It was November 2013, during the Q3 quarterly investor call in Toronto, when an analyst asked if Kinross was willing to shutter Maricunga if we couldn’t get costs under control.
At the time, the price of gold was around $1,250/oz., cash costs for the quarter were $1,370/oz., and the operation was clearly in the red.
Kinross made it clear on the call and to the operation: Maricunga had one year to turn things around.
At the time, it may have seemed like a long shot. Even by mining standards Maricunga is a tough site: located in the High Andes at 4,500 metres, the scarcity of oxygen, gusting wind and extreme temperatures challenge the hardiest of miners. Then there is the site’s remoteness – four hours from the closest city – and the complexity of the low grade gold-copper deposit that contributes to the operation’s high costs.
Yet in 12 short months Maricunga has beaten the odds: in Q3 2014, exactly one year after that investor call, the site has engineered an impressive turnaround. Production increased 86% year-over-year – the highest recorded output in the mine’s 15-year operating history, while costs declined by an impressive 36% over the same period.
Pictured above: Production and Cost: 2013 versus 2014
The results are a testament not only to the depth of experience and operational know-how within the Company, but to Maricunga’s commitment to the Kinross Values, says Rick Cruea, Maricunga Vice-President & General Manager.
Rick Cruea, Maricunga Vice-President & General Manager
“Maricunga, as people know, is a tough site to operate, tough conditions to work in, but what we found is that people are very proud to be able to work there,” says Cruea. “They are very proud that not everybody can do what they do at that altitude. So when you bottle that up and give people targets that they think they can achieve, and you start getting a few wins, success breeds success.”
So how exactly did they do it?
It’s All About the People
Kinross prides itself on moving talent around the organization and the Company took a three-pronged approach to building a turnaround team at Maricunga:
i) A handful of Kinross veterans were brought in from other sites, including Round Mountain’s Bruce Thieking (Assistant GM) and Rick Cruea (GM), who had also worked on the Paracatu turnaround;
ii) Kinross capitalized on the La Coipa suspension to transfer experienced La Coipa managers and supervisors to the site; and,
iii) Maricunga employees were newly empowered to bring forward ideas to improve the operation.
A regular routine of daily and weekly meetings was instituted and together, the new team focused on a single, shared vision:
One Team, 12 Months, One Opportunity.
“It became the battle cry,” says Cruea.
Ironically, in diagnosing the challenges Maricunga faced, the biggest obstacle to success says Assistant GM, Bruce Thieking, was the site’s narrow focus on cost. The new team set about purposely making cost the last priority. Instead, priorities were aligned with the Kinross Values, with Safety first, followed by Environment, Production and then Cost. The feeling was that if the site got the first three priorities right, costs would follow.
A 5S workplace program was introduced to clean up and organize the site: workspaces were cleaned up, inventory streamlined, junk hauled away, and roads were resurfaced.
“You could just see the relief when we started to use a different set of priorities,” explains Thieking. “Once we took away the constraint of always focusing on costs, people responded very quickly with more efficient ways to do things, which then improved the production and then lowered the costs.”
Bruce Thieking, Assistant General Manager
A Focus on Continuous Improvement
On the production front, part of Maricunga’s immediate challenge was the ore body itself: the mine plan had hit a clay-heavy zone, which impacted throughput and was difficult to heap leach. There were also many opportunities throughout the process – from the mine pit to the ADR plant – to ramp up efficiencies.
A multidisciplinary Continuous Improvement team was assembled to review everything from drilling and blasting strategies, to mobile equipment availabilities, stockpile management, crusher maintenance and heap leach management, as well as ADR and SART plant efficiencies.
Some throughput improvements included:
- An ore blending strategy to reduce the clay concentration.
- New blasting techniques to reduce particle size and avoid crusher blockages.
- Better communication between dispatch and crushing.
- Improved primary stockpile management to provide steady feed to the crusher.
- Replacing mobile equipment contractors with Kinross employees, resulting in a 5 – 25% improvement in equipment availabilities from haul trucks to loaders.
Pictured above: Before-and-after images showing improved ore feed to the primary crusher
Throughput began to improve dramatically, with the primary and fine crushing areas hitting new monthly records on a regular basis. In 2014, Maricunga processed a record throughput of 16 million tonnes – a level the site had been upgraded to reach in 2007.
A key element of that success, says Thieking, was the move to self-perform mobile maintenance or ‘internalization’.
Maricunga had historically relied very heavily on contractors and the decision to go in-house not only improved productivity, but also boosted employee morale.
“It was a big change in how we did maintenance on the site – it led to much more available and reliable equipment, which led to more consistent mining, which led to more consistent feeding of the crusher,” Thieking explains. “And once we saw the success of that internalization, it translated to other areas that we had been contracting work, to the point where now we self-perform a lot of work that just a year ago was performed by contractors.”
“It gave the employees a real sense of ownership and pride, that ‘we can do this, this is our mine,’” he adds. “They knew they could do a better job than the contractors, they just needed an opportunity to show what they could do.”
Pictured above: Mobile Maintenance crew at Maricunga
Pictured left to right: Maintenance Planning Superintendent Mauricio Cabezas with Héctor Titichoca and Pablo Delgado
Pictured left to right: Maricunga’s Wilson Miranda, Osvaldo Marin and Roberto Pino
Heap Leach Performance Improvements
The improvements in throughput, in turn, led to more consistent placement of tonnes on the heap. Heap management was also re-organized, with better stacking plans, and cyanide and lime controls, and improved solution management practices.
“The heaps, when we first got there, were in tough shape – it looked like a BMX bike track instead of a heap leach,” explains Cruea. “Now the heaps look pretty good, and we’ve actually got a lot of extra gold that should have been leached in 2012 and 2013.”
Pictured above: Before-and-after images showing heap leach improvements
The last piece to the turnaround story is the ADR plant. In mid-2014, the team at Maricunga kicked off a project to improve both the management of the plant and Adsorption efficiency. A number of measures were taken, including:
- Investment in infrastructure, including an Elution tower, electrolyte tank, recycle tank, and pump redundancies – all for less than $2 million.
- New carbon safety screens that improve flows, reduce carbon robbing and improve employee morale.
- Strengthened controls, documentation, discipline and cleanliness.
The result? Today the plant is achieving 94% Adsorption efficiency, compared to an average efficiency of 90% since 2010.
Pictured above: Improvements in ounces adsorbed per day
All told, the site’s Continuous Improvement efforts from the ADR to the pit have translated into over $50 million in savings: that equates to an over $225/oz. impact on production costs, and $90 million in increased cash flow.
“It’s all about the people. People want to be successful. You support them, provide them the guidance and direction, and it’s amazing what they can accomplish,” says Cruea. “This has been a great example of what true team work can accomplish.”
“It’s been quite an experience,” adds Thieking. “The workers here, they responded amazingly to the challenges that we had during the year, and I couldn’t be more proud of the team at Maricunga and what we’ve been able to achieve.”
But the story doesn’t end there.
“The exciting thing for me is we haven’t reached our peak,” says Cruea. “We’re going to keep going – we’re moving into 2015 with that same challenge and excitement, and I feel confident that we will have another good news story to tell.”
Pictured above: Operations Manager Pablo Asiain and Mine Superintendent René Cortés, with Andrea Mandel-Campbell, Director of Communications (Toronto)
Pictured above: The pit at Maricunga, January 2015