production efficiency. Similarly, the company should create enough space within the open pits in order to have productive and efficient use of mining equipments which will on the other hand maximize value over the remaining open pit life (Hayes 2005). Accordingly, full optimization of automated mining fleet dispatch accompanied with larger more open space for working on a decreased number of mining branches will culminate into better excavator and truck efficiencies coupled with improved productivity (Plenert 2002). Similarly, by the company significantly monitoring and controlling its cost of production by constantly reviewing its production budget it will ensure that the company does not spend what it does not have. OZ Minerals should manage its operations and production processes using the 4V strategy: Volume, Variety, Variation, and Visibility (Rankin 2011). Volume refers to the amount of products and/or services, variety refers to the different products and services, variation is the demand of products and services, and visibility is what the client has to product and service production (Tan & Matthews 2009). In this regard, OZ Minerals should align its production operations to allow for high volume, low variation, low variety and low visibility to ensure that production costs are low while keeping productivity high. Production companies have different ways of managing their production operations using the four V’s approach (Lewis & Slack 2003). In general, management of operational activities are grouped into four categories including, product operation designing, services and process, developing process performance, and planning and controlling delivery. Recommendations i. It is virtually important for operations to be treated at both strategic and operational levels; this vitally essential for creating opportunities for enhancing operations together with the overall company performance (Rankin 2011). Given this understanding, OZ Minerals must develop operational strategies to make sure that the target production of copper and gold is met; the company operations will be sound and strategically guided (Brown, Bessant & Lamming, 2013). ii. Maintaining high production standards together with production reliability within the company is usually achieved through constant and regular evaluation and monitoring of operations (Mieghem 2008). OZ Minerals must have a strategy in place to monitor and measure its production operations to ensure that they are working and effective to meet the set production goals. The company will build a strong reputation and increase its business with regard to the set high and reliable operational standards (Bettley, Mayle & Tantoush 2005). iii. Having a performance measure system in place is another essential way of improving the company’s operations. Key performance indicators that are measurable and specific are particularly important. OZ minerals should use performance measure systems to truck its productivity levels which on the other will show whether the company is continuously meeting its production objectives (Tan & Matthews 2009). Similarly, they will help track of work and target setting together with regular evaluations of the set targets thus helping the company with achieving the strategic objectives and company visions. Conclusion OZ Minerals a modern Australian based copper mining company whereby it owns and operates Prominent Hill copper-gold mine comprising of Malu Open Pit, Malu Underground, and Ankata Underground. Similarly, the company owns Carrapateena copper gold-project. The company’s open pit mine operations are significantly challenged by various issues. For instance, the company’s efforts to increase and/or maximize production of ore yield inefficient results as compared to what is expected within the pit. The above discussion provides an expansive analysis of the company’s operational issues together with how the company can work to ensure that these problems are abolished. For instance, in order to for OZ Minerals to meet the company’s production objectives it must overcome its operational difficulties. This will ensure improvement of the efficiency of the flow of waste materials particularly in their open pit mining operations while at the same time improving its productivity. The paper has also provided recommendations that OZ Minerals should implement for enhanced future production performance. 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