BHP Billiton Diamonds Inc., Company of the month - BHP Billiton Diamonds Inc.

Manufacturing in Action, Source : The Manufacturer US

The jewel in the north

The EKATI Diamond Mine is Canada’s first-ever and has presented BHP Billiton Diamonds Inc. with a series of major challenges, both environmental and in processes. Richard Weishaupt and Charlie Deluca tell Ruari McCallion how the company has met them

When businesses complain about a harsh economic or commercial climate, they should spare a thought for the people who run the EKATI Diamond Mine. It’s located about 190 miles (300 km) northeast of Yellowknife, in Canada’s Northwest Territories, and around 125 miles (200 km) south of the Arctic Circle. Still air temperatures drop below minus 40 for days at a time and the wind-chill factor can take it all the way down to minus 60 degrees Celsius, or minus 76 degrees Fahrenheit. At those temperatures, metals become brittle; gas-powered engines give up the unequal struggle; exposed flesh will freeze in seconds and stick to metal. It’s a wonderful place to witness the Northern Lights, if the mucous membranes on your eyes don’t freeze first. While there is no day in the year when the sun doesn’t actually rise, it has over 20 hours of darkness in each 24-hour period during December and January. The tundra could never be described as warm, even in summer, but that doesn’t stop locally-adapted, and insatiably hungry, mosquitoes from flourishing. It really isn’t a welcoming place. Natural diamonds occur in concentrations of less than one part per million. As they can be produced by industrial processes, the question has to be asked: Why bother digging diamonds out of the ground at all, especially in such extreme conditions?

“Ask your wife or your girlfriend which she prefers: real diamonds or one of the other things that are supposed to look diamond-like,” says Richard Weishaupt, business improvement manager for BHP Billiton at the EKATI Diamond Mine. “The inherent value of diamonds is that they are unique; they’re a completely natural product.”

Diamonds aren’t just pretty; they have a lot of commercial applications, also, but the main outlet for EKATI’s output is the jewelry market. Part of the reason is their purity: EKATI supplies four percent of the world’s diamonds by volume, and six percent by value. Consider the facts behind that statement; there isn’t an auto plant anywhere in the world that has production at that level, not in Detroit, not in Cologne, not in Toyota City in Japan. Some polished diamonds are marketed by Point Lake Marketing Inc., a subsidiary of BHP Billiton Diamonds Inc., under the trademark Aurias or CanadaMark brand names and all of them are graded as SI2 or better. They have no flaws visible to the naked eye, so the light is reflected and refracted purely, giving a brilliant appearance that takes the breath away.

So the outstanding quality makes EKATI diamonds very attractive, and the circumstances made the commercial exploitation attractive, also. Diamonds are incredibly rare, so rare that it’s almost miraculous that they were ever found in the first place.

EKATI’s yield is about one million to one, which makes it very productive indeed. Which is just as well: deciding to invest in even such a promising prospect was not to be undertaken lightly.

“Diamonds are pretty elusive,” Weishaupt says. “And, once they’re found, they may be low value. Our pipes, and most Canadian pipes, have quite a high concentration and they’re quite high-grade pipes, but high-grade doesn’t automatically equate to high value. Individual stones range from dollars a carat to thousands of dollars a carat.

The process by which diamonds form make coal and oil look like mewling infants. They’re made deep in the Earth’s crust, between 150 and 200 miles below the surface. Extremely high temperatures and massive pressures lead pure carbon to crystallize. They’re then brought to the surface through pipes of kimberlite, a particular type of volcanic rock that exploits the routes to the surface created by volcanic eruptions. Diamonds were formed millions of years ago and may date before life even existed on the planet, although the EKATI kimberlite pipe is, at 53 million years, relatively young. The dinosaurs had disappeared from the face of the Earth before the EKATI pipe reached the surface.

Kimberlite is so named because it was discovered in the 1870s in Kimberley, South Africa, which was the most productive diamond area in the world for a long time. It isn’t a uniform rock: sometimes, it’s almost as hard as the surrounding granite of the Canadian Shield and at other times it’s so soft as to be almost mud. It’s found underneath the calderas of extinct volcanoes and the Canadian heartland has been so thoroughly glaciated that the uneducated eye wouldn’t even know there has ever been any volcanoes there at all. Charles Fipke, a geologist from British Columbia, knew perfectly well that there had been volcanoes and he started his search for diamonds in 1981, following the trail of Ice Age glaciers. He and his crew were looking for trace minerals, including garnets, olivines, and chrome diopsides, which indicated the presence of kimberlite. He founded Dia Met Minerals Ltd. in 1983, to fund exploration in the Lac de Gras region. In 1990, Dia Met and BHP Billiton (then BHP) signed an agreement to fund a larger and more aggressive prospecting effort. A year later, after 10 years in the wilderness and working with fellow geologist Dr. Stewart Blusson, they found their first diamonds, beneath 400 feet of rock under Point Lake. That first discovery looked very promising: it yielded 81 diamonds from a 59 kilogram core sample, and when it was made public, it triggered off the greatest staking rush ever in North America.

EKATI Diamond Mine is the focal point of BHP Billiton’s claim, which covers an area of 344,000 hectares, which is well over 800,000 acres. The company has discovered 154 kimberlite pipes in its claim block; most of them are overlain by small and relatively shallow lakes. Extraction is by a combination of open-pit and underground mining, which is expected to enable the mine to extend its life for some years after the open-cast sites are exhausted. Known reserves at this time predict a life of 17 years, but there’s a reasonable expectation of further discoveries that will increase that by eight years or more. The pipes currently being exploited are named Panda, Koala, Koala North, Misery, Fox, and Beartooth with potential development of Sable and Pigeon. Wherever the raw kimberlite is extracted from, the refinement process is relatively the same.

“Because of the variation in the density of kimberlite, we can mine some areas with free digging but, mostly, we mine by blasting,” says Weishaupt. “In the open-pit mines, kimberlite is quite a small percentage of the total material; the host rock is used for building materials. We have to move the other stuff out of the way to get to the diamonds. They have a number of unique characteristics, and we look for those in order to extract them. First, we wash, screen, and squeeze the rock, to break it up. We do that quite gently, because we don’t want to damage the diamonds themselves.” The word “gently” is relative: crushing rock in any form requires a lot of force. The primary crusher reduces the ore to a maximum size of 300 millimeters (12 inches). About 50 percent of the total material is removed through the primary stage.

“We wash, screen, and squeeze the rock because one of the characteristics of diamonds is that they are hard. They’re also heavy: They have a specific gravity of 3.53, which is heavier than average rock,” he continues. A water cone crusher reduces the ore size further, to 75 millimeters (three inches). A high-pressure grinding roll creates fines, which are less than a millimeter in diameter. This stage liberates the diamonds from the surrounding material but the concentration is still measured in the parts-per-10,000s, so there’s still a lot of material to be sifted through before the diamonds emerge. Primary and secondary scrubbers, degritters, and desanding sections remove fine waste material; heavy medium separation in a slurry of water and ferrosilicon separates heavy mineral concentrates from the crushed ore.

“Diamonds aren’t magnetic and so, in the next stage, we get rid of everything highly magnetic,” he says. “Next, we use an x-ray machine on the concentrate. Again, we’re using a characteristic of diamonds to find them: They fluoresce when exposed to x-rays, so we collect everything that fluoresces and discard the rest.” Materials other than diamonds, including calcites, which are found in the raw ore, also emit light under x-ray bombardment but they’re lighter and softer than diamonds, so they should have been extracted already. The final stage is washing through a water-grease process. Diamonds are hydrophobic. Given the opportunity, they will jump out of the water and into grease; this stage of the process gives them that opportunity. Most of the processes BHP Billiton uses at EKATI are well-established but the x-ray machine is a differentiator.

“The x-ray machine is key. The one we installed was a prototype and gives very high accuracy,” says Weishaupt. But every aspect of the process is important and, to an extent, ground-breaking. The wet high-intensity magnetic separator (WHIMS) has set new standards in efficiency, for example, and the location means that the company is one of the first in the world to use segmented rollers for high-pressure grinding, which are impregnated with carbon and flown wherever they’re needed. No other mine uses segmented rollers as extensively as EKATI.

The whole process is powered by six 4.4 megawatt (mW) diesel generating sets, giving a maximum output of 26.4 mW. At any time, four of the six will be on-line, providing 17.6 mW of continuous power. Of the remaining two, one is on standby and the other will be in service rotation. Power is distributed around the mine area through a normal power grid; engine exhaust from the generator sets is recovered and the heat is extracted through glycol heat exchangers. It’s then used to heat buildings and water used in the processes. The whole set-up is completely self-contained; mining runs 24 hours a day, 365 days a year.

The EKATI Diamond Mine took 10 years to bring to operation and represents an investment of almost $835 million Canadian. It remains the largest construction project ever undertaken north of the Canadian treeline. During construction, more than 40 million kilograms (40,000 tons) of building materials, trucks, diesel fuel oil, and vehicles were moved over the ice road that runs 300 miles (475 km) from Yellowknife to the mine.

“We began in 1998 with one open pit and the process plant. Today, we feed the plant from five different locations, including two underground mines. They’re all at different stages of exploitation,” Weishaupt says. “The distances vary: Panda is about two miles from the plant, Fox and Misery are some tens of miles away.”

The inaccessibility of the EKATI Diamond Mine is a constant factor and a continual challenge. Just in time (JIT) takes on new meaning, for example.

“There are two methods of getting supplies and material in and out of the site. The winter road runs over frozen lakes and portions of open tundra and it’s open just eight to 10 weeks a year, from January to April. The rest of the year, everything has to be flown in,” says Charlie Deluca, supply and operations services manager. “Some things simply can’t be flown in, like tires, crushers, and ground-based items, like drills. Flying is impractical, because of the weight factor. Other mines have access 365 days a year but if we don’t get what we need in on the winter road, then the mine won’t be running, so the JIT process is a bit different; it’s a longer planning process.” Ice technology has been developed specifically to manage the winter road. BHP Billiton knows exactly when it’s able to support heavy trucks and, on the other side of the coin, when time is running out. It’s best not to run the timetable too close and that reality has led the company to develop very high monitoring and maintenance standards.

“For the first three years, we didn’t really have an organized way of measuring improvement benefits. We’ve become a lot better over the last three years,” says Weishaupt. “We measure primarily in cash and last year’s performance was a hallmark. We achieved savings and improvement benefits of around $30 million Canadian. We achieved the best throughput in the process plant, our best-ever productivity and set new standards in safety.”

“The improvement represents something between five and 10 percent,” says Deluca. “It’s made up of improvements in maintenance effectiveness in the process, improved costs of mobile maintenance, and improved productivity in our giant shovel. It was moving 1,100 tons per hour; now it’s shifting 1,300. That difference in tons per day really shows up in the fiscal year.” EKATI Diamond Mine holds ISO 14001 certification, which is a good way to do business, the company believes. “Our umbrella continuous improvement strategy is named the Operating Excellence Program. It incorporates six sigma, communities of practice and business improvement methodology that is founded on six sigma.” Why has BHP Billiton placed such reliance on six sigma? And is it to the exclusion of other tools?

“We find the training aspect of six sigma very valuable,” Deluca says, but it doesn’t use it in every circumstance. “At the robust end, we use six sigma. Numerous other tools use the same principles of measure, understand, implement, and audit, but I wouldn’t call them six sigma. What we do in the mine situation is identify a project, undertake a quick investigation to gauge the potential value, and identify whether we go for a full six sigma approach or for something else. The general methodology doesn’t change but there’s a lot of difference in the resources we’ll devote to a $3,000 project initiative and a $300,000 project.”

Whichever approach the company follows, there’s no doubt it is serious about improvement and will look under every stone to find it. It undertook a best practice exercise in the control room and its first step was about getting itself aligned so that there was an immediate effect on wasted effort. The consequence was that the facility is now in better shape for a deeper project to extract even more value. A six sigma project is ongoing in Powerhouse One, and is about getting more value from the power transmitted to the mine site.

“The belts on the WHIMS machines were failing regularly,” Weishaupt says. “We got some teams together to analyze why and to review, and to determine what the solution was, going forward. As a result, we’ve got the belt times up from, for example, 300 hours to 1,200 hours.” In the WHIMS station and in the mine generally, the company has gained by moving from hours-based to condition-based maintenance. Reliability has been significantly improved in the loaders, by adopting condition-based maintenance on the gearboxes and rear differentials, the components that are under most strain when loaded. BHP Billiton worldwide has an alliance with Caterpillar, for the supply of open pit and some underground mining equipment, including vehicles.

“Finning Canada, our supplier of Caterpillar equipment, provides maintenance service. We manage the activity, we determine the planning cycle, but their people do the work,” he continues. “We use software monitoring on the truck to feed us data on tire temperatures, lubricant condition, and other crucial factors that can cause breakdowns. It gives us the capability to determine when to send people out to physically check oil levels, shimmies, and so on. It allows us to decide whether to repair, replace, or carry on.” The deployment of people for optimum effectiveness is something that engages a lot of management attention. A high proportion of the workforce is made up of local indigenous people, who have been living in the harsh Barrenlands for centuries, if not millennia, but even those who are most used to the conditions are still affected by them. The local peoples may be able to keep working in circumstances that those from further south would find intolerable, and maybe even fatal, but no-one can maintain peak performance when the still air temperature’s at minus 40 and the wind chill is pushing it down another 25 to 30 degrees.

“It isn’t uncommon for the temperature to be below minus 40 for five, six, or even 10 days at a time. The reality is that we don’t work at the same level of efficiency in the winter. Something that takes half a day to repair in the summer could take days in winter. And there are some repairs and operations we simply won’t do in the winter,” Deluca says. “We provide high-grade protective clothing but, in the winter, our people can only be outside for a maximum of 25 to 30 minutes at a time; then they have to go back into the truck for 15 minutes, to warm up again. Our people have a relatively small amount of exposure to the elements while they build a shelter and heat it, then they can work pretty effectively, year-round.”

Gas-powered vehicles simply won’t work in winter at EKATI, so all its transport and trucks are diesel-powered. The equipment has been modified to an extent to run in freezing temperatures that last for months, the diesel is manufactured as a high Arctic-grade fuel, for example; for the rest, the summer is a precious time of high activity, to ensure that everything, including water lines, heat recovery and the power system, are ready for the winter. Otherwise, they maintain, things are pretty much the same as any other major operation.

“Our supply chain is really no different,” he continues. “Tires have a certain amount of wear; drills can be used for so long. The engineering aspect is always how much we need, when, and how we’re going to get it. We’re always working on ways to improve usage and the value we can get from any product.” Drill bits would seem to be a case in point: Not only is EKATI Diamond Mine drilling through rock, it has to deal with permafrost, doesn’t it? Surprisingly, not necessarily.

“The pipes are mostly located underneath shallow lakes. They may freeze on the surface, and to quite a depth, but they don’t freeze all the way down. The water actually provides a degree of insulation, so permafrost isn’t a significant problem in the kimberlite,” Weishaupt says.

Given the harsh operating environment and the need for different standards in things like JIT and repair times, it may seem unfair to compare EKATI Diamond Mine with other operations around the world. However, the local management is actually very enthusiastic.

“We use SAP because, as BHP Billiton, we want to have a single system where people can see and obtain data about the company globally,” he says. “In SAP, we have all that global data. We can flip a switch and get all the information we need. We can get data on employment, both within our specialty division and across the company. It gives us accurate figures on our extraction levels and those of other parts of the corporation. SAP uses common Bill of Material and asset monitoring modules worldwide, commonality between cataloging allows us to see the total value of inventory worldwide.” Which is all fascinating stuff, but how exactly does it help?

“If we have a need for a replacement part, we can see instantly if there’s one available somewhere else in the company,” Deluca says. “For each item of equipment, we can access maintenance plans, for example. We can see the performance of other sites across the business. Whatever is happening, anywhere in the company across the world, can be utilized anywhere in the world. One of our key continuous improvement tools is benchmarking, internally and externally. We can monitor what’s going on anywhere and, if we see someone getting better performance than we are, we can get in touch with them and find out what they’re doing that’s different.” And information flows the other way, also. The performance of EKATI Diamond Mine in extreme conditions has provided, and continues to provide, invaluable data for other divisions within BHP Billiton, helping to raise global performance in a worldwide self-help group.

The health, safety, and environmental framework within which EKATI operates is, the company believes, unique. “Not only are we working in an extreme climate; we’re also operating in a pristine environment,” says Weishaupt. “One of our key corporate commitments is to cause zero harm to our people and to the environment. We have established sustainable community agreements with the local indigenous peoples, with four groups, altogether.” Agreement with the local communities is important and EKATI Diamond Mine is proud to have been voted among the top 100 employers in Canada for five years in succession. “Safety is our number-one priority. The environment is second and production comes in third.”

“A large proportion of our workforce comes from the local communities. We always ask ourselves: ‘are we valued within the communities? How are we benefiting the communities, our suppliers, and our stakeholders? Are we adding value?’ Those all add up to the framework within which we drive for continuous improvement,” Deluca says.

“Everything revolves around sustainable development,” Weishaupt says, continuing the theme. Mining, of course, doesn’t have a very good reputation when it comes to taking care of the environment but, from the outset, EKATI Diamond Mine has set out to be different. Part of that is a direct consequence of the legislative framework that allowed the mine to operate in the first place. In 1995, four years after Dia Met and BHP first discovered diamonds under Point Lake and three years before EKATI opened, BHP submitted a comprehensive environmental impact statement (EIS) to the Environmental Assessment Review Panel (EARP), which was appointed by the Canadian federal government. A year later, EARP submitted its report, which found that the “environmental effects of the project are largely predictable and mitigable.” It recommended that the government should approve the project to mine the Barrenlands for diamonds, subject to certain conditions, 29 in all. Some of them remained confidential, including an Impact and Benefit Agreement, signed with the Dogrib Treaty 11 Council, as representatives of one of the four groups of indigenous peoples. A socio-economic agreement was signed with the government of the Northwest Territories in October 1996 and, the following month, the Minister of the Department of Indian Affairs and Northern Development and the Prime Minister of Canada announced that the project had received full approval. An implementation protocol was signed by the exploitation companies with the Northwest Territories government and with the four aboriginal groups: the Dogrib Treaty 11 Council; Akaitcho Treaty 8; North Slave Métis Alliance; and the Kugluktuk Inuit of the Kitikmeot Inuit Association.

“We’re making a great deal of use of local knowledge in the sustainability program,” says Weishaupt. “EKATI has a water and wildlife monitoring program and we’re staying in very close touch with the community groups. One option for the closure of the mine is for the open pits to be flooded and eventually form lakes; the spoil will become mounds in the tundra, which aren’t unusual. Processed kimberlite will become wetlands and pond areas. Our goal is that the legacy we leave behind will not adversely affect us elsewhere, and that the local people will have skills and opportunities to sustain the communities in the long term.”

And the longest-lasting legacy will be the diamonds that grace the necks, wrists, and fingers of beautiful women the world over.

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