Project Management Institute

Frozen Assets

A Diamond Mine Project Team Had To Navigate Subarctic Territory To Strike It Rich

2017 PMI®

Project
of the
Year

FINALIST

BY TEGAN JONES

The Gahcho Kué diamond mine in Canada's Northwest Territories

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PHOTO COURTESY OF DIAMOND PRODUCERS ASSOCIATION

Diamonds are forever. Diamond mines are not.

Each mine has a set carat count it's projected to produce in its limited lifespan. And how quickly a mine can ramp up production plays a large part in defining its long-term profitability.

The Gahcho Kué diamond mine, located just below the Arctic Circle, is projected to produce 54 million carats over its 12-year lifetime and contribute CA$6.7 billion to the Canadian economy.

But to maximize ROI for its owners, De Beers Canada and Mountain Province Diamonds, the mine had to start production on schedule. And the project team had to overcome a blizzard of challenges to keep the project on schedule. It had to navigate hundreds of miles of deadly ice roads, extreme weather conditions and surprise schedule setbacks—all while meeting strict environmental and safety standards.

“We want people who buy our diamonds to know that we've been responsible, both in terms of safety toward people and also in terms of our stewardship of the land, so they can wear that diamond with pride,” says Kim Truter, CEO, De Beers Canada, Calgary, Alberta, Canada.

Located deep in Canada's Northwest Territories, 280 kilometers (174 miles) northeast of the region's capital of Yellowknife, Gahcho Kué was built in one of the world's harshest environments. With winter temperatures averaging minus 29 degrees Celsius (minus 20 degrees Fahrenheit), project plans had to revolve around the region's weather.

For instance, any outside tasks had to be completed before temperatures dropped so low that equipment could no longer function properly. If work had been delayed and was stretched into the coldest months, shifts would have needed to be shortened to keep team members from spending too much time outside, says Allan Rodel, PMP, head of project and now the general manager of Gahcho Kué for De Beers Canada in Yellowknife.

“Imagine working in minus 40 degrees Celsius [minus 40 degrees Fahrenheit]—you cannot work for extended periods in that environment,” Mr. Rodel says. “So it ends up meaning that you have extended person hours on-site. That then drives costs. So the quicker you can get the project safely completed in the right amount of time, or better yet, even early, you then drive your budget down.”

“Missing the ice road would have meant adding 10 months to a year to the project schedule.”

—Guy LeClair, Hatch, Montreal, Quebec, Canada

On the flip side, most supplies can be transported only in the dead of winter, after the ice on northern lakes becomes thick enough to hold heavy trucks. Specialized engineers measure the ice in different areas, and when it's 3 feet (0.91 meters) thick, the first light loads can be sent up the road. As the ice grows, even heavier loads—up to 45 tons—can be shipped. To stay on schedule, the Gahcho Kué team had to plan logistics carefully, making sure materials were shipped as soon as the roads were ready, says Mr. Rodel.

“The winter road is open between six and eight weeks of the year,” he says. “That means your main logistics campaign has to take place within that time frame. There's really limited space for error.”

Supplies that weren't delivered on the 420-kilometer (261-mile) ice road likely wouldn't make it on-site until the following year, as the site could not accommodate large shipments of air freight, says Guy LeClair, managing director of minerals for Hatch, the company that managed planning and execution for the project.

Hidden Gems

December 2013: Land use permit issued and work begins

November 2014: Airstrip operational and permanent camp installation complete

March 2015: Concrete foundation construction begins for processing plant

May 2015: Structural steel construction begins

January 2016: Emulsion plant completed

May 2016: Truck shop and processing plant completed

June 2016: First diamonds mined

August 2016: Ramp up to full production begins

March 2017: Commercial production begins

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From left, Kim Truter, Allan Rodel, PMP, Guy LeClair and John Bryant

PHOTO BY GERARD YUNKER

“There are very few projects around the world in the mining space these days that get delivered on time and on budget.”

—Kim Truter, De Beers Canada, Calgary, Alberta, Canada

“Missing the ice road would have meant adding 10 months to a year to the project schedule,” says Mr. LeClair, who is based in Montreal, Quebec, Canada. “It would have destroyed a lot of value for the owners by pushing revenue back by that period of time.”

UNDER PRESSURE

To identify and mitigate any logistics issues before they pushed the project off track, the team relied on well-defined risk management processes. It maintained an active risk log that outlined the top 20 to 30 upcoming issues and developed mitigation measures to address potential consequences. The team reviewed the highest priority items in weekly trend meetings, Mr. LeClair says.

“That's a living process,” he says. “You don't do that once and put it in a drawer. You update it as information becomes available throughout the life cycle of the project.”

Thorough risk management also helped the team manage a major surprise that threatened to sink the project schedule: Six months before construction was scheduled to begin, the main contractor pulled out of the project.

“After the initial panic was over, we realized that we had to change strategies completely,” says John Bryant, senior project manager, Hatch, Scottsdale, Arizona, USA. “It was too late to go back to a single contractor, so we elected to go to discipline-based, commodity contractors and break out the project accordingly.”

The project team was able to react quickly because it had created a very detailed construction plan. It outlined where specific work packages integrated with engineering and procurement, so that the team understood what dependencies would be impacted by the change. Paired with a construction simulation tool, this plan made it possible for the team to assign work to a variety of vendors without throwing the project into chaos.

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TALENT SPOTLIGHT

Allan Rodel, PMP,

head of project; general manager, Gahcho Kué mine, De Beers Canada

Location: Yellowknife, Northwest Territories, Canada

Experience: 18 years

Other notable projects:

■ The Angolan Mulepe project, completed in 2012, included resource evaluation, resettlement and compensation, the construction of a sampling facility, and the feasibility and engineering of a 7-metric-ton per year mining complex. Mr. Rodel was the senior project manager.

■ The AK06 mine feasibility and early works program, a project in Botswana completed in 2008. Mr. Rodel was the senior project manager.

Career lesson learned:

“Fully understanding the local conditions for both the project phase and the operational phase will ensure you build it right.”

Using lean boards also helped the project team think fast and stay on track in spite of this setback. For instance, the team conducted daily meetings in front of a whiteboard that listed upcoming tasks. This approach helped the team quickly identify key action items that needed to be completed every day. Doing this also reduced the amount of time the team had to spend rehashing project details and helped everyone stay focused on next steps.

“The lean board allowed each of the disciplines to be able to talk to each other straightaway and hand off needs and decisions immediately,” Mr. Bryant says. “That process really does allow you to mitigate risks in a timely fashion and ensure good outcomes.”

Having a common project management language also helped the team respond quickly and efficiently. Drawing on good practices from PMI's A Guide to the Project Management Body of Knowledge (PMBOK® Guide) saved time up front by giving everyone a structured approach to start from.

“You're not spending time trying to develop a new system,” Mr. Rodel says. “A system does exist, and you've just got to make sure that your project execution plan has a full array of the functional requirements to execute the project.”

Clear processes that streamlined logistics and kept the project on track also helped workers on-site focus on safety. Because the construction team received plans, work products and supplies on schedule, it didn't feel the need to skip steps to make up lost time.

“If materials are late, if engineering is incomplete, if the equipment that gets to site is not the right equipment, construction crews will be thinking about workaround solutions rather than focusing on safe planning of the work,” Mr. LeClair says.

The team's disciplined project management approach helped it deliver a predictable outcome—and a strong ROI—in an unpredictable environment, says Mr. Truter.

“There are very few projects around the world in the mining space these days that get delivered on time and on budget,” he says. “So if you can have a track record of doing that consistently, you have created a competitive advantage and therefore a strategic advantage.”

SHARE THE WEALTH

How the team collaborated with the local community was another key factor that fueled the project's success. To make sure the project was meeting the requirements of indigenous stakeholders in the Northwest Territories, the project team created impact benefit agreements with six communities.

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“After the initial panic was over, we realized that we had to change strategies completely.”

—John Bryant, Hatch, Scottsdale, Arizona, USA

The Gahcho Kué ice road. At left, the facility's processing plant

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As a result of these agreements, the project team established an environmental monitoring agency that included community members. The agency met quarterly to discuss how the mine project was progressing and address any stakeholder pain points, such as concerns about how the mine would affect the local environment and the use of the land. But the on-site team didn't stop there. It also added one of the community members to observe operations on-site on a daily basis.

“So when the environmental department goes out and does water samples or goes in and inspects land-use permit requirements or water license requirements, they're there with us,” Mr. Rodel says. “They would, on a firsthand basis, be able to see in the field how we're treating the land, how we're abiding the requirements of the land-use permit and the water license.”

The project also provided economic benefits to communities across the Northwest Territories. Whenever possible, the project team spent money in the region, helping to build capacity that will last into the future within the workforce as well as among northern businesses. Through training and progressive development, the project aimed to help people, particularly from indigenous communities, gain marketable skills that they will be able to carry with them after the mine closes in 12 years.

“We've got several professional development programs for training metallurgists, engineers, geologists,” Mr. Rodel says. “We are sourcing those scholars where we can out of Yellowknife and the surrounding areas.”

On an ongoing basis, the mine aims to spend at least 60 percent of its operating budget with local businesses ranging from fabricators to caterers. And in its first year of operation, that amount reached 71 percent. This level of investment is helping northern companies grow so that they can compete against more established businesses in the south.

“That is a lasting legacy we can leave behind,” Mr. Truter says.

Ultimately, the team was able to ramp up production two months early—and exceeded the mine's 2016 carat projection by 60 percent.

“This project was delivered safely, on time and under budget, in one of the harshest operating environments in the world,” Mr. Truter says. “It's a testament to very good project management and very good project leadership.” PM

Lights, Camera, Action!

Check out behind-the-scenes videos of this year's PMI Project of the Year finalists on PMI's YouTube channel.

Call for Awards Nominations

Honor project excellence in 2018. Visit PMI.org/Awards

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

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