Cost Reduction Program - Coal Miner

Jim Cowan
Partner, Heavy Industry
Heavy Industry
Strategic Procurement
November 17, 2023
value under contract
tenders & negotiations
cost reduction

Client Problem

The mining client had a requirement to put in place procurement policies and procedures, to develop new goods and services contracts, and to reduce operating costs.

Caliba Solution

The client had inherited various supply of goods and services contracts when they acquired the mine. Many of the contracts were expiring shortly and required attention. The site did not have a procurement team and lacked ‘fit for purpose’ procurement policies and procedures.

Caliba was engaged to develop the new procurement framework; to identify where cost reductions could be achieved; and then to tender and put in place new contracts for all goods and services requirements.

Caliba developed all new procurement policies and procedures (tendering and contract management) to ensure the site had right level of governance and to deliver the optimum outcomes.

Caliba developed a sourcing plan, which was signed-off by the executive team and then completed 32 tenders and supplier negotiations to ensure the site had all forecast requirements under contract at competitive rates. The overall operations costs were reduced by $39m per annum over the 3-year period.

Caliba was able to reduce the cost of operations to a level that was lower than when the site was acquired, which contributed to increase in profit for the mining operation.

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