Codelco: cost containment plan settings contracts emphasize Andina and Salvador
Executive Chairman of the State Company, Thomas Keller, said the intention is to maintain and possibly increase savings by $ 482 million this plan failed in 2013.
“One of the most important challenges for this year on costs is to consolidate the success of 2013. Obviously, we have to keep saving of U.S. $ 482 million we achieved”.
Thus Codelco’s CEO, Thomas Keller summarized, which will be one of the axes for this year’s Draft Structural Productivity and Costs (PEPC), an initiative that helped in 2013 and for the first time in nearly a decade, the state lowering its cost of production.
The manager of this plan, Katharina Jenny explained that the experience gained after the first year of the PEPC allowed them to polish and refine other elements, all with the goal of replicating the achievements and exceed 15% in the initial goal of the plan (U.S. $ 418 million in savings) or contribute to reposition the mining in the second quartile of the industry, to achieve a cash cost (C1) placing at U.S. $ 1.63 per pound, 0.3% lower than the average 2012.
On this point, Keller predicted that this year the goal is to consolidate Codelco in the bottom of the second quartile.
Added two divisions to plan
The PEPC consists of four areas of implementation related to the increase of equipment performance and budget optimization, Jenny said.
At this level, optimizing spending on services to third parties by way of renegotiating contracts, which in 2013 was implemented on a trial basis only El Teniente, this year will be extended to two other divisions: Salvador and Andina.
The goal, Jenny said, is to renegotiate globally this year by 200 contracts, which will add to the 250 adjusted in 2013. Overall the state company has more than 4,700 agreements, considering all its divisions and headquarters.
“In the same line of services of others, this year as in the past, we have classified our contracts in dispensable, indispensable and needed, and posteriorly defined trading strategies with our partners to optimize our services,” said the executive.
She added that this process allows to apply a formula in which the services of those who can do without are removed, renegotiated rate those agreements to detect opportunities for improvement, and merge detected contracts where a synergy of activities is implemented.
Another major lines of PEPC this year is to improve the productivity of production processes and staff areas of Codelco. So Keller has emphasized himself and about it the owner of PEPC said to be a hub dedicated to such management.
“We will establish measurements of own productivity and to third-party maintenance and service activities, we will implement a model based on contractual KPI (performance indicators) and back office, we will install workshops with contractors to identify gaps that affect productivity, among other actions”, said Jenny.
Lower electricity bills
On energy the mining company already has results to display this year, as the effective date of a fixed price electricity contracts, which reduced mining exposure at marginal cost only 15% of demand in the central area, meant to it the end of the first quarter by lower spending $ 36 million.
“This area also requires management because there are contracts that leave room for optimizations”, added the executive.
Source: Diario Financiero
