Client Background
A large iron ore operation with a complex value chain including mining, processing and integrated logistics and significant revenue (~£3B) and workforce (~3,000 employees and up to ~2,000 contractors) providing key iron ore products primarily to the premier steel and emerging green steel markets.
Challenges Faced
1. Lack of clear strategic direction, particularly concerning growth, decarbonisation, and digital/technology strategies.
2. Cash crunch necessitating rapid reduction of CapEx and OpEx to protect the company’s balance sheet.
3. High-cost inflation due to commodity price increases and capacity expansions by competitors.
4. Organisational challenges including declining workforce productivity and over-reliance on contractors.
5. Poor project, programme, and portfolio management practices leading to delivery issues.
Approach
1. Capital Optimisation:
· Scrutinised major projects to reduce costs.
· Revamped capital budgeting process to prioritise projects within a cash-constrained environment.
· Implemented cost reduction initiatives and streamlined benefits realisation processes.
· Ensured external reviews on the capital portfolio and major investments.
2. Operational Transformation:
· Redesigned the operating model and organisation to enhance operational effectiveness.
· Implemented lean operating practices and improved engagement across the organisation.
3. External Spend Optimisation:
· Renegotiated major contracts and enhanced procurement practices.
· Cut non-critical work by 50% and realigned long-term business plans based on value assessments.
4. Commercial Strategy Revamp:
· Rebuilt cost allocation models and identified unprofitable projects.
5. Executive Mentoring:
· Provided guidance and coaching to the Executive Committee and Senior Management to drive turnaround efforts.
· Fostered a culture of accountability and results at the leadership level.
Impact
· Captured £100M in recurring savings within the first five months.
· Cost reductions facilitated the acquisition of new projects and revenue growth.
· Increased margins by 5-10% through renegotiated contracts.
· Streamlined the organisation by 20%.
· Post-implementation, successful approval of projects totalling over £250M in the delivery phase, and potential projects exceeding £10B in development.
Conclusion
This case study illustrates how Strategist Solutions collaborated with the iron ore operation to overcome various challenges and take advantage of various opportunities by optimising capital, transforming operations, reducing external spend, revamping commercial strategies, and providing executive mentoring. The impact was significant, leading to improved financial health, operational efficiency, strategic alignment, and culture, ultimately positioning the company for improved sustainable growth and competitiveness in its industry.
