OceanaGold Corporation
20 October 2010
Lowell Millburn
Procurement & Logistics
TSX, ASX, NZX : OGC
OceanaGold (NZ) Ltd.
Delivering on Sustainable Growth
17 April 2012
Lowell Millburn
National Manager - Procurement & Logistics
Global Choice…Right Source
15th Annual Shared Services Outsourcing Week (SSOW)
Melbourne Convention Centre, Victoria, Australia
OceanaGold Corporation
[email protected] www.oceanagold.com
Oceana Gold (NZ) Limited
• A subsidiary of Oceana Gold Corporation (OGC: ASX, NZX, TSX)
• Significant Pacific Rim gold producer, with portfolio of operating,
greenfield, exploration assets on the South Island of New Zealand
and the Philippines.
• Macraes Gold Project. New Zealand’s largest gold project-- has
produced 3.0 million ounces of gold since 1990.
• Reefton /Globe Progress. On the West Coast of the South Island,
commissioned in 2007.
• Frasers Underground. Located at Macraes Flat in Central Otago,
commissioned in 2007.
• Annual Production. Averages ~250,000 – 300,000 oz/annum
OceanaGold Corporation
[email protected] www.oceanagold.com
OceanaGold - Group Procurement Overview (FY 2007-2012)
A Multi-Site Approach
• Integrate BUs Optimise/align procurement, purchasing & logistics
functions via uniform procurement policy, process & planning
• Aggregate Spend. Engage stakeholders. Identify, plan and leverage
spend across exploration, greenfield and operational operations in NZ
• Deep SCM Collaboration. Pursue global suppliers who are creative at
improving materials/service quality, react to demand/delivery upstream.
• Develop Locally . Encourage local vendors to upskill service offerings.
Revised Scope & Mission
• Pricepoint. With GFC, Oceana recognised a need to refine adherence to
pricepoint in relation to quality, continuous supply, process improvement ,
local community development.
• Captive Supply. Work with OGNZL operations to identify/reduce reliance
on tools, materials, service providers which keep OGNZL captive
OceanaGold Corporation
[email protected] www.oceanagold.com
OceanaGold - Group Procurement .Multi-Site Integration (FY 2007-11)
• Update OGNZL Procurement Policy
• Categorise/Prioritise Capex/Opex
• Identify Uncontracted Spend
• Create Spend Management Plan
• Consolidate Logistics Suppliers
• Reefton, Frasers Sites Commissioned
2007-2008
• Imbed Preferred Provider Ag (PPA)
• Redevelop BOM/Equipment Lists
• Expand Global Supply Chain (Asia)
• Local Community / SD integration
• SCM Tool Integration (ie, Pronto,. . .
. Cognos; Ariba, Fieldglass; XML/EDI?) • Integrate Multi-Site Spend Plans
• Retender High Value Cats (eg,Fuel)
• Identify/Pursue critical/bulk material
• Optimise Site-Based P&L Staff
• Redevelop Contract Suite/Forms
. (Material / Service / FPA/ Site Agmts)
Foundation
Aggregation
2008-2009
Foundation
2007-2009
Foundation
Aggregation
Sustainability
2010-2012
Since 2007, OGNZL has taken a phased
approach to integrating multiple business units
under its centralised, hub and spoke Procurement
model.
OceanaGold Corporation
[email protected] www.oceanagold.com
NZ Operational Expenditure Aggregating Multi-Mine Requirements
OceanaGold Corporation
[email protected] www.oceanagold.com
Commercial Activity / Result 2011
NZ Operational Expenditure ~$ 310 M
2011 Contestable Spend (Tendered) $ 54 M
Estimated Savings (Annualised) $ 3.56 M
Annual Savings vs Market 6.6%
Spend on Contract (%) 86%
Spend Directed Locally * 72%
P&L Staff Retention/Training (NZ) 91%
•- Materials and service supply with local, regional base of operations within NZ.
Group ProcurementNZ Operational Results (FY 2011)
OceanaGold Corporation
[email protected] www.oceanagold.com
Oceanagold understands,
benefits reciporically from the
local & regional synergies it
pursues with South Island
communities.
Through its Preferred
Provider (PPA) program,
OGNZL actively attempts to
progressively nurture a
complex range of goods and
service suppliers within NZ,
especially <100km of its
operations at Macraes,
Frasers and Reefton.
Over 2010/11 preference has
been given to establishing
complex service base
proximate to site (Palmerston,
Oamaru, Reefton, Greymouth,
Westport).
OGNZL Operations – Macraes Flat , Frasers Underground & Reefton/Globe Progress Mines
Developing Local & Regional
Sustainable Supply Synergies
Reefton/Globe Progress
Gold Projects
Macraes Flat/
Frasers Underground
Gold Projects
OceanaGold Corporation
Preferred Provider Agreements (PPA)
Local/Regional Services Base – Plant Maintenance
• Mining– as an asset intensive industry– is exposed to substantial cost movements when contractors are not properly managed against agreed rates, scope, or standard contract requirements.
• A potential 20% cost movement from unmanaged rates/time = ~$1.8Million [Across 12 primary service providers (2008/9)]
• Preferred Provider Agreements provide a uniform framework for localising spend while reducing risk to unmanaged costs, adherence to policy.
OceanaGold Corporation
Preferred Provider Agreements (PPA)
Macraes/Reefton Plant Services – PPA Approach
• Process Plant / Fleet Maintenance Contractors (2010/11)
Hydraulics Electrical Mechanical Autoclave/Refractories
• Contractor capabilities/rates review - Local/Regional/InternationalHourly/Role Based Fixed Rate/Lump Sum Contractor Lattitude to scope
• OGL Requirement : Preferred Provider, Site & Master Supply Agreements
Standard Terms Rite to Remove/Deny Entry HSE Compliance
Overtime Incidental Allowances On Call/Standdown
Mileage Uniform Billing/Invoice Travel time
• Intent is to expand PPA Projects to Macraes/Reefton Pit & U/G (2012)
OceanaGold Corporation
Lowell Millburn
General Manager – Procurement & Logistics
OceanaGold (New Zealand) Ltd.
22 MacLaggan Street
Dunedin 9012 Otago
New Zealand
T: 64 (03) 479-4702
Contact Details