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Case Study

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17.5% capital cost reduction through scope and commercial adjustments for a brownfields iron ore mine

Business challenge

Our client needed to remove redundancy, expand capacity and ensure an optimal contracting strategy to provide the lowest capital option.

Context

A major iron ore producer was expanding production at a brownfields operation from 10 to 20 mtpa.

They were concerned about the high capital cost of the expansion project, and also interested in determining the most effective contracting strategy (in a buyer's market) while still appropriately managing risk.

$0m

reduction in capital costs from $800m to $740m

$0m

additional potential capital cost savings available by adopting a minimum technical solution

Solution

Top Line Solution

Conduct a value improvement review of the entire project and reduce scope to achieve only core requirements

Evaluate the current contracting strategy and market conditions to recommend an optimal contract strategy

Identify opportunities to further reduce cost through the exploration of gain sharing and penalty assessment

Focus on contract terms to drive project performance management and ensure transparency regardless of contractual approach

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