General manager Demand Chain

Mike Lomman

Pit to Port Optimisation

Bulk Materials Handling

24th June 2015

Project location

1

Roy Hill overview

18+ Year Mine Life

More than 2.3bt of +50% Fe iron ore

comprised of more than 1.2bt of +55%

FE iron ore

Open cut mine operating multiple pits & 55 Mtpa wet

processing plant

344km heavy haul railway & two berth

wharf in Port Hedland

2

Roy Hill Mine superimposed on Perth

Roy Hill – a project of national significance…

Only independent iron ore project with

Australian majority ownership

Significant participant in the iron ore market

$10 billion construction budget.

Just under twice the size of 2015/16 federal infrastructure

budget & exceeds WA’s infrastructure budget for

2015/16

Full production export revenue approx.

US$4b per year

3

Project progress – Construction

Project more than 81% complete

More than 5000 people working on site across

the Project (>6500 employed)

More than 24 million hours worked on site to

date

All Long Lead Items delivered & being installed on site

Significantly de-risking the Project

5

Safety 7 to 10 times better than industry LTIFR data

Greenfield Business - The opportunity

Build what we need to now to

easily incorporate innovation &

technology later

Ability to adapt & implement

learnings from the field

Provides flexibility to easily adopt

further cost optimisation

6

Thinking culture, focused on productivity

Production constrained by 55Mtpa port allocation, so

innovation key driver of margin focused business

Innovative thinking drives

business & productivity

improvements & cost optimisation

Embrace technology as a core element to

deliver 55Mtpa of iron ore to our

customers competitively

7

Building a culture of innovation

Encourage & empower our people to find

better & smarter ways of doing

things

Combine cross industry methods, technology & the experience of our people to create

innovative solutions

Encourage genuine

collaboration, to share knowledge & experience to foster innovative

thinking

9

Productivity driven by the Remote Operations Centre (ROC)

10

End to end integration of operations, marketing and corporate services

functions

Coordinated & integrated approach to planning,

operation & overall management

Drives productivity & continuous improvement by focusing Operations,

Marketing & Corporate –to effectively operate

together

Drives the maximisationof throughput and quality

conformance while managing variation to

minimise operating costs

Innovation in action – Remote Operations Centre

11

Technology used to gather, validate & report

real time & near real time operational data to support & drive key operational decision

making

ROC centralises asset management practices & engineering disciplines to

improve reliability & productive rates of

equipment across site operations

Maximising throughput is the objective of the ROC,

not site operations

This drives a fundamental change to how we

manage productivity

ROC extends the focus on planning & scheduling into the supply chain.

This provides a supplier facing approach to delivering effective

maintenance outcomes

Innovation in action – Remote Operations Centre

To optimise the Roy Hill ‘Demand System’

and the Roy Hill ‘Supply system’

TO DELIVER BETTER BUSINESS OUTCOMES

12

Integrating Demand and Supply - Demand

Demand ChainMaximise Revenue

Mine Process Rail Port Ship Customer

13

Production constraint

Customer Relationship focus

Integrating Demand and Supply - Supply

Maximise Availability

Maintain constraint

Supplier PickupDeliver

Central Receipting

Freight Site Warehouse Deliver MaintainOperate

14

Supplier and Contractor Relationship Focus

Integrating Demand and Supply

Integrated Optimisation of Systems

Mine Process Steel MillShipPortRail

Supply Chain Plan Maintenance PlanDemand Chain

Plan

Supply Chain Schedule

Maintenance Schedule

Demand Chain Schedule

MaintainDemand Chain

ExecuteSupply

Execute

Monthly Production Reporting

Daily Production Reporting

Business Improvement

Supplier Relationships & Contracting

Contracts

15

Optimising Operational Strategy

CapacityExpansion Major

UnplannedEvents

Equipment Performance

Execution

SchedulingPlanning

Simulation Modeling

Operating Philosophy

Philosophy by which Roy Hill will be operated to

minimize incidents, optimize demand chain throughput, optimize shipped quality and

minimize operating costs.

Operating Strategy

Strategy by which the Demand Chain will plan.

The Strategy is the Normal Operations Mode and sets

System KPI priorities.

Operating Mode

Mode by which the Demand Chain will

schedule around exceptions in order to

meet System KPIs as set by the strategy and return to

Normal Operations.

15

If you don’t follow your plan, how do you improve your planning.

To enable discipline in execution we need to plan and schedule effectively.

But to plan and schedule effectively, we need to have correct assumptions.

The Required Discipline in Execution

In 1928 a statistician named Walter Shewhart proposed a way of presenting data that will help to analyse the variation.

The Control Chart

Shewhart

Real Time Statistical Process Control

Business Improvement Specialists

Historical analysis of data

Challenge to understand what happened to cause a change

Traditional use of control charts

Real Time Statistical Process Control

Online dashboard, automatically updating every hour.

Operational Superintendents, supervisors with their teams every day, every shift.

Assessing performance change in drivers of business outcomes

Capturing the reasons for change by the people who saw it happen.

Roy Hill use of control charts

Real Time Statistical Process Control

Same tool

General Managers and Managers

Longer term performance of business outcomes

Roy Hill use of control charts

Real Time Statistical Process Control

We don’t have shift production targets.

We don’t report excuses.

We investigate what really cause performance changes.

This enables us to improve our understanding and assumptions

What is different

Real Time Statistical Process Control

Innovation in action – Remote Operations Centre

11

Technology used to gather, validate & report

real time & near real time operational data to support & drive key operational decision

making

ROC centralises asset management practices & engineering disciplines to

improve reliability & productive rates of

equipment across site operations

Maximising throughput is the objective of the ROC,

not site operations

This drives a fundamental change to how we

manage productivity

ROC extends the focus on planning & scheduling into the supply chain.

This provides a supplier facing approach to delivering effective

maintenance outcomes

Building a culture of innovation

Encourage & empower our people to find

better & smarter ways of doing

things

Combine cross industry methods, technology & the experience of our people to create

innovative solutions

Encourage genuine

collaboration, to share knowledge & experience to foster innovative

thinking

9

Thinking culture, focused on productivity

Production constrained by 55Mtpa port allocation, so

innovation key driver of margin focused business

Innovative thinking drives

business & productivity

improvements & cost optimisation

Embrace technology as a core element to

deliver 55Mtpa of iron ore to our

customers competitively

7

THANK YOU