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AFGHANISTAN RESOURCE CORRIDORPRIVATE SECTOR DEVELOPMENT
Detailed procurement plan for Aynak and Amu DaryaPROGRESS REPORT #1
31st March, 2012
Copyright 2012
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2
EXECUTIVE SUMMARY
• Aynak and Amu Darya represent an immediate opportunity for the Afghan economy to trigger private sector development
• Development phase of both projects are opportunities for the Afghan construction and civil works sector
• Regarding Aynak: – ~$500m could be injected into the Afghan economy during Aynak project development (20MT ROM scale),
mainly driven by construction and civil work activities (equipment, labour, consumables) – An additional $400m could also be invested in the mid-term through local companies in key sectors needed
during project development (steel structures, piping, etc.) – In the long-term, a large share of operational expenditures to manage the mine, process the ore, and operate
the power plant could be sourced locally » Efforts to develop the foundry industries and technical explosives needs to be undertaken; it is realistic
as some of these industries have been developed in similar environments (Mauritania, Algeria, etc.) » Fuel supply and management also represents a large share of activity
• Regarding Amu Darya
– ~$150m could be injected in the short-term, also driven by construction and civil work activities – An additional ~$130m could be triggered locally if pumping equipment and drilling operations are developed
in the mid-term – In the long-term, a large part of operations could also be supplied locally, as already achieved in similar
environments (Chad, Angola, Gabon, Algeria)
Once operating, Aynak mostly represents opportunities for Afghan companies able to supply consumables related to mining operations and life-support
Once operating, Amu Darya represents minor opportunities for Private Sector Development in Afghanistan
3
Once operating, Aynak mostly represents opportunities for Afghan companies able to supply consumables related to mining operations and life-support
SUMMARY - AYNAK CAPEX & OPEX PER CATEGORY
Cat.1 Cat.2 Cat.3
CAPEX
OPEX
Millions USD
Consumable
Services/Labor
Maintenance
100-150 100-150 150-250
Bubble size is proportional to expenditures
Equipment
Construction Material
450-700 400-700 1100-1600
4
Once operating, Amu Darya has marginal category II opportunities, thus representing minor opportunities for Private Sector Development in Afghanistan
SUMMARY - AMU DARYA CAPEX & OPEX PER CATEGORY
Cat.1 Cat.2 Cat.3
CAPEX
OPEX
Millions USD
Services/Labor
Maintenance
Consumable
50-100
10-20 20-30
Bubble size is proportional to expenditures
Construction Material
Equipment
150-300 200-400 100-200
AGENDA
5
1. Procurement plan approach
2. Aynak and Amu Darya projects key figures
3. List of prioritized categories
4. Zoom on technical categories to support suppliers discussion
5. Annexes • Benchmarks • Procurement plan models
6
Definition of Aynak and Amu Darya projects’ potential procurement plan
• Benchmarking industrial development generated in contexts similar to Afghanistan, in terms of industrial capability
• First insights on goods and services easily outsourced by mining and oil & gas companies in similar industrial contexts
Benchmarks of local content and induced development triggered by mining and oil & gas projects in similar industrial contexts
• Definition of the projected industrial set-up for Aynak and Amu Darya
• Breakdown of projects’ set-up by main activities / competencies (Capex / Opex)
• Sizing of the individual competencies required
1. GENERAL APPROACH
Aynak and Amu Darya procurements plans have been developed based on available information. Gaps have been covered through international benchmarks and interviews
Categorisation of the individual competencies into the 3 categories defined in the TOR
7
1.APPROACH - PROCUREMENT PLAN DESIGN
The design of both procurement plans aims to develop homogeneous categories in terms of local content approach
Services / Labor
Equipment
Construction Material
Services / Labor
Consumables
Maintenance
Development
Operations
Asset 1 Asset 2 X Asset …
• Based on benchmarks, mining operations (excluding smelting / refining activities) can generate between 50,000 to 100,000 procurement events
• Oil&Gas upstream operations can encompass between 10,000 to 20,000 procurement events
⇒ The detailed procurement plan will try to capture key subcategories (that could themselves encompass different procurement events)
Procurement plan breakdown structure
Level of detail for the procurement plan
8
During the project lifecycle, 3 milestone reviews are conducted by mining companies. CAPEX/OPEX can vary by up to 50% in the “scoping study” phase alone.
1.APPROACH - PROCUREMENT PLAN SIZING
Scoping Study
Pre-Feasibility Study
Feasibility Study
Error tolerance
100% -50% +50%
100% -20% +20%
-10% +10%
Procurement plan sizing range
9
• According to World Bank reports, the local procurement preference consists of varying
combinations of the following three elements: – Participation of citizens in
» Employment » Management » Ownership of mining supply activities.
– Extent of value add taking place locally, along the continuum of raw materials sourcing, manufacturing or production, and sales, distribution and associated services: “local sourcing,” “local content.”
– Distinction in terms of geography between the area immediately surrounding the mine—“local local” or “community content”—and at a subnational level—“regional content”, or more widely at a national level.
• Qualification of suppliers will be a continuum based on different criteria, integrating local procurement definition as well as capability and competitiveness elements
1. APPROACH – CLASSIFICATION OF PRIORITY CATEGORIES
Source: World bank report “Increasing local procurement by the mining industry in West Africa”
Local procurement definitions consist of a combination of factors to rate the value-added content captured from extractive investments
10
• Thomas Loffet, Project Manager for Oil&Gas operations (active in Mozambique, Ghana) Bolloré SDV
• R. Herrenschmidt, Former Head of BP refineries in France (Dunkerque, Lavéra), Independent Consultant
• D. Di Pace, former head of BP Group for refining activities optimization, Independent Consultant
• Christophe Du Rotois, Reservoir Engineer, Perenco • P.L. Migairou, Mining Engineer active in coal and copper, former Anglo-American • A. Dissaux, Hydrometallurgical manager, Process and Engineering – Eramet Group • J. J. Reverdy, Industrial Manager, Eramet Nickel Division
1. APPROACH – INTERVIEWS CONDUCTED
A selected number of experts have been interviewed in order to fully grasp the scale and scope of activities and estimate the size of the procurement plan
AGENDA
11
1. Procurement plan approach
2. Aynak and Amu Darya projects key figures
3. List of prioritized categories
4. Zoom on technical categories to support suppliers discussion
5. Annexes • Benchmarks • Procurement plan models
12
• In this report, figures used for the sizing of category items rely mainly on international benchmark and interviews
• CVA has done its best to benchmark similar environments in order to capture the effects on Afghanistan
– Mauritania
– Indonesia
– Etc.
• An overall cross-check of main figures has been done with available information on Aynak and Amu Darya projects
• Interviews have been conducted in order to ensure robustness of figures and selection of categories I and II
• Modifications from the assumptions drawn from available information would impact the sizing of the different categories
2.CAVEATS
13
2. 1. KEY FIGURES AYNAK - CAPEX
Aynak project should quickly present opportunities for the Aynak area in terms of labour and materials.
Power Plant
300-550
Electric line
300-550
Mining & Refining of copper
1,350-1,850
Water pipeline
20-40
Equipment
1,000-1,500
Labour/Services
650-950
350-550
Material
CAPEX breakdown per asset ($m)
CAPEX breakdown per expenditure type ($m)
69% 15% 15%
1%
33% 50%
17%
14
2. 1. KEY FIGURES AYNAK - OPEX
Operations at mine and power plant should drive the opportunities for labour, services and consumables
Water pipeline (20-30km)
Power Plant (400MW)
200-400
Electric line (300km)
5-10
Copper Mining and Refining
350-450
0-5
Maintenance (excl. Labour)
150-200
Consumables
400-600
Labour/Services
40-80
OPEX breakdown per asset ($m)
OPEX breakdown per expenditure type ($m)
53% 45%
68%
25% 7%
15
2. 2. KEY FIGURES AMU DARYA - CAPEX
Amu Darya CAPEX will be driven by the number of wells. Labour & materials will represent 2/3 of full CAPEX.
50-100
150-200
Refinery investment (Turkmenistan)
Civil works
400-750
Transportation
5-10
Refinery Oil Drilling & Production
200-400
Equipment
150-250
Labour/Services Material
100-200
CAPEX breakdown per asset ($m)
CAPEX breakdown per expenditure type ($m)
33% 66%
44% 33%
23%
16
2. 2. KEY FIGURES AMU DARYA - OPEX
Operations at refinery could represent an interesting opportunity for Amu Darya Region
Refinery
10-20
Oil Drilling & Production
90-180
Transportation
10-20
Maintenance (exc. Labor) Consumables
30-60
Labor / Services
50-100
30-60
OPEX breakdown per asset ($m)
OPEX breakdown per expenditure type ($m)
80%
10% 10%
46% 27% 27%
AGENDA
17
1. Procurement plan approach
2. Aynak and Amu Darya projects key figures
3. List of prioritized categories
4. Zoom on technical categories to support suppliers discussion
5. Annexes • Benchmarks • Procurement plan models
18
Aynak will quickly represent an opportunity for local procurement during the investment phase; an important share of operating expenditures could be sourced locally in the medium term.
3.1. CLASSIFICATION OF AYNAK PROCUREMENT PLAN CATEGORIES
Non Recuring Recuring Non-Recurring Costs (CAPEX) (m$) Recurring Costs (OPEX) (m$)
Cat. III
1,100-1,600
500-700 400-700
Cat. II Cat. I
300-500
Cat. I
100-150
Cat. III Cat. II
150-250
71%40%
14%
69%
12%
100%
Construction Material
Equipment
Services / Labor
Cat. III
1,100-1,600
31%
Cat. II
400-700
16%
Cat. I
500-700
48%
67%
93% 83%
27%
8%
Maintenance Consumables
100% Services / Labor
Consumables
150-250
Cat. III Cat. II
300-500 9%
Cat. I
100-150
4%
25% 20%
55%
18%
55%
27%
# of sub-cat. (Approximation)
(27) (14) (39) # of sub-cat. (Approximation)
(15) (12) (16)
19
3.1. PRIORITY CATEGORIES – AYNAK
Focusing on 10 priority Category 1 items and 3 priority Category 2 items, we cover more than 50% of “actionable” Capex and 60% of “actionable” Opex
Non-Recurring Subcategories (CAPEX) $m; based on lower range estimates
Recurring Subcategories (OPEX) $m; based on lower range estimates
1. Construction equipment (all sites) ~$165m 2. Civil works & concrete labour (all sites) ~$95m 3. Transportation & hauling ~$50m 4. Construction Labour – road & building ~$30m 5. Concrete ~$20m 6. Painting ~$10m 7. Electric board ~$5m 8. Pumps for plants operation ~$5m 9. Sand / stone ~$5m 10. Bitumen ~$5m
Cat.1
1. Metallic piping $70m 2. Steel structure $60m 3. Electric cable $50m
Cat.2
1. Fuel $50m 2. Spares for light vehicles $3m 3. Limestone $3m 4. Medical products $2m 5. Protection equipment $1m 6. Clothes, food and appliances $1m 7. Supplies (valve, piping, etc.) $1m
Cat.1
1. Coal $180m 2. Ammonium nitrate/explosives $20m 3. Wear parts (foundry) $15m
Cat.2
~$390m 75% coverage
~$180m 45% coverage
~$60m 60% coverage
~$215m 70% coverage
20
Amu Darya also represents a short-term opportunity for local procurement; the refinery and well operations represent a long-term opportunity for the region
3.2. CLASSIFICATION OF AMU DARYA PROCUREMENT PLAN CATEGORIES
Cat. III
100-200
Cat. II
200-400
Cat. I
150-300
Cat. III
0-50
Cat. II
0-50
Cat. I
50-150
39% 39%
12%
46%
32%
8%
150-300
49%
100%
Construction Material
Equipment
Services / Labor
Cat. III
100-200
29%
Cat. II
200-400
46%
Cat. I
48%
14%
50%
18%
41%
Cat. II
0-50
50%
Cat. I
50-150
41%
100%
Maintenance Consumables
Consumables
Services / Labor
Cat. III
0-50
38%
Non-Recurring Costs (CAPEX) (m$) Recurring Costs (OPEX) (m$)
33%
45%
22%
60%
20% 20%
# of sub-cat. (Approximation)
(20) (24) (15) # of sub-cat. (Approximation)
(20) (8) (5)
21
3.2. PRIORITY CATEGORIES – AMU DARYA
With 10 priority Category 1 and 3 priority Category 2, we cover a large share of Amu Darya “actionable” local procurement
1. Cement/Concrete $50m 2. Transportation & Hauling $20m 3. Equipment for civil works – Refinery $15m 4. Labor for civil works – Refinery $15m 5. Testing and analysis – Oil production $10m 6. Administration labor – Oil production $5m 7. Fuel & Power – Drilling $5m 8. Housing and catering – Drilling $5m 9. Environmental & Safety $5m 10. Water $3m
Cat.1
1. Operator – Drilling $70m 2. Pumping equipment $40 3. Civil works material – Refinery $20m
Cat.2
1. Fuel, power & Water – Oil prod. & Refinery $30m 1. Administration – Oil prod. $4m 2. Operators – Oil production $3m 3. Work over rig services $3m 4. Maintenance of tanker trucks $3m 5. Fasteners (nuts, bolts) $2m 6. Remedial services $2m 7. Automotive services $2m 8. Labor – Refinery $2m 9. Drivers – Oil transportation $2m
Cat.1
1. Small spare parts – Oil production $5m 2. Protection equipment $0.5m Cat.2
~$130m 80% coverage
~$130m 65% coverage
~$50m >90% coverage
~$6m >90% coverage
Non-Recurring Subcategories (CAPEX) $m; based on lower range estimates
Recurring Subcategories (OPEX) $m; based on lower range estimates
AGENDA
22
1. Procurement plan approach
2. Aynak and Amu Darya projects key figures
3. List of prioritized categories
4. Focus on technical categories to support suppliers discussion
5. Annexes • Benchmarks • Procurement plan models
23
4. KEY CATEGORIES WITH DETAILED FOCUS
Labour and raw material like concrete or metallic structures represent the largest subcategory of items that the local economy could supply. A detail on technical products is described in the following slides
• Construction Equipment • Pumping Equipment • Engineering services • Explosives • Steel structures • Piping • Tanks • Foundry • Labor requirement
24
Construction equipment will be purchased or lease depending on the type of equipment and on MCC’s choice. Optimization of construction operations will impact the number of equipment used and the total cost.
4.1. DETAILED PROCUREMENT PLAN ON CONSTRUCTION EQUIPMENT – (1/4)
• Perimeter – Mining & Processing plant – Transmission line plant – Power plant – Water treatment plant & pipeline – Roads
Category articles - illustration of product typology
• Earth moving equipment − Wheel loader, excavator… − Crawler dozer − Grader − Dragline − Scrapper, etc.
• Stakes – $100 to $200m of expenditures for
leasing/purchasing of construction equipment, utilization of machinery and transportation during the entire project.
– Potential leverage for other construction projects in Afghanistan
• Paving equipment & concrete wall equipment − Asphalt pavers − Concrete pavers − Curb & gutter pavers − Cold planers & milling machine − Tandem vibratory rollers − Soil stabilizing equipment − Concrete pumps, etc.…
10
10
Number of equipments used for each Aynak project piece (forecasted numbers based on assumptions and interviews. They might differ from MCC choice)
25
The major part of construction equipment will be for framing, wall and foundation construction.
4.1. DETAILED PROCUREMENT PLAN ON CONSTRUCTION EQUIPMENT – (2/4)
• Perimeter – Mining & Processing plant – Transmission line plant – Power plant – Water treatment plant & pipeline – Roads
Category articles - illustration of product typology
• Frame construction equipment − Tower cranes − Rough terrain cranes / Heavy cranes − Scaffolding − Aerial work plateform − Etc.
• Trucking − Medium & heavy duty trucks − Trailers − Mixer trucks − Mining truck − Telehandlers − Drills − Etc.
27
34
Number of equipments used for each Aynak project piece (forecasted numbers based on assumptions and interviews. They might differ from MCC choice)
26
Few equipment will be used for specific construction activities like transmission line of underground works.
4.1. DETAILED PROCUREMENT PLAN ON CONSTRUCTION EQUIPMENT – (3/4)
• Perimeter – Mining & Processing plant – Transmission line plant – Power plant – Water treatment plant & pipeline – Roads
Category articles - illustration of product typology
• Specific transmission line equipment − Puller tensioner − Insulated bucket trucks − Etc.
• Underground Work − Pipelayers − Tunnel mining machines − Etc.
• Other specific equipment − Heavy lift helicopter − Water truck − Explosive truck − Fire truck, ambulance… − Etc.
2
2
15
Number of equipments used for each Aynak project piece (forecasted numbers based on assumptions and interviews. They might differ from MCC choice)
27
Many diverse light construction equipment will be used on every construction site.
4.1. DETAILED PROCUREMENT PLAN ON CONSTRUCTION EQUIPMENT – (4/4)
• Perimeter – Mining & Processing plant – Transmission line plant – Power plant – Water treatment plant & pipeline – Roads
Category articles - illustration of product typology
• Light equipment − Electric generator sets − Hydraulic power pack − Jackhammers − Portable light towers − Portable air compressors − Concrete saws − Hydraulic tools − Water pumps − Vibratory plate compactors − Formwork − Etc.
28
Pumping equipment are used for many applications in multiple industries. Capabilities developed for Aynak and Amu Darya could easily be re-used elsewhere.
4.2. DETAILED PROCUREMENT PLAN ON PUMPING EQUIPMENT
• Perimeter – Lot of different pumps will be required during the
development phase as well as the production phase for Aynak and Amu Darya Project.
Category articles - illustration of product typology
• Few standard for pumping equipment in Oil industry − API Standard 610, 674, 675, 676, 68, 682…
• Stakes – More than $55m of pumping equipment for
Aynak and Amu Darya projects
• Several types of pumps exist: − Horizontal pumps − Vertical pumps − In line pumps − Submersible pumps − Slurry pumps − Etc.
• Pumps are used to create pressure or move: − Water − Air − Fluids − Oil − Cement − Etc.
29
EPCM services for big mining project are usually done by major specialized EPCM companies that integrate the activities of all contractors and subcontractors, being the single point of contact for the client.
4.3. DETAILED PROCUREMENT PLAN ON EPCM SERVICES
• Perimeter Full project scope – Engineering – Procurement – Construction Management
Category services
• Project management services − Project Management − Contract Management − Corporate Governance / Insurance − Project Audit / Review − Project Controls − Etc.
• Stakes – 150 to 250 million dollars from preliminary study to
plant commissioning – Indivisible package of services – Great expertise required
• SNC Lavalin • Jacobs • Fluor
• General construction services − Construction Management − Etc.
Several major EPCM companies for Mining / Oil industries
• Amec • Ausenco • Etc.
• Operation & Technical services − Mechanical & Electrical engineering − Civil/Structural engineering − Process engineering − Instrumentation engineering − Etc.
• Quality, Safety and Commissioning services − QA/QC Management − Safety Management − Commissioning Engineering − Etc.
30
Explosives are a key consumable for mining operations, encompasses 4 main technical products, specific labor for blasting operations could be developed
4.4. DETAILED PROCUREMENT PLAN ON EXPLOSIVES – CONSUMABLES (1/2)
• Perimeter –Explosives encompasses all consumables required for the blasting of rock used during mining operations
–Politically sensitive, some explosives are currently available for aggregate blasting using low-tech products
Category articles
• POROUS PRILL AMMONIUM NITRATE (ANPP) − Main category ~25mt per year
• Stakes – $20 to $25m per year of
recurring business – Potential leverage for many
other sectors (civil works, other mines, roads)
• Electronic detonator and associated softwares − Eg.: Carrick® Statsafe® from AEL Cy.
• Aluminium granules − Used as a fuel in blasting agents − E.g. US Granules corporation products
• Emulsion: E.g. Energan product from AEL Cy.
NH4 NO3 concentration >98.6% Total Nitrogen concentration >34.5% Insoluble in water <0.8% humidity H2O<0.2% PH A 20 D>C> (SOLUTION 10% 4.5A6 acidity HNO3 <0.01 Coating: MINERAL ANTIMOTTANT: Organic composes organic <0.09% Test D'abel @ 80 D.C.>1H Density Versement 0.67+-0.03 FIOUL retention capacity >11%
31
Operations for blasting could have a large part of local content
4.4. DETAILED PROCUREMENT PLAN ON EXPLOSIVES – LABOR (2/2)
Head of blasting operations
ANFO plant - Production manager - Production assistant - Logistics - Warehouse
Maintenance
- 2 technicians - 2 operators
Blasting
- Production manager - 2 drivers - 4 operators
Finance
- Accounting
Logistics and purchasing
- Purchase manager
Administration
- Administrative assistant
HSE manager
32
Steel distribution is core for Aynak investment, it can easily be leveraged for other sectors
4.5. DETAILED PROCUREMENT PLAN ON STEEL STRUCTURES
• Perimeter – Mainly unalloyed carbon steel for plant structures – Encompasses also some wielding consumables
• Stakes – $60m investment (non-
recurring) – Potential leverage for many
other sectors
Category articles - illustration of product typology
• Flat profile steel – 50x10 – E24 NF A35-501 • Non alloyed carbon steel – diam. 160mm, grade A70, 6m long • Angle iron L 50x50x5 E24 NF A35-501 (>5000 MLN) • Angle iron L 60x60x6 E24 NF A35-501 (> 5000 MLN) • UPN 100x50x6, profile U E24 NF A35-501(>2000 MLN) • Heel anti-abrasive 40x40 Z120M12 (>2000 MLN) • Steel sheet 6x1000x2000, NF A35-501 (> 2000 MLN) • Tube 1’’ Tarif 10, TU E220A (>1000 MLN) • µTube ¾’’ Tarif 3, galvanized threaded (>3000 MLN) • Rod 37x68 – 500 HB (>200 PC) • H 200x200x15, HE24 (>200 MLN) • Cable DIA.2 MM NF35-551 (>2000kg)
33
Piping is a large investment for Aynak
4.6. DETAILED PROCUREMENT PLAN ON PIPING
• Perimeter – Lot of different tubes with different diameters will be required for
sulfuric acid plant but also for all the processing plant
• Stakes – $70m investment (non-
recurring) – Potential leverage for many
other sectors
Category articles - illustration of product typology
• Stainless steel, either 304L or 316L • Caan SS-304L X
34
Tank construction and lining can easily be leveraged from Aynak development and re-used for other sectors
4.7. DETAILED PROCUREMENT PLAN ON TANK CAPACITIES AND TANK INTERNAL LINING
• Perimeter – Storage capacities will be required at Aynak for fuel, sulfuric acid,
copper ore leaching, liquid effluent treatment, caustic soda, raw water
• Stakes – $60 investment (non recurring) – Potential leverage for many
other sectors
Category articles - illustration of product typology
• Wielded Steel Tanks for Oil Storage − API Standard 650
• Sulfuric acid tanks and lining − Mainly carbon steel:
www.sulphuric-acid.com
• Water tanks − Usually Bolted Steel Tanks − Industry standards: API, ASME, AWS, AWWA, NFPA,
UBC and UL-142
• Tank lining − Lining done with phenolic coatings
35
Foundry for mining equipment wear parts as well as rebar casting represent a good opportunity to be further sized during detailed procurement plan
4.8. DETAILED PROCUREMENT PLAN ON FOUNDRY PARTS
• Perimeter – Replacement parts for mining equipment (shovels, scrapers,
bulldozers, crushers) are within the top 5 categories of mining consumables
– Various articles are required to serve the industry for replacement parts (teeth, blades, grinding ring, etc.), and technology required to produce these articles can vary from simple to complex
Category articles
• Wear parts for shovels, draglines, and bulldozers − Teeth / lips for buckets − Blades / Crawler shoes
• Stakes – $10 to $20m per year of
recurring business – Potential leverage for many
other sectors to develop foundry activity (construction, cement plant wear parts)
• Wear parts for crushers: − Grinding ring / liners
• Consumables for concentrator plant − Grinding media
• Steel for construction phase − Rebar casting
Need of ~xkt per
year
Need of ~ykt per
year
Need of ~ykt per
year
Need of ~ykt per
year
36
4.9. MINING OPERATIONS – LABOR (1/4)
Based on mining environments similar to Afghanistan, approximately 75% to 85% of the manpower could be sourced locally, representing 800 to 1,500 direct jobs and $15m to $37m/y
Non-Mine Mine Processing
General Management Management Management
Administration Technical services
Technical services
Human Resources Operations Operations
HSE Maintenance Maintenance
Services (incl. Utilities &
Infrastructure Maintenance)
Note: figures are based on international salaries for expatriates positions and on salaries of Mauritania-like countries for local positions
$1-2m
$2-5m
$1-2m
$2-4m
$3-10m
$1-2m
$3-8m
$2-5m
$0.5m
$0.5-1m
$2-4m
$1-3m
$1-2m
380-700 jobs 500-750 jobs 200 - 300 jobs
$20m to $45m will be spent yearly in direct labour needs, corresponding to 1,000–1,800 direct jobs, of which a large part could be sourced locally
37
4.9. MINING OPERATIONS – LABOR (2/4)
Note: benchmark performed on different iron ore – copper mine in the same range (ROM) than Aynak
Around $5 to 9m per year should be spent in direct mine labour, corresponding to 500 to 750 jobs, a large part of which to be potentially sourced locally
Mine positions Management - TS
# employees
Mine Manager 1
Maintenance Manager 1
Technical Services Manager 1
Chief Geologist 1
Senior Mine Engineers 1 – 2
Chief Surveyor 1 – 2
Surveyors 2 – 4
Mine Engineers 3 – 6
Geologist 3 -5
Surveyor Assistant 2 -5
Field Assistant 4 – 8
Secretary 3 – 8
Clerks 3 – 8
Systems Analyst 2 – 4
Assistants/Trainees 8 -15
Mine positions Operations
# employees
Superintendent 1 – 2
Foreman 4 – 6
Shift supervisors 10 - 20
Shovel Operator 15 – 20
Truck Operator 100 – 150
Loader Operator 8 – 25
Dozer Operator 35 - 50
Grader Operator 10 - 20
Drill Operator 25 – 35
Water Truck Operator 15 – 30
Explo/RC Drill Operators 1 – 2
Powder Crew 10 – 15
Sample collectors/Drill asst. 8 – 15
Helpers/Trainees 100 - 120
Mine positions Maintenance
# employees
Maintenance Superintendent 1 - 2
Workshop Foreman 2 - 4
Shift Supervisor 4 - 6
Fitter 20 – 30
Electrician 8 – 15
Welder 20 - 30
Serviceman 20 - 30
Maintenance Planner 2 - 4
Senior Mechanical Engineer 4 - 6
Helpers/Trainees 60 - 80
40-60 jobs $1-2m Opex /year
350-500 jobs $2-4m Opex / year
140-220 jobs $1-3m Opex / year
38
4.9. MINING OPERATIONS – LABOR (3/4)
$6m to $15m per year should be spent in direct processing labor, corresponding to 500 to 750 jobs, a large part of which to be potentially sourced locally
Processing positions Management - TS
# employees
Processing Manager 2
Maintenance Manager 2-4 Process/Metallurgical
Engineer 2-4
Metallurgical Accountant 2-4
Processing positions Operations
# employees
Shift Supervisor 4 – 8
Control Room Operator 4 - 8
Reclaim & crusher operator 10-15
Concentration Cleaner 4-6
Tails disposal operator 15-20
Laboratory Manager (EXP) 2
Laboratory Technician 10-15
Primary crusher operators 10
Others operators 20
Processing positions Maintenance
# employees
Maintenance Manager 2
Maintenance Planner 2
Planning Coordinator 2
Welder 10
Fitter 10
Mobile crane driver 10 Electrical & Instrument
Supervisor (EXP) 10
Electrician 20
Other operators 10-20
8-15 jobs $1-2m Opex /year
80-100 jobs $3-8m Opex / year 80-100 jobs
$2-5m Opex / year
39
4.9. MINING OPERATIONS – LABOR (4/4)
$10m to $25m per year should be spent in direct non-mine and life-support labour, corresponding to 380 to 700 jobs, with a large part to be potentially sourced locally
Non-mine positions GM and HR
# employees
General Manager 1 Government liaison 1 Contract Manager 1 – 2
Shipping Coordinator 2 – 4 Flight Coordinator 2 - 4
Legal 2 Drivers 4 – 6 Security 8 – 10
Clerical/Secretarial 3 - 5 Human Resources Manager 1
Training Manager 3 Training Assistants 10 – 20
Records Clerk 3 Helpers / Training 5
Recruitment Supervisor 2 Clerical/Secretarial 5 - 10
Non-mine positions Administration
# employees
Administration Manager 1 Commercial Manager 1
Logistics Manager 1 Puchasing Officer 1 Purchasing Clerks 4-6
Customs Clearance Officer 1 Payroll Officer (EXP) 1
Payroll Officer 1 Salaries and wages clerk 2
Financial Controller 1 Chief Accountant 1 Accounts Clerk 6-8 Systems Analyst 1-2
IT Assistants 4-6 Warehouse Manager 1
Stores Supervisor 10-15 Stores Assistants 10-15
Clerical/Secretarial 20-30
Non-mine positions Support services for
camp
# employee
s Power Station 30-50 Water supply 50-80
Building Maintenance 25-50 Accomodation 100-200
Transport 50-80 Infrastructure 5-10
25-35 jobs $2-4m Opex /year
60-100 jobs $2-4m Opex / year
300-550 jobs $5-15m Opex / year
Non-mine positions HSE #
employees
H, S & E Manager 2 Security Manager 2 Security officers 20
Superintendent Health 2 Nurse 4
Ambulance Attendants 5-10 Safety Officer 5 – 10 Records Clerk 2
Environnemental Manager 2 Environmental Officer 5 Clerical / Secretarial 10
AGENDA
40
1. Procurement plan approach
2. Aynak and Amu Darya projects key figures
3. List of prioritized categories
4. Zoom on technical categories to support suppliers discussion
5. Annexes • Benchmarks • Procurement plan models
41
5.1 BENCHMARKS
Benchmarks Mining and Oil&Gas
42
BENCHMARKING PANEL
Initiatives for private sector development have been benchmarked in similar environments
Mauritania: - Iron ore mining activity - Poor local industrial setup - Interesting initiatives around
private sector development
1
Indonesia: - Performed in the poorest
province of Indonesia (North Moluku)
- Lack of industrial clusters - Local content initiatives
driven by government
2
Mozambique: - Strong initiative around Mozal
project supported by World Bank
- Mozal was the anchor of Maputo Development corridor
3
Kazakhstan: - One of the largest petroleum
developments in the world - A JV of 7 world class
companies
4
Azerbaijan: - Offshore gas production - Very important investments of
BP in Azerbaijan (roughly $31.6 B)
- Existing knowledge from USSR period
5
Chad: - Important political issues - Consortium of three
companies - Annual production comparable
to Afghanistan potential
6
Mining projects Oil & Gas projects
Nigeria: - Shell is the oldest oil & gas
company in Nigeria - Both land and offshore
activities - Important oil & gas industry
7
43
MAURITANIA BENCHMARK - SYNTHESIS (1/4)
The context and outcomes of a large iron ore mining project in Mauritania were analysed.
• Outcomes on local procurement development that is considered as successful
– Foundry activity for wear parts of mining equipment (shovels, excavators, bulldozers, crushers)
– Mechanical engineering activity (bonding, machining, milling)
– Automotive fleet (~500 vehicles) full management (maintenance)
– Catering activity and camp/hotel management
– Sanitation/sewerage systems of the camp
– Civil works activity
– Gypsum stack management
– Air transportation
– Insurances for employees
• Context: – Iron ore company operating in Mauritania critical to development
– ~12MMT production of iron ore
– Limited local capacity available
• Ideas under feasibility study
– Foundry for grinding media
– Foundry for rebars (for construction sector supply)
– Recapping unit for conveyor belts
~$50-100m at stake for 10 MMT ore extraction
~$10-20m at stake for
10 MMT ore extraction
44
MAURITANIA BENCHMARK - FOUNDRY (2/4)
The Mauritania iron ore project had a successful foundry component, as detailed below:
• Focus on foundry activity
– ~120 employees for ~2,000-5,000 MT capacity;
– Main activity is foundry for wear parts that require a relatively standard foundry technology: - Excavators/shovels/draglines (teeth and lips for buckets, crawler shoes); - Bulldozers (lips, blades, shoes), simple buckets; - Crushers (grinding ring, liners).
– Studies were considered for the development, with future investments, of: - Rebar production; - Grinding media production.
• Comment:
– The development of foundry activity to serve the mining industry has been successful in many countries with low levels of industrialisation (Mauritania, South Africa, Mozambique, Morocco, Algeria). The development of the foundry for wear parts is triggered by mining activity, but afterwards can serve other sectors having wear parts (cement plant, civil works engines);
– Most of these developments have been achieved through partnerships with international companies (Magotteaux, Scaw Metals);
– Energy at economically viable prices + local scrap presence aid this development.
~$7-15m revenue
potential for a 10 MMT
ore activity
45
MAURITANIA BENCHMARK - AUTOMOTIVE FLEET (3/4)
The Mauritania iron ore project had a successful fleet management component, detailed below:
• Zoom on automotive fleet management activity
– ~800 vehicles (light cars, 4x4s, buses);
– More than 150 people in charge of the fleet;
– Main activity managed locally is: - Administrative management of the fleet (monitoring of cars, supervision of maintenance rounds,
drivers, purchasing of new cars,…); - Maintenance of the cars (mechanical maintenance, electrical maintenance, standard maintenance) - Spare parts management: imports, warehousing and distribution to the different sites.
• Comment:
– Externalisation of fleet management has been also successfully achieved by some international mining companies in some remote countries: - BHP – Freeport at Antofagasta mine in Chile; - OCP in Morocco; - Oil & Gas companies in Alberta, Canada.
~$2-5m revenue
potential for a 800
vehicles
46
MAURITANIA BENCHMARK - MECHANICAL ENGINEERING (4/4)
Mechanical engineering activities are an important component of a mining project. The regional context can be used, as in the Mauritanian project.
Focus on mechanical engineering activity
– Mining infrastructure development and early operations required mechanical engineering activities, specifically: - Steel construction; - Rollers maintenance / production for conveyor belts; - Machining of metal pieces used for vehicles, trucks, and fixed installation maintenance; - Bonding of metal infrastructures.
• Comment:
– Morocco has successfully developed a plant of roller fabrication for OCP conveyor belts (Maroc Rouleaux).
– Roller fabrication was considered in Mauritania by the SNIM subsidiary COMECA but has yet to be achieved.
– Bonding of metal pieces / infrastructures is an important competence that is often developed through the financing of training and technical schools.
~$5-10m revenue potential
47
AZERBAIJAN(BP) - SYNTHESIS
The context and outcomes of a petroleum development in Azerbaijan were analysed.
• Outcomes of successful local procurement development
– Waste Management
– Electrical Equipment Installation
– Telecom Equipment Installation and Maintenance
– Construction
– Logistics
– Project Management and Design
– Construction of Electric Line
– Installation, Running, and Restoration of Fibre-optic and Copper Cables
– Rental of Crawler Cranes and Provision of Personnel
– Fabrication of Steelwork
– Pipe and Ductware, Blasting, Painting and Welding Services
• Context: – Nearly $31.6 B investment on different projects in Azerbaijan – Off shore gas production
48
AZERBAIJAN(BP) - SYNTHESIS
In the context of BP’s development in Azerbaijan, some successful examples of local development can be outlined:
Examples of local procurement development
– RT Services Ltd. (RTS) was established in 2002 to provide waste management (used brine treatment) Services. In 2009, the company won the contract with BP for the provision of integrated waste management.
– TelcoPlus was established in 2005 to provide a wide range of technical services as well as technical consulting in the following areas: electrical equipment installation, telecom equipment installation and maintenance, construction, logistics, project management and design. The company won a contract with BP for the construction of electric lines along BTC to supply with electric energy for the valves and other electric devices.
– Cable Services LLC was established in 2001 to provide cable installation, maintenance and field services. Cable Services LLC won a contract with BP for the provision of installation, running, and restoration of fibre optic and copper cables.
– SOCAR Heavy Crane Alliance was established in 2009 as a JV with SOCAR and Heavy Crane (Dubai) to provide heavy lifting services. The company won a long-term contract with BP for the rental of crawler cranes and provision of personnel.
– MQS, formerly Metal Qaynaq Sinaq (Metal Weld Testing), was set up in Azerbaijan in 1998. Its areas of expertise include fabrication of steelwork, pipe and duct ware, blasting, painting and welding services.
49
NIGERIA (SHELL) - SYNTHESIS
The context and outcomes of a petroleum development in Nigeria were analysed.
• Outcomes on successful local procurement development: – Helicopters And Air Transport – Seismic Acquisition – Insurance Policy Contract – Brownfield Maintenance And Engineering Services – Integrated Pipeline Maintenance, Pigging And Corrosion Control
• Context: – Oldest Oil & Gas Company in Nigeria – Both Land and Offshore Activities
• Examples of local procurement development:
– Contracts to Nigerian-owned Caverton Helicopters ltd to provide helicopters and associated services. In total, this five-year contract is worth $694m.
– A $26.7m contract to Sonar Limited for ocean bottom node seismic acquisition.
– An operational insurance policy contract worth $7.6m was awarded to Sovereign Trust Insurance for the Bonga deep water production vessel.
– Dorman Long Engineering, a Nigerian company, was awarded a contract worth $41m for brownfield maintenance of the Bonga and EA Fpsos.
– A $59m contract was awarded for brownfield engineering services and integrated pipeline maintenance to another Nigerian company, Baywood Continental Limited.
– A contract for $28m was awarded to B. G. Technical Limited for integrated pipeline pigging and corrosion control.
50
INDONESIA BENCHMARK - SYNTHESIS
The context and outcomes of an nickel mining project in Indonesia were analysed.
• Outcomes on local procurement initiatives
– Exploration work (sampling, assaying, laboratory work)
– Mine truck driving
– Environmental management/preparations for rehabilitation phase (Tree nursery)
– Logistics (warehousing of consumables, customs management)
– Civil works (roads, buildings)
– Site security
– IT / Maintenance
– Catering
– Financial services (development of a local bank branch)
• Context: – ~65 thousand metric tons hydrometallurgical nickel project (6 MMT of extracted ore) – Investment of $6 B – First industrial project in the region / complete feedback on successful local procurement experiences has
not yet been measured
51
MOZAMBIQUE BENCHMARK - SYNTHESIS
The context and outcomes of an aluminium project in Mozambique (Mozal) were analysed.
• Outcomes of successful local procurement development
– Basic services (catering, cleaning, landscaping earthworks, manned security)
– Engineering / manufacturing industry firms (pots, chimneys and pipes production and maintenance, repair of start-up equipment)
– Construction firms (maintenance, water drains, removal of temporary buildings, electric installations and wiring, and repairs, electricity substation in the plant and acoustic barrier in the port of Matola, housing construction and maintenance of buildings )
– Industrial services (phone and phone data base network, suppliers and maintenance of hydraulic equipment, industrial waste removal, employee transport)
• Context: – Mozal is an aluminum smelter that has been developed near Maputo, Mozambique, in a $2 B joint venture
involving BHP Billiton, Mitsubishi, the government of Mozambique, and the Industrial Development Corporation of South Africa.
– Mozal was the first major foreign investment in Mozambique, and was considered as the anchor of Maputo Development corridor. International companies and IFC pushed for the development of SMEs through Mozlink program, in order to: - Build stronger and more competitive Mozambican SMEs - Transfer knowledge and capacity from foreign countries to Mozambique - Increase spending with Mozambican Companies
– 19 companies were awarded at least one contract ~750 full-time jobs and 2,500 indirect jobs
~$35-50m sourced to local SMEs
yearly
52
KAZAKHSTAN (NCOC: ENI, SHELL,TOTAL) - SYNTHESIS
The context and outcomes of an petroleum development in Kazakhstan were analysed.
• Outcomes of successful local procurement development – Marine fleet operations – Fleet maintenance – Offshore services from construction to commissioning – Pipe racks fabrication – Barge assembly – Catering – Accommodations, services, medical services – Telecommunications
• Context: – One of the largest petroleum developments in the world – A joint venture of 7 world class companies – Offshore project
• Examples of local procurement development
– Caspian Offshore Construction, first private company with 100% Kazakh content providing marine fleet operations and maintenance. The forecast revenue for 2011 is $75m. COC has around 300 employees.
– Ersai is a JV (50/50) between a Kazakh company and Saipem. It provides onshore and offshore services from construction to commissioning. In particular, Ersai fabricated pipe racks (18,000 MT/year) and also assembled barges. Ersai has more than 3,000 employees.
– Sayan Firm, is a subsidiary of a Kazakh company. Its activity covers catering, accommodations, services, medical services, and telecommunications. Sayan has more than 500 employees.
53
CHAD (EXXON) - SYNTHESIS
The context and outcomes of a petroleum development in Chad were analysed.
• Outcomes of successful local procurement development: – Inspection for potential issues with the pipeline – Civil works (roads, trails, bridges) – Building (schools, factories, hospitals, airport) – Hydraulic urban & sanitation – Rental of vehicles, fleet management, heavy machinery and equipment and miscellaneous tools – Maintenance – Drilling – Pipe construction – Security services and equipment – Recruitment and training – Permitting
• Context: – Construction was launched in October 2000, the consortium consisted of ExxonMobil (40%, project
operator), Petronas (35%), and Chevron (25%). Oil production commenced in late 2003.
• Examples of local procurement development: – ENCOBAT SA is a company specialised in building construction and civil works, founded in 1997. ESSO Group
entrusted the company with work to develop its various sites including construction of oil rigs, drilling and maintenance. Encobat SA is now the 2nd subcontractor for Esso in Chad.
– Copguard is a provider of security services and equipment. – Emploi & Services is the first recruitment and interim employment company in Cameroon and Chad. Emploi
& Services is now operating in 7 West African countries.
~$160m at stake for
~90,000 bpd
54
5.2 AYNAK PROCUREMENT PLAN
Aynak Procurement Plan
55
5.3 AMU DARYA PROCUREMENT PLAN
Amu Darya Procurement plan