Every year Kinross spends about $60 million on grinding media – the small steel balls used in SAG and ball mills to grind ore into finer particles that are small enough to process.
In a low gold-price environment, it’s more important than ever that we find opportunities for cost-savings, and in 2014, the Grinding Media Steering Team coordinated by David Menezes (Manager, Global Sourcing, Steel Products), set its sights on reducing what Kinross spends on those small steel balls.
Competition in the grinding media world was on the rise, steel prices were coming down, and most sites had joined our global procurement program – growing our global grinding media buy. Add all of that up, and David and his team saw an opportunity to push for lower costs and better service from suppliers.
David and the Steering Team struck a deal with ME Elecmetal, a smaller, lesser-known supplier that had been providing great service to Round Mountain. The higher volume, global contract meant that Kinross could capitalize on economies of scale, resulting in a 10% savings over our three-year agreement*.
In 2014, commercial savings alone topped $3 million.
“ME Elecmetal is delivering meaningful benefits to Kinross,” says David. “They’re a high-performing supplier, and that’s in line with our values. Equally important, they’re delivering savings across a range of areas: unit costs, support costs, freight costs, and continuous improvement. It’s a win-win partnership.”
Feedback from site technical teams has reinforced the success of the collaboration. “I have worked with ME Elecmetal at Fort Knox and Paracatu, and they have been a positive contributor to both sites’ performance in terms of product quality and technical support,” says Charlie Wells (Director, Strategic Operations, Paracatu).
This year will see renewed focus on value generation through Supply Chain-enabled partnerships, as David and the team work to consolidate similar deals for other consumables within our steel portfolio.
Paul Tomory (Senior Vice-President, Operations Strategy) with Zen Xu, Vice-President of ME Elecmetal’s Grinding Media Division
SAG mills at Paracatu
*On a performance-adjusted basis
