Integral Management of mining projects in a world of Dynamic Complexities: Challenges and opportunities

Abstract

This paper aims at providing an explanation as to why certain mining projects face major difficulties that can lead to their failure, even when a considerable part of the investments has already been made. This research reviews the literature on the topic and was developed after 35 years’ experience of the author, who led two projects of a very different nature; the first one was a mining-port investment –amounting to US$ 600 million– in a remote and almost uninhabited island in Magallanes (Riesco Island), including an open pit coal mine and port facilities which have been in operation for the last six years and export to different countries around the world and to Chile’s north region. The second project was the expansion of CODELCO’s El Teniente Mine (New Mine Level), a project worth more than US$ 4 billion. The common ground in such different projects is Dynamic Complexity and a new understanding of uncertainties, which both are defined and explained from the standpoint of the learning process as well as from the relationship among different aspects of a mining project. The article makes three recommendations in order to manage the Dynamic Complexity, first the concept of Site Investment in the early stages of the project. Second an application of the Geotechnical Baseline Report, not only related to the focus made by theirs authors (Essex, 2007), but also related to capture a Bank of Key Assumptions (related to the Site Investment process) in order to manage the uncertainties, considering the definition made by Perminova (2008). Finally, the article emphasizes the role of the Board of Directors in the definition of the appetite for risk (Enrione, 2014), along with the introduction of a Technical Committee that creates a healthy stress between the Project Manager and the Board of Directors as the ultimately responsible party.