Rio Tinto ReviewSeptember 200908

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Rio Tinto 09September 2009Review

Bridging the Gulf

Synergy and collaborationbetween former rivals bring cost savings and efficiencies to Rio Tinto Alcan’s operations in northern Australia.

Words: John ArlidgePhotographs: Christian Sprogoe

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Rio Tinto Bridging the Gulf ReviewSeptember 200910

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Rio TintoBridging the Gulf 11September 2009Review

Once upon a time, more than one

gulf separated northern Australia’s

two bauxite mines, Weipa, on

Queensland’s western Cape York

and, 560km away across the water,

Gove, in north east Arnhem Land,

in the Northern Territory.

Weipa, a huge bauxite mine, hasbeen a jewel in Rio Tinto’s crown andthe mainstay of its aluminium groupfor 40 years, but until two years ago,the Gove bauxite mine and aluminarefinery were part of Alcan.

The two operations were isolatedoutposts astride the Gulf ofCarpentaria, facing similarchallenges of supply andcommunications and an equatorialclimate that pushed people andequipment to their limits.

Now, both being under Rio Tinto’sownership, opportunities tocollaborate and exploit synergieshave been eagerly seized.

“Both sites immediately saw thepossibilities,” explains Jo-AnneScarini, Weipa’s general managerOperations. “Just as Gove wasisolated from Alcan’s globaloperations, so the Weipa bauxiteoperation was the only mine withinRio Tinto’s aluminium processingbusiness.”

Gaining a sister mine engaged in thesame business and operating undersimilar conditions created theprospect of sharing knowledge andleveraging scale.

Jo-Anne’s counterpart at Gove, JulioCosta, also sees the logic of synergy,not only with Weipa but through aCross Refinery programme that linksGove and the two alumina refineries atGladstone, in Queensland, Yarwun andQueensland Alumina Limited (QAL).

“It is very significant for us. We havecost saving initiatives at Gove whichwe expect will bring around US$90million this year. Some of these aresynergy related and these alone willsave tens of millions of dollars.”

General manager Cross Refinery

Projects Alex Bates points out thatthe relationships have evolvedrapidly. “Immediately following thecompletion of the acquisition,information started flowing. We arenow cranking up the engine ofcollaboration on many safety andmaintenance issues.”

Communication between sites,particularly Weipa and Gove, is nowroutine at the team level andcollaboration is a two way street. Forexample, while Weipa has suppliedexpertise and business systems inareas such as cultural heritagesurveys, knowledge and skillsinvolved in rehabilitating miningareas flow the other way.

One of the big gains to date hasbeen in mine planning. For severalyears, mine planning for Weipa hasbeen carried out in Brisbane using acomputer based system designed byRio Tinto Technology & Innovation.Planning is managed strategicallyand matches available resources toforecasts of customer needs.

Gove, a smaller mine, took a lessstrategic approach, nominating agrade of ore and exploiting orebodieswhich allowed them to fulfil it.

Now Gove has been brought into thebigger system and general managerResource Development Bauxite &Alumina Laurie Hicks says theapproach has leveraged gains forboth mines.

“The global financial crisis changedthe behaviour of some of ourcustomers,” Laurie explains. “Whenthe market turned down, Chinesecustomers delayed plans to expandalumina production frommonohydrate bauxite, concentratinginstead on existing infrastructurethat utilised trihydrate bauxite.”

While Weipa principally producesmonohydrate bauxite, Gove, whichhas not exported since 2005,produces trihydrate.

“Our planners saw a synergy thatwould help us and our customers,”says Laurie. “Now, using our shipping

efficiencies, we are exportingtrihydrate from Gove and winningcustomers from competitor bauxitemines in Indonesia. It has been amultimillion dollar result for us.”

There are further synergies from thisarrangement. Yarwun and QALrefineries continue to receive highquality (low silica content) bauxiteore, and trihydrate produced atWeipa is used at QAL as a sweetener,lowering production costs there.

Improved mine planning also plays arole in another important synergyproject, cultural heritage andcommunity relations.

Unlike Weipa, Gove did not have anin house archaeologist to handlecultural heritage surveys. This is acritical function for both mines, assurveys underpin agreements withthe local indigenous communitieswho permit Rio Tinto to mine theirland.

“The work is fundamental,” observesAlan Tietzel, general manager ofGovernment and CommunityRelations. “Our business needs tounderstand and fit in with the localcommunity: the local people mustbenefit from our being there andshould share the benefits of theoperation.” For Rio Tinto, says Alan,opportunity and profit flow from this.

To assist negotiations with two clansof the Yolngu people for renewal ofmining and other leases, specialistarchaeologist Justin Shiner, whoconducted Weipa’s cultural heritagesurveys, went to Gove to applyproven techniques there.

Just as people from the WesternCape York communities wereinvolved in surveys around Weipa,the Gove Community Relationsteam, led by Tim O’Neill, invitedNorthern Land Councilrepresentatives at Gove toparticipate in a survey there.

“Six local people spaced five metresapart walk transects which aretypically a kilometre long and twokilometres wide, looking for

Previous pagePanorama of the Rio Tinto Alcan Govealumina refinery onthe coast of northernAustralia.

LeftA dozer at work on abauxite stockpilewith the refinery inthe background.

Below far leftOperators TonyStanfield and LawrieRolley examining thequality of bauxite atthe East Weipa mine.

Below leftEnvironment officerJacinta Wells inspectssampling filters usedto monitor air qualityat the Weipa mine.

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Rio Tinto Bridging the Gulf12

archaeological and anthropologicalfeatures,” explains Justin.

When discoveries are made theirlocation and nature are recorded in adatabase, building up a detailedpicture of previous occupation.

“We download this into theGeographic Information System (GIS)that we developed for Weipa, whichthen gives us detailed mapping ofthe areas we propose to mine.”

Mine planners use the resulting aerialimages to develop long and shortterm mining plans, avoiding areas ofsignificance. The plans are thenreviewed by the traditional owners.

Both Gove and Weipa draw onexpertise in indigenous employmentand training pioneered by ArgyleDiamonds, in Western Australia.

“This work is very important,” AlanTietzel notes. “Doing these thingswell gives us a reputationaladvantage. It helps to ensure thatwe get our leases renewed.”

Gove has an excellent reputation forthe quality of its regeneration,repopulating rehabilitated mineareas with native plants. Weipabelieved they could learn from thisand sent members of theEnvironment Team to find out more.Planning and Environment managerMatt Lengerich explains: “We werehaving trouble getting some types ofnative seeds to take,” says Matt.“The main difference in practice wasthat at Gove, they did not allow seedto mix with fertiliser for more thanfour hours before being sowed.

“We formed a working hypothesisthat maybe we were inadvertentlypoisoning our seed with the fertiliser,so we set up trials to test this.” Itwill take five years to build con-clusive evidence but early signs arepromising.

At the Gove alumina refinery, MartinGoodchild, the Maintenance andEngineering manager, is anotherbeneficiary of the synergyprogrammes.

He, along with maintenancemanagers from QAL and Yarwun,met to establish and share bestpractices for calciners – therefractory lined kilns in whichhydrated alumina is cooked at1,100°C to produce pure alumina.

“We found that they have the sameproblems we do,” Martin says. “Wehave been able to share ourexperiences. There is much to begained once you get those networksgoing.” Alex Bates says cost savingsare expected to reach tens ofmillions of dollars per year acrossthe refineries through reducingdowntime and heating the calcinersmore efficiently.

A safety dividend is also expectedfrom establishing a single standardfor people working in refractory linedvessels.

A similar collaborative approach isabout to be taken with washers atthe three refineries, the vessels inwhich the caustic liquor stream,central to the Bayer refining process,is cleaned for recycling.

Bauxite and Alumina’s chiefoperating officer, Chris Salisbury, isdelighted with progress: thesynergies being achieved are wellahead of plan.

“The current state of the business,where we require cost reductionsand value improvement, hasincreased the momentum ofcollaboration,” Chris observes.

“It is helping us achieve the value ofour scale. It is clear that sharingequipment, systems and ourcollective knowledge is the way tomake these businesses improve indifficult trading circumstances.”

John Arlidge is a freelance journalistand business consultant based inQueensland, Australia.

Find out more about Rio Tinto

Alcan at www.riotintoalcan.com/

RightRoger McLaughlin,mine operator, at the wheel of a lightvehicle at East Weipa.

Far rightEd Crawford carryingout maintenancework at the Gove alumina refinery.

Below rightLocal communityleader BanambiWunungmurra (left)with tug skipperGrant Barnett at Gove.

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