Don’t be front page news for all the wrong reasons: Critical knowledge your team needs
The AusIMM Bulletin sat down with Enthalpy CEO, Paul Harper FAusIMM(CP), member of the facilitation team for AusIMM’s new short course Study Processes for Resource Projects, for his insights into the criticality of studies to shield organisations from feasibility issues and cost blow outs – or becoming front page news for all the wrong reasons.
Where do you see the state of projects in the resources sector?
One of the key challenges we have is that despite innovation and progress in the resources industry, as well as other sectors like the energy and infrastructure sectors, we continue to see that too many projects are not being executed very effectively – often far exceeding capital costs, experiencing construction schedule overruns and failing to meet environmental and social obligations. The larger the project, the higher the potential that the project failures are so significant that they reach front-page headlines. These outcomes are not good for the stakeholders involved nor the reputation of the industry as a whole.
So why are many mining projects failing to deliver successfully?
The answer is not always straightforward and there are a multitude of reasons for this. Two key factors that impact project delivery performance are:
- not defining an optimal strategy in the first place; followed by
- poor implementation of a sub-optimal strategy.
In both cases, clearly defined study processes are needed to address these issues.
Are you seeing companies experiencing challenges in developing clearly defined study processes?
The JORC Code and NI 43-101 have certainly made a significant difference in setting standards in reporting of resources and reserves and making sure there is a good start to the process. However, because the industry is still seeing project blow-outs, we consider there’s opportunity to a make a difference by improving study processes.
Projects are more likely to achieve success if they are considered and developed using a phased approach, with control points to determine the level of exposure and cost of investigations. Each phase has different objectives, methodologies, and progression pathways. Good practice is for project developers to ensure that Independent Peer Reviews are performed at key points in the study phases and before approval to commit any shareholder funds; these reviews are an essential element of the management decision-making structure.
How can organisations gain value from improving their study processes?
The economic justification for clearly defined study processed can be presented on two levels:
- Value adding - savings in development costs, and improvement in the risk-reward ratio
- Value protection - reducing the potential for projects not achieving forecasts due to poor definition at the study stage.
At the same time, what some people do not realise is the strategic approach that is required to meet corporate objectives. Sometimes this is not well understood at a corporate level and consequently the parameters for the studies are not defined. This can lead to a delivery of a study that is totally unacceptable for Corporate – an example of this is not meeting an unknown funding strategy.
As Fellows of the AusIMM, we see establishing the AusIMM Study Processes for Resource Projects as a step towards improving project delivery outcomes – with the first step being to make sure project owners choose the right project to build at the outset.
The AusIMM’s intention is to develop a course outlining best practice for study processes that practitioners and other stakeholders can refer to as processes, guidelines or a framework.
Would this course suit someone with some experience/seeking to upskill, or those starting fresh?
Both. It would suit a variety of people with a variety of skill sets, and the roles they play within the company plan in developing projects e.g.:
- Project teams – those leading studies and having a clear understanding of the directive and framework, the constraints and minimum standards and the technical support.
- Project managers – minimise the surprise factor and maximise transparency. To be pre-emptive and proactive in mitigating project risks and optimising project reviews. So very clear guidelines will help achieve this.
- Company leaders – having a clear understanding of the right data, at the right time to make the best decisions about a project.
What are the next steps for the AusIMM to make a difference in this global challenge?
This training course is only the first step. The course comprises four modules to be delivered over five weeks and will include four live webinars. The first module is starting 17 February.
The next step is to establish study guidelines as a handbook for the development of mining projects, from discovery to operation, with the objective to enhance the professional capability of our members and to underpin investor and community confidence, corporate governance, and the reputation in the mineral resources sector.
We will be calling for SMEs to assist us in pulling together this handbook and who knows where it will go from here. Maybe a code complementing the JORC and Valmin Codes. It is a case of taking one step at time to make a meaningful difference.
This sounds like a team effort?
Yes, I would like to thank the AusIMM working group who have been working on developing this training course: Lisa Park, Karl Van Olden, Peter Fairfield, Kristy Burt, and Alison Bickford.
Without their efforts this initiative would be still in the starting blocks.
Commencing on May 1, the Study Processes for Resource Projects short course is still taking enrolments. Visit the course website for more information.