Anglo American is one of the world's leading mining companies, with high-quality assets and natural resources spanning bulk commodities such as iron ore, manganese, metallurgical coal and thermal coal; to base metals such as copper and nickel; to precious metals and minerals, including platinum and diamonds.
Hatch cut its teeth with Anglo American in the company's platinum business. In the early 1990s, Hatch worked with JCI Platinum (now Anglo Platinum) to apply its furnace technology to upgrades of its operations in Africa. Projects to upgrade two furnaces at JCI's Waterval facility helped to nearly double the original power capacity. The successful projects cemented Hatch's relationship with JCI and, subsequently, Anglo Platinum.
Today, Anglo American is a global mining powerhouse employing over 100,000 people around the world. The company's Supply Chain transformation program — initiated by CEO Cynthia Carroll — was designed to enable Anglo American to leverage its massive scale across business units to improve quality, reduce delivery lead times and reduce the overall cost of projects, among other objectives.
One of the first steps in implementing this program was to prequalify engineering, procurement and construction management (EPCM) suppliers. Anglo American selected only three or four of the most qualified EPCM companies in each of its major operating regions, which include Africa, South America, Australia and Asia. To determine the list, EPCM providers were evaluated against the following criteria: a demonstrated track record of excellence in safety; project delivery and innovation; a substantial resource base; best-in-class systems; effective low-cost country sourcing capability; and a willingness to engage in a collaborative partnership.
Hatch is the only company to qualify globally for Anglo American's program. And for both organizations, the designation is an important step forward in an increasingly deep relationship. Over the next seven years, Hatch will provide EPCM services for more than 20 of Anglo American's major projects — totaling about US$17 billion in capital expenditure.
These include metallurgical and thermal coal projects across Queensland and New South Wales; port and rail to support the export of coal from Australia; and, in South Africa, ten platinum projects as well as work for Kumba Iron Ore, the fifth-largest iron ore producer in the world, 65 percent owned by Anglo American.
The evaluation process to become an EPCM provider involved not only written and oral responses, but on-the-ground teams that inspected project performance and verified that organizations actually had the services, procedures or tools they claimed to have.
While this new qualification can be viewed as a strong endorsement of Hatch's performance, it is also a graduation of sorts to the next level of relationship between the two companies. This robust affiliation has already proven to be beneficial to both sides. Many people in both companies have worked on several projects together. This has built a strong degree of respect for each other regarding roles and responsibilities, each organization's capabilities, and the expectations of combined project teams. This understanding makes both companies more efficient because it nurtures a culture of continuous learning and rapid knowledge transfer as teams move from one project to the next.
Indeed, the relationship between the two companies has stood the test of time in many different parts of the world. Take Anglo American's metallurgical coal business unit for example. This unit's activities are largely concentrated on the east coast of Australia where Hatch has a large presence. Many Hatch professionals have worked on Anglo American projects there for more than a decade and are now engaged in supporting the company's goal of bringing on a mine development every two years in an effort to triple its current output levels by 2020.
The long-running relationship has allowed the two companies to align organizational structures and execute with integrated project delivery teams — an approach that is quite different from a conventional EPCM model.
Forming relationships across all levels provides insight not only into the company's corporate governance needs but also its operational realities. One example is the joint commitment to safely deliver projects with a zero-harm outcome. Both companies are well-aligned on what has to be done to achieve such an important target.
Maintaining this close alignment will continue to be a top priority as Hatch moves forward in carrying out the responsibilities associated with its global appointment, the continuation of which is governed by very strict key performance indicators. Performance is closely related to alignment, and Hatch's involvement in the Supply Chain transformation initiative is an excellent example of how a mature relationship and approach to managing and executing projects can deliver a mutual benefit.