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Engineers take an entrepreneurial edge

By IAN ROSS Engineers in Xstrata’s Process Support group are not just in the mining business, they’re also a profitable business.

By IAN ROSS

Engineers in Xstrata’s Process Support group are not just in the mining business, they’re also a profitable business.

The entrepreneurial spirit that catapulted Mick Davis and Xstrata from relatively obscurity to one of the world’s biggest miners is being applied right down to its individual business units.

Edgar Peek, superintendent of extractive metallurgy at Xstrata’s Process Support Group, explained the new organizational model to members of the Canadian Institute of Mining, Metallurgy and Petroleum in last January.

When Xstrata acquired Falconbridge in 2006, new ownership demanded each business unit perform almost as its own stand-alone, sustainable entity, delivering ‘shareholder value’ on its own.

Located in the former Falconbridge Technology Centre, the Sudbury Process Support team is only a small 50-60 employee group within Xstrata’s global mine and mill holdings.

But it’s regarded as an equal and autonomous unit within the greater structure.

As a consultancy agency, the engineers provide worldwide technical support for Xstrata’s greenfield sites and existing operations in 18 countries.

The four close-knit engineering disciplines in the Sudbury facility provide expertise in process mineralogy, process control, extractive metallurgy and materials technology. It’s a mix of highly-skilled expertise in plant operating skills and in-depth knowledge of milling and metallurgical operations.

“But the new dimension is we have to be highly entrepreneurial,” said Peek, a Falconbridge and Xstrata engineer for 12 years, “It’s a different accounting and accountability structure.

“We are an independent operating company with its own board of directors and its own reporting structure into Switzerland (Xstrata headquarters).”

During the lean years, the mining industry under-invested in technology and exploration. Now there’s cost pressure and delays in trying to meet demand.  In industry vernacular, value creation and risk mitigation by using technology, is in high demand.

Peek said some problems, such as troubleshooting computer networks, can be solved at a distance in Sudbury. But personal interaction and human contact is always an important aspect of their business and that means plenty of travelling.

That’s important because under the new way of doing business at Xstrata, mine and plant operators aren’t forced to work with the company’s consultants. Outside specialists can be hired, if they so choose.

“We know them and they are an existing client base, but Xstrata operations don’t have to work with us.”

Under those ground rules, it means each business unit must be a “viable, sustainable, independent business.”

But it’s a two-way street. As a technical business, the Process Support Group has free reign to offer their expertise and secure work outside of the Xstrata chain to fund their own technology initiatives.

“We use the word sustainable,” said Peek. “We want to pay our way.”

“There’s no corporate funding to go out and study or invent something new.”

When working with outside companies, the group is obligated to respect a client’s proprietary technology and keep trade secrets if requested.

“We have our own legal and confidentiality agreements that we sign on a contract,” said Peek. “We act no differently than an engineering company hired by a mining company.”

There’s also opportunities to work with other industries and pick up new ideas that can be applied elsewhere.  As well, their own processes and inventions can be applied on outside contracts.

Peek said last year there was an 85 to 15 ratio of in-house Xstrata work to outside customers.

All clients, including Xstrata, are expected to pay full market rate. “We do not give preferred rate to internal customers because that would be defeating the market mechanism,” said Peek. 

www.xstrata.com/corporate/commodities/technology