Bechtel’s new value proposition is to offer mining customers a single point of accountability with direct hire integrated EPC

Ailie MacAdam, new President of EPC giant Bechtel’s Mining & Metals division since November 2020, gave an insightful keynote presentation entitled A new model for copper projects in a world of higher expectations at the CRU World Copper Virtual Conference 2021 this week – focused on how it is meeting the challenge of increasing copper demand in a way that ties in with customer expectations in project delivery and sustainability but leveraging its expertise gained in sectors like energy and infrastructure to bring new levels of certainty to complex large mining project builds. And reaching progress levels with the energy transition to renewables and water use efficiency that mining customers now expect.

Ailie MacAdam, President Bechtel Mining & Metals

MacAdam stated: “Despite the global challenges we are facing, we are at an exciting inflexion point in our industry and I believe that Bechtel has a vital role to play in ensuring that we collectively meet the expectations of a world that is depending on us. Beyond the somewhat predictable and cyclical nature of an industry, we are in the midst of an energy transition that will likely increase the demand for our commodities, particularly copper, for an extended period. Bechtel is all in, so to speak, on the energy transition and seeking ways to make our world sustainable and beneficial for local communities.”

So what does success look like in Bechtel’s world of project delivery to meet those new and higher expectations? MacAdam says Bechtel has been working hard since 2015 to understand what its customers and stakeholders will expect when high levels of copper project activity return. “Past business cycles have delivered many lessons learned about how to structure and execute large mining projects. Innovation, capital efficiency and execution have been pillars of our business strategy since 2015 as we sought to implement the best practices and discipline that have become increasingly important in the last 20 years. Safety, schedule and budget receive intense scrutiny from shareholder, authorities and communities and we sought to raise our game in each of these areas to maintain the high standard that our company is known for.”

This means she said delivering technologies that improve the quality of its services and ensure that its customers investments are reliability and efficiently placed and that Bechtel project delivery is safe and predictable. With the objective of integrating all of the tools that make this level of performance possible, Bechtel is in the midst of implementing the largest investment in it’s history – the Digital Enterprise Program. “That will tie all of our tools, work processes and procedures together to make us a more efficient and agile builder. Our customers are seeking the same level of extensive digital transformation in the design and construction of their own facilities, to include automation, remote control of operations and vast data collection. We are responding to be certain we are building state of the art facilities.” Its Copper Centre of Excellence based in Santiago, Chile is a team of experts that evaluate and apply leading edge technologies and ensure that the company is responsive to the design requirements of each project.

But she argues that safety and quality were enough, and if that was the case Bechtel could say that success is within reach. “As an example our lost time injury frequency rate within Bechtel has dropped 95% in the last 20 years. We worked 23 million hours in 2020 without a lost time accident in M&M. The levels of performance that we’re able to achieve these days through training and technology were unimaginable in the turn of the century. But all of that is not quite enough. The renewed expectations of our industry are going further. Our shareholders are seeking ways to guarantee project outcomes and avoid costly surprises and our communities are expecting to be consulted and included in the success. For these reasons, we’re extending our strategy beyond innovation, capital efficiency and execution to delivery models that ensure that our company can control the outcomes of our projects and meet the high expectations that our customers have for our work.”

In Bechtel realm of engineering, procurement and construction, this leads to a direct hire, integrated EPC execution model whereby the prime contractor has all the controls and tools necessary to influence the final outcome. “Its a model that Bechtel has deployed around the world and has delivered tremendous results in key sectors including those that are already part of the energy transition such as liquefied natural gas of which we have built a third of the world’s export capacity. Success for us in an improving environment for investment means expanding the breadth and depth of our responsibilities, going beyond copper concentrators to include conveyor systems, water treatment plants, pipelines, pump stations and any infrastructure that is critical to a successful ramp up and stable operation. Although the last few years have proven to be intensely competitive and where risk transfer has sometimes been ill conceived, we anticipate that where there is truly a structural supply deficit of 9 million tonnes or more of copper within a decade as some market analysts conclude, the resources available will quickly become strained and those companies with the ability to secure globally will become lifelines to ensure that projects are executed as sold.”

As a leading global EPC contractor, MacAdam says Bechtel believes that executing as sold is its primary function for the customers that choose it by offering the best professionals in the industry, processes and procedures that do not allow for gaps in oversight, and unparalleled ability to build anything, anywhere. “And when I say deliver as sold, I mean in addition to health and safety, quality, cost and schedule. I also mean deliver the social performance in engaging and providing opportunities for local communities. The sustainability, responsiveness and flexibility are just as important.”

Based on that, wow can Bechtel ensure that its mining customers value the benefits of a new delivery model? “Our response to the increasingly stringent requirements for major projects in the mining sector is to integrate, streamline and allocate risk to the parties best equipped to mitigate and deliver on their commitments. We believe our customers will value the elimination of interface risks where multiple contracts create interdependency amongst contractors and scope growth and change are common. Therefore our value proposition to our current and future customers is the following – a single point of accountability to reduce conflict between design and construction as well as change in the field. And for those mining customers that have complex projects that aren’t equipped with their own project execution organisation, we can offer and adaptable and agile model that comprehensively addresses of their requirements.”

MacAdam said that the direct hire integrated EPC model is not common in the mining sector, but that it is standard practice in energy and infrastructure. “Our objective therefore is to bring our values – ethics, safety, quality, culture, relationships, innovation and sustainability; and our proven processes and procedures and key resources, to deliver the most challenging mining projects of the business cycle. Given the importance of sustainability in the current market environment, we’re in the process of evaluating several technologies through ongoing studies, to improve energy efficiency and water recovery in copper concentrators; and more sustainable solutions for tailings deposition and storage. The result will be lower operating expenditure for our customers and reduced environmental impact.”

She says Bechtel believes in the use of renewable energy and sustainable water supply and understands the urgency with which mining customers are seeking those elements. “As a demonstration of our commitment, we have a business line focused on water and waste water treatment and conveyance across multiple industries. And a dedicated part of our business is focused on renewable energy. We are on a mission to be cleaner, greener and safer.”

Lastly, she said the company acknowledges the opportunities it controls internally to make the organisation sustainable around the world – by increasing the diversity of its employee population and better representing the communities in which it works. “We are committed to increasing the proportion of women and other underrepresented groups in our company so we mirror the customers and communities we seek to serve. It is an internal element of our own organisational sustainability. To ensure that we are hiring and deploying a broad cross section of talent and not limiting the capabilities of our company to make an impact wherever we are in the world. Our opportunity to make an impact in environmental, social and governance is huge by virtue of being a global company working across numerous industries, we can learn and apply best practices quickly so our customers always receive best in class solutions to all project challenges.”