RESPONSIBLE MINING: a HUMAN RESOURCES STRATEGY for MINE DEVELOPMENT PROJECTS by Sriram (Ram) Sampathkumar MS, Computer Engineer
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RESPONSIBLE MINING: A HUMAN RESOURCES STRATEGY FOR MINE DEVELOPMENT PROJECTS by Sriram (Ram) Sampathkumar MS, Computer Engineering Kiev International University of Civil Aviation, 1995 PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION In the Executive MBA Program of the Faculty of Business Administration © Sriram (Ram) Sampathkumar, 2012 SIMON FRASER UNIVERSITY SUMMER 2010 All rights reserved. However, in accordance with the Copyright Act of Canada, this work may be reproduced, without authorization, under the conditions for Fair Dealing. Therefore, limited reproduction of this work for the purposes of private study, research, criticism, review and news reporting is likely to be in accordance with the law, particularly if cited appropriately. APPROVAL Name: Sriram (Ram) Sampathkumar Degree: Master of Business Administration TITLE OF PROJECT: RESPONSIBLE MINING: A HUMAN RESOURCES STRATEGY FOR MINE DEVELOPMENT PROJECTS Supervisory Committee: ___________________________________________ Dr. Neil R. Abramson, Ph.D. Associate Professor of Strategy Senior Supervisor ___________________________________________ Dr. David Dunne Adjunct Professor and Senior Fellow Second Reader Date Approved: ___________________________________________ ii ABSTRACT Mining is a global industry. Most mining companies operate internationally, often in remote, challenging environments and consequently frequently have respond to unusual and demanding Human Resource (HR) requirements. It is my opinion that the strategic imperative behind success in mining industry is responsible mining. The purpose of this paper is to examine how an effective HR strategy can be a competitive advantage that contributes to the success of a mining project in the global mining industry. It will draw on the author’s experience as the Project HR Manager for Kinross Gold Corporation (Kinross) at the Dvoinoye Project in Russia, where he is currently tasked with developing a Human Resources Feasibility Study, including workforce planning, labour cost analysis, staffing and compensation strategy, and establishing processes for the ramp up schedule. This paper will analyse how HR practices contribute to the Kinross strategy, specifically as applied to the Dvoinoye Project in Russia. The paper is also anticipated to serve as a project development model that could be adapted within a global mining setting when embarking on a venture in any jurisdiction. The proposed model will consider current best practices and recommend strategic inclusions aligned to business imperatives, emphasizing staffing, retention and development. The paper will present a general description and analysis of the industry and Kinross, and a detailed description of the Dvoinoye Project. A more detailed examination using value chain and Porter’s five forces analyses that focuses on Kinross Russia will be presented. To clarify Kinross’ competitive position, a competitive analysis will explore and identify the opportunities and threats for Kinross’s growth in Russia. These analyses will identify Key Success Factors (KSF) with particular emphasis on the KSFs relevant to our discussion of the Human Resources Strategy development and implementation for the Dvoinoye Project. Keywords: Mining, Human Resources iii DEDICATION Without her unconditional support and dedication to our family, I would not be who I am today. I dedicate this paper to my wife, Neelima Sriram. In addition, I would like to dedicate this paper to my parents for instilling the values and courage that kept me going and achieving results as I have been on autopilot from the age of 19, since I left India on an international journey […and the journey continues..] iv ACKNOWLEDGEMENTS I would like to acknowledge Dr. Neil Abramson for his guidance and for tirelessly challenging me with critical questions that allowed me to improve this paper significantly. I acknowledge Kinross Gold Corporation for their generosity and for supporting me during my EMBA and in the preparation of this final paper. In particular, I would like to mention the support I received from the Regional Vice President of Russia, Warwick Morley-Jepson. v Table of Contents Approval ......................................................................................................................................... ii Abstract ......................................................................................................................................... iii Dedication....................................................................................................................................... iv Acknowledgements ......................................................................................................................... v Table of Contents ........................................................................................................................... vi List of Figures ............................................................................................................................. viii List of Tables .................................................................................................................................. ix Glossary ........................................................................................................................................... x 1: Introduction ................................................................................................................................ 1 1.1 Objective and Focus ................................................................................................................ 1 1.2 Scope ....................................................................................................................................... 1 1.3 Theory and Methodology ........................................................................................................ 2 1.4 Industry Overview ................................................................................................................... 2 1.4.1 History and Culture ..................................................................................................... 2 1.4.2 Supply and Demand .................................................................................................... 3 1.5 Kinross Gold Corporation ....................................................................................................... 7 1.5.1 Background ................................................................................................................. 7 1.5.2 Kinross in Russia ........................................................................................................ 8 1.5.3 Dvoinoye Project ........................................................................................................ 8 1.5.4 Structural Characteristics .......................................................................................... 10 1.5.5 Complexity ................................................................................................................ 10 1.5.6 Organizational Environment ..................................................................................... 11 1.5.7 Values ....................................................................................................................... 11 1.5.8 Kinross Current Activities ........................................................................................ 13 1.5.9 Market Strategy ......................................................................................................... 13 1.5.10 Human Resource Strategy ........................................................................................ 13 2: External Analysis: Industry Analysis ..................................................................................... 16 2.1 Introduction ........................................................................................................................... 16 2.1.1 Mining Value Chain .................................................................................................. 16 2.1.2 Five Forces ................................................................................................................ 20 2.1.3 Key Success Factors ................................................................................................. 26 2.1.4 Competitiveness of Kinross in Russia ...................................................................... 27 2.1.5 Project Risks and Opportunities ................................................................................ 31 vi 3: Implementation Analysis (Internal Analysis / Human Resources) ...................................... 34 3.1 Evaluation Criteria ................................................................................................................ 34 3.2 Implementation of Human Resources Strategy at Dvoinoye ................................................ 35 3.2.1 Management Preference ............................................................................................ 35 3.2.2 Background and Organization .................................................................................. 36 3.2.3 Organizational Structure ........................................................................................... 49 3.2.4 Financial Resources .................................................................................................. 68 3.2.5 Overview of Operating