Late last week, Petra Diamonds confirmed that its “Project 2022” initiative was fully operational at both mine sites and the group level.
This milestone, coming in the face of recent output disruptions and the suspension of the company’s production guidance following the outbreak of COVID-19, is worth a mention.
When announcing Project 2022 in July 2019, Petra said the initiative was targeting an initial $150-200 million of free cashflow over a three-year period from the company’s 2019 financial year (year ending June 30, 2019) to its 2022 financial year (year ending June 30, 2022).
An internal project team, led by former Cullinan diamond mine General Manager, Juan Kemp, was established to identify and drive these efficiencies. Petra also appointed Partners in Performance, a global management consulting firm, to support Kemp and the project team.
The focus of Project 2022 is mainly on improving throughput at the company’s operations – which includes the Cullinan, Finsch and Koffiefontein mines in South Africa and the Williamson mine in Tanzania. Cost efficiencies, strategic sourcing and one-off initiatives are also included in its remit, all of which are likely to be handled at the group level.
In the interim update at the end of last week, Petra said the work to date had entailed a structured assessment of the value drivers at each mine site.
It said: “All ideas are evaluated and identified initiatives are systematically structured with timelines, enablers and project plans for each.
“The implementation of the identified initiatives was firmly on track but has been significantly interrupted by the COVID-19 lockdown. When operations return to full capacity, focused steps will be taken to continue the initiatives to ensure the delivery of the expected benefits.”
While revenue fell in the nine months to the end of March 2020, Petra said production rose 2% in this period to just over 3 Mct. This demonstrated “the delivery of significant throughput benefits realised through the implementation of Project 2022, offset by the disruptions to production relating to Eskom load shedding during Q2 FY 2020 (December quarter of 2019) and the COVID-19 lockdown measures towards the end of Q3 (March quarter of 2020)”, it said.
In a February 2020 update (reviewing the six months to the end of December 2019), the company said Project 2022 remained on track to deliver significant cash flow generation, reaching an annualised rate of $50-80 million.
It added: “However, the operational cash flow benefits are being eroded by a weaker diamond market, due to the outbreak of the coronavirus, which has served to significantly reduce activity across the pipeline.
“In light of this continued market weakness, coupled with the impact of adverse product mix, the delivery of Project 2022’s cumulative cash flow target is expected to be delayed, resulting in the $150-200 million being revised to $100-150 million by June 2022.”
Despite this setback, in the six-months to the end of December 2019, Petra achieved a record half year of run of mine production – 7 Mt treated and 2.07 Mct recovered – as part of the Project 2022 efforts.
Specific ideas considered under Project 2022 within its mining operations include the shrinking of shift changes to increase the number of productive hours on LHDs by changing the blasting time and ensuring shift handovers happen efficiently; appointing a contractor to load over the weekends; improving LHD cycle time by reducing delays from refuelling, operational delays (eg large boulders) and unplanned maintenance; and implementing a new shaft shift structure to increase winder operating time and reduce the amount of time the LHDs have to stop loading due to full underground silos.
These mining ideas are complemented by a set of ideas in the plant, the company said.
This includes the optimisation and redesign of high-pressure grinding roll crushers; refurbishing and redesigning the rolls so they crush recycled material more effectively and reduce the recycle load of the milling circuit. This would allow a higher proportion of run of mine ore to be fed into the mills, it said.
The company also wants to develop best practices for operation of the mills; improving automated control and standardising operating procedures to allow for a more consistent operating performance and a higher overall feed rate.
On top of this, Petra is looking into accelerating its processing of historical high value “red tailings” to fill plant capacity.
