Leadership

Case Study Of Nickel Smelter: Profit Bolstered During Hard Times

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Executive Summary

Deloitte was contacted by a smelter's manager from Ontario to assist them in reducing the weighted average cost to produce a pound of nickel and copper by 20 cents to $1.30 to cope with worldwide pressures on nickel prices. Deloitte consultant Yvan Levesque put forth three options: cut costs, increase production from its existing asset base (which would reduce overall unit costs), or do both of which a middle path was selected. During a worker's strike, with management running the plant at 65-70 percent capacity, with roughly one-quarter of the manpower, Levesque and his team moved in to document and reconfigure the work while management ran the show. The team analyzed the backlog, and the critical activities required to maintain each major piece of equipment. They figured out what the plant needed after the strike ? the appropriate skill sets, job descriptions, the metrics to judge performance ? and recommended the work itself be re-configured. The team employed the same approach in other areas of the smelter, with impressive results: An overall cost saving of $10 million per year. The main challenge was to consistently demonstrate the improved roaster furnace output increase on a consistent basis from 30-32 tonnes per hour of material to 35-37 tonnes. Moving beyond symptoms to deal with the root cause of a problem brought the solution into focus.

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