PIP was engaged to optimise capital expenditure on major Greenfield iron ore development project during the pre-feasibility study. The project was for a large scale operation in a developing world context, where major new port and rail infrastructure would be required to support the new mine operation and the export and shipping of the iron ore. The goal of the prefeasibility study (PFS) was to develop an option to produce a large-scale output for a positive project NPV from the identified resource. The project design or base case to achieve these goals is only determined at a conceptual level in the previous phase of studies, thereby making the study of alternatives of critical importance.

Using NPV as its guide, the PIP ROCX process identifies the drivers of value and then systematically identifies, prioritises and assesses ways to reduce capital, risks and operating costs, and to increase revenue and time-to-first-profit.

The main objectives of the PIP team on this project at prefeasibility stage (PFS) were twofold:

1. Systematically conduct a comprehensive early stage assessment of design and technology alternatives for the operation in order to maximise the project NPV and lead to a set ‘base case’ design for future study phases. This involved excluding options that were not commercially viable. (See Chart One.)
   
   This phase included ‘macro’ options which had fairly significant NPV effects and downstream design implications as the optimal production tonnages for the mine, as well the products produced and the process flow sheets.
   
   Several new technologies were also assessed to determine their NPV impacts and the likelihood of technical readiness for the start of mine operations. Some of these technologies such as tubular modular track, continuous miners and regenerative conveyors have high value-adding potential.
   
   
2. Drive the commercial evaluations and capture technical evaluations of the ‘base case’ operational design including assessment within the areas of rail, port and mine to produce an ‘optimised case’.
   
   This phase included mine to port simulations on product flow as well as NPV impacts of the freight strategies.

A more systemic advantage of having the PIP team in place was the benefit to the integrated planning on the project – by eliminating the functional silos that can sometimes exist. Individual experts and managers for different functional areas were brought together to communicate not only the options under consideration in their area but also the options under consideration in other areas that may impact their own planning and require flexibility of design in their area.

The ROCX methodology involves steps which apply at each design stage not just at PFS stage (business case through to detailed design) with the steps being applied with increased level of detail in the later stages of the design compared to the early stages. These involve:

1. Identifying the levers which drive NPV.
2. Determining the range of NPV impact each lever could have.
3. Generating ideas on ways to reduce the downside impact and increase the upside impact of each lever on NPV.
4. Stress testing the viability of the ideas – starting with those with the highest ‘value:ease’ to focus efforts on the highest potential impact ideas first.
5. Systematically refining the strategy and design as the viability of improvement ideas firms up.

At a conceptual level the process systematically reviews each lever to drive the NPV outcome. For further information on the ROCX methodology, please contact PIP for our article on our ROCX methodology.