Xstrata’s project pipeline is the product of many years’ planning and preparation as projects are nurtured through numerous approval stages, feasibility, environmental and social studies. A vital component of the extensive feasibility and planning process is to eliminate or mitigate the risks involved in each individual project and the cumulative risks across the pipeline, including through conducting extensive detailed designs early on, realising potential synergies between projects, optimising sequencing and ensuring that the requisite skills and equipment will be available to avoid expensive over-runs or delays once each project has been approved.
The entrepreneurial spirit we foster throughout the Group is clearly evident in the approach our management teams have taken to de-risking our growth pipeline. At Xstrata Nickel, a modular approach has been adopted at the Koniambo project to use best value engineering expertise and minimise the risks of additional on-site activity in constructing a power plant and metallurgical complex. Xstrata Alloys and Xstrata Zinc are using proprietary technology in their development projects to optimise the cost performance and scope of metallurgical operations. Xstrata Copper signed a strategic alliance with Bechtel to secure the skills and personnel required to deliver its major growth projects currently in development and, together with engineering partners, developed a standard concentrator design to fast-track the construction and delivery of the concentrator infrastructure required at the projects currently being developed. At each of our projects, we have engaged communities early in the process to address any areas of concern from the outset and to work together with community members to deliver sustainable benefits from our presence in the region, with the ultimate aim of maintaining a social licence to operate.
The decentralised management structure that is a core differentiator of Xstrata, in my view, underpins our entrepreneurial approach to project execution, just as it has in our day-to-day operations and approach to M&A. Our businesses are able to adopt innovative solutions to specific project challenges and respond more nimbly to local issues, unencumbered by the constraints imposed by a single, rigid approach to project development and the limited resources and capacity which often befall centralised project teams. Once proven, innovative ways of responding to particular risks or technical issues are widely disseminated and shared across the Group to ensure that all of our businesses enjoy the benefits of successful innovation. Under our structure, projects are developed by the same commodity business management teams that will eventually be responsible for running the operations, ensuring maximum accountability throughout the process and enabling operational management to develop longer term, more strategic relationships with key stakeholders.
