Glenn Barr, Lynas Corporation; Building a new business and creating an organisation that meets its...
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Transcript of Glenn Barr, Lynas Corporation; Building a new business and creating an organisation that meets its...
Lynas CorporationBuilding a New Business and Creating an Organisation that meets its vision
HR Leaders Summit8 May 2013
Introduction
3
• Imagine in that environment attempting to attract, on board and train employees at a rate of 1 per day for 2.5 years
• Keeping 360 employees engaged and focussed on building a new industry in an environment where
• You drive to work every day and the car in front of you has a sticker telling people that your employer should not be here
• That your employer is simply using your country to dump radioactive waste
• Where you go to restaurants and are refused service based on what your uniform carrying your employers name
Company overview
4
Mount Weld Concentration Plant
Lynas Advanced Materials Plant CLD Rare Earth Deposit
Mt Weld Project and Concentration Plant
LAMP, Malaysia
Primarily involved in the exploration, development, mining and processing of Rare Earth minerals
ASX-listed, market capitalisation of A$1.2bn as of February 27, 2013
Owns and operates:
Mt. Weld – the highest grade known Rare Earths deposit in the world – located 35km south of Laverton in W.A.
Mt. Weld Concentration Plant – commissioned in 2011 and located 1.5km from site
Lynas Advanced Materials Plant (“LAMP”) facility – located in the Gebeng Industrial Estate (“GIE”) near the Port of Kuantan in Malaysia
Phase 1 production capacity of 11,000 tonnes per annum (“tpa”) REO and Phase 2 production capacity of 22,000tpa REO
Location of key assets
Building a fully integrated source of Rare Earths from mine to customers
Lynas’ vision is to be the leader in Rare Earths for a sustainable future
5
Production process overview
Vertically integrated operations from mining at Mt. Weld to oxide production at the LAMP
Rare Earths Solution
Mt. Weld Mine & Concentration Plant
6
Overview of Australian assets
Mt Weld Project and Concentration Plant
Location of the Mt. Weld Project & Concentration PlantMt. Weld Mine
The highest grade known deposit of Rare Earths in the world
Consists of the Central Lanthanide Deposit (“CLD”) and Duncan Deposit
Located 35km south of Laverton in W.A.
Simple, conventional open-pit mining operation
Stockpiled ore is sufficient to sustain Phase 1 steady state production for 6 years
773kt mined at 15.4% REO (116kt contained REO)
Mt. Weld Concentration Plant
Commissioned in May 2011
Located 1.5km from Mt. Weld mine
Phase 1 capacity: 33,000tpa REO concentrate
Expected capacity including Phase 2: 66,000tpa REO concentrate
Proven REO flotation technology
~15kt of dry bagged concentrate ready for shipment to Malaysia
7
CLD is the world’s highest grade known Rare Earths orebody
Recent drilling on the western side of the CLD has increased confidence levels in the resource with a large portion of the resources in the measured and indicated categories
Above a REO cut-off of 2.5%, the CLD has a resource of 14.9mt at an average grade of 9.8% REO for a total of 1,460,000 tonnes of REO
CLD resource category
Ore (mmt) REO (%)¹
Measured 6.9 12.2
Indicated 7.0 8.1
Inferred 1.1 4.6
Total 14.9 9.8
CLD(Lynas)
Mountain Pass(Molycorp)
Duncan(Lynas)
Nolans(Arafura)
Hoidas Lake(Great Western)
Thor Lake(Avalon)
Kvanefjeld(Greenland)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
9.8%
6.4%
4.9%
2.6%2.0%
1.4% 1.1%
Source: Company filings
Note: Figures may not sum due to rounding1 REO (%) includes all the lanthanide elements plus yttrium
Central Lanthanide Deposit
Rare Earth Grade – Mt. Weld vs. some other projectsREO grade (%)
Lynas cut-off grade – 2.5%
8
The LAMP facility is strategically located in Malaysia
Stable operating environment and a sovereign credit rating of A3
Gebeng is a hub into Asia with exceptional infrastructure
Located in close proximity to Kuantan deep-water port with bulk material, liquid and container berths
Key reagent products located nearby due to large chemical industry on the east coast of Malaysia
Established supplier / manufacturer network within the Gebeng Industrial Estate
High quality and well-maintained infrastructure and utilities
Access to skilled and competitive labour force
Tax free period granted by the Malaysian Industrial Development Association under “strategic pioneer status”
Malaysia operations – Lynas Advanced Materials Plant
Kangar
PERLIS
LANGKAWIAlor Setar
KEDAH
George Town
PENANG
Ipoh
PERAK
KELANTAN
Kota Baharu
TERENGGANU
Kuala Terengganu
PAHANG
Kuantan
Johor Baharu
JOHOR
[Melaka]
NEGERI SEMBILAN
Seremban
SELANGOR
Cameron Highlands
Kuala Lumpur
T H A I L A N D
M A L A Y S I A
S I N G A P O R E
GEBENGSOUTH SEA CHINA
Tioman
MELAKA
9
Future milestones
LAMP continues to ramp up toward Phase 1 nominal capacity (expected Q2 2013)
Commissioning of Phase 2 expected in Q2 2013
Ramp-up of Phase 2 in Q3 2013 in line with customer demand
First feed to kiln achieved in November 2012 First arrival of Rare Earths concentrate from Mount Weld in
November 2012
Initial first feed of concentrate into LAMP rotary kilns in November 2012
Successful commissioning of LAMP cracking and leaching units in January 2013
Initial Rare Earths products produced in February 2013
Lynas Advanced Materials Plant – operational update
10
REO demand growth outlook
SectorCAGR
2012-2018 Rare Earths used
NiMH Batteries 3.3% La, Nd
Magnets 10.1% NdPr, Dy
Autocatalysts 6.0% CeFCCs 8.0% LaMetallurgy & FerroSilicon 3.4% CeLa
Phosphors -1.2% Eu, Tb, Y, Ce, La
Polishing 4.8% CeLaUV Cut 3.0% CeOptical Glass 5.0% La, Gd
Other 3.0% La, Ce, Nd, Pr, Sm, Gd, Y
Total demand 5.8%
2015E Expected Global Rare Earths demand by application
Demand drivers – Rare Earth uses
NiMH Batteries10%
Magnets27%
Autocatalysts7%
FCCs16%
Metallurgy & FerroSilicon
13%
Phosphors7%
Polishing11%
UV Cut2%
Optical Glass3%
Other4%
Sep ‘12 Nov‘12 Q1‘13 Q2 ‘13
11
Indicative timeline to first sales and operating cash flow
First shipment to LAMP from
Mt. Weld
First feed to kiln
Finished goods
Customer qualification
Commercial shipments and first
sales
First cash from sales
Next steps
Current operational focus is LAMP ramp-up towards Phase 1 nominal capacity
Sales & Marketing focus is on completion of customer qualification process and commencement of commercial shipments
Commissioning of Phase 2 expected in Q2 2013
TOL issued
External ViewStrong cash flows expected in the near term
Nov ‘12
12
GFCCommunity
Outrage
International and Local Reviews
IAEA etc
Political Uncertainty Sovereign
Risk Issues
Rare Earth Price Erosion
Malaysian GE13
New Company
Challenges Along The Way – An External Environment that creates Employee Anxiety
The Challenge A People and Culture Perspective.
13
• To create and build an organisation that is capable of surviving but also thriving in a changing external environment
• Recruit, On-board, Train new employees • 2009 40 employees; 2013 – 490 employees
• Able to deal with uncertainty and continue to grow willing to take on wicked problems
• Changing Production Parameters, Cost Structures• Sovereign Risk Issues• Social License to Operate
• Focus employee efforts on building a company while at the same time getting ready to Operate a new 800M plant in Malaysia
The Challenge - People and Culture Perspective.
14
Biggest Challenge for a start up company
• Align Organisational and Employee Goals in a way that contains employee anxiety” so that employees can focus on goal achievement
• Development of the Organisational Software
• Values, • Organisational Structure, • Role Accountabilities and Responsibilities,• Feedback Mechanisms, Thinking Tools etc
• Organisational Software allows the Organisational Hardware – Plant, Equipment, Financial Systems to Operate
Psychological FrameHuman Behaviour – Seeking New Experiences and Reducing Exposure
to Unpleasant Experiences”
15
• Gray believed that personality traits and behaviour could not be explained by classical behavioural conditioning alone.
• Gray proposed a “Biopsychological Theory of Personality”
• Emphasized the relationship between personality and sensitivity to reinforcement systems of Reward and Punishment
• System 1 - Willingness to try something new – New Goal Orientation
• Approach Motivation; Impulsivity, Willingness to try something new) , and
• System 2 - Work to avoid unpleasant outcomes
• Motivation (drive to avoid pain, anxiety, punishment, unpleasant outcomes )
Gray's model of personality is based on two hypothesized brain systems
Gray, J.A. (1981). A critique of Eysenck's theory of personality, In H.J. Eysenck (Ed.) A model for personality (pp 246–276)
Gray, J.A. (1982). The neuropsychology of anxiety: An enquiry into the functions of the septo-hippocampal system
A Biopsychological Frame“Behavioural Activation System”
16
Behavioural Activation System (BAS)
• The BAS includes brain regions involved in regulating arousal: cerebral cortex, thalamus, and stratum.
• The system is responsive to conditioned and unconditioned reward cues.
• BAS regulates approach behaviours and is referred to as the Reward System.
Individual BAS Sensitivity
• In general, individuals with a more active BAS tend to be more fun seeking, like novelty, change , are more disposed to goal seeking, will respond to seeking novel or new experiences
A Biopsychological Frame“Behavioral Inhibition System”
17
Behavioral Inhibition System (BIS)
• The BI also includes brain regions involved in regulating arousal: the brain stem, and neocortical projections to the frontal lobe.
• BIS is responsive to punishment, novelty, uncertainty, and non-rewarding stimuli.
• BIS regulates avoidance behaviours and is often referred to as the Punishment System.
Individual BIS Sensitivity
• Individuals with more active BIS may be vulnerable to negative emotions, including frustration, anxiety, fear, and sadness
• See the risk in things, try to avoid pain or lower anxiety by mitigating risk
• Anxiety lowered for Individuals with High BIS sensitivity by
• working within prescribed systems and when given work that allows avoidance of something unpleasant – e.g avoid uncertainty in outcomes
Psychological Frame – Mapping to People and Culture Systems and Organisational Culture
18
• In an environment that is facing rapid discontinuous change, where social licence to operate and other issues create uncertainty in the workplace
• How do we develop and build an organisation and its People and Culture Processes and Systems in a way that enables employees to remain engaged in the business.
• How do we deal with BIS and BAS sensitivity in a way that allows ongoing Employee Engagement
“The Lynas Way”
“A System to Contain Employee Anxiety”
Viewing HR System Elements with this Frame in Mind – The Lynas Way
19
Viewing HR System Elements with this Frame in Mind – The Lynas Way
20
BIS Sensitivity - Put decision making at an efficient level (consistent with control and risk management) ; Match human capability to role/task complexity
BAS Sensitivity – Time Span of Discretions – Pushing Accountability and Empowerment within Time Span of Discretion.
BIS Sensitivity – Provides a Frame when the normal gaps in Policy, Procedure and System miss but where people need something to connect to
BAS - Sensitivity
Codifying Breakthrough Thinking and Risk Taking
Provide space for people to try something new
BAS - Sensitivity
Encouraging “Entrepreneurial” and “breakthrough Thinking Approaches” – Higher Levels of Thinking;Spiral Dynamics; Deep Change
BIS Sensitivity
Emotional Safety Creation through Values Based Discussions and EQ toolsets
BIS Sensitivity – Clear Context, Purpose, Quality, Quantity Resources and Timing for Task Work Assignments
-21-
Dimension 1 - The Way We Organise
The Challenge of Leadership
“The difficulty is that we have put ourselves to work in organizations so badly put together as to mitigate against our working together effectively.
We have too many layers, undefined cross-functional working relationships, false concepts of leadership, unclear leadership accountability and authority, chaotic compensation systems, phony performance systems, unfair incentive systems, false notions of capability and its growth, poor career development processes and on and on. It is these systems that have to be mended. The art is to mend them in such a way as to elicit the behaviours we want in the process.”
Source: Elliot Jaques, Requisite Organisation, Cason Hall 1996
Employees come to new organizations from these experiences,
effective and creative leadership and behavior in organizations, requires changing the systems and not by trying to change the people.
Principles of Lynas Way – The Way We Organise
-22-
• Role clarity- Accountabilities and Responsibilities Clear
• Levels of work (Stratums) – Individuals working within their time span of discretion are naturally expected to have lower anxiety
• Task Assigning Role Responsibility (TARR’s) and Task Initiating Role Responsibility – (TIRR’s) – It is clear who can give me work
-23-
Role Clarity
• Clearly Defined Position Descriptions based on application of RACI Mapping across the organisation• Enables people to perform and deliver the required results and behaviour• Ensures people understand how their role and personal performance
contributes to the achievement of business strategy• Specifies real accountabilities able to be measured with clarity• Clarifies interdependencies within and between teams and people – who does
what!• Provides a framework that focuses on accountabilities, authorities and
capabilities required to deliver expected outcomes
-24-
Stratums - Human Nature and Capability
Organizational hierarchy is a natural human phenomenon and forms according to a relatively predetermined formula, based upon human capability
Capability is defined as the extent to which an individual can handle the complexity of any task
A key measure of capability is how far an individual is able think/project into the future
▬ i.e. Each of us have a different starting point, however, the longer time horizon a person has, the more complex roles they are typically capable of undertaking
.Appropriate Structure Contains Anxiety
Allowing Structure to Follow Strategy (Removing ambiguity) and allowing individuals discretion to complete work in a way that fits
their planning horizon
-25-
Levels of Work (Stratums)
Levels of work define the relative complexity of the tasks that make up the work requirements of particular roles in the organisation.
Each level of work:
- Requires a different way of thinking
- Must provide information laterally
- Sets overall Context and Purpose for the Level below
- Allocates tasks to the Level below (direct reports)
-26-
Levels of Work (Stratum)
6 10 - 20 Years Value Delivery
5 5 - 10 Years Strategic Direction
4 2 - 5 Years Strategic Delivery
3 1 - 2 Years Operational Direction
2 3 - 12 Months Operational Delivery
1 0 - 3 Months Operational Execution
-27-
How Flat Should a Structure be?
Role Compression and Effective Organisation
Stated Organisation Structure
A
B
C
D
E
F
G
H
I
J
A
B
C
D
E
F
G
H
I
J
What reallyhappens
I
F
G
H
J
A
B
CD
E
Should be
After Elliott Jacques “Requisite Organisation”; Cason-Hall 1989
-28-
PROJECT ENGINEER
TEAM LEADER
SPECIALIST• Safety• Industrial Relations
OTHER TEAM LEADER
Role Relationships
Task Assigning and Task Initiating
TARR
- only your team leader can assign you tasks (blue box )
TIRR
• if previously agreed, the people in green boxes can initiate certain tasks with you
TEAM MEMBER
Inevitably people perform tasks that are not given to them by their immediate leader.
This can cause concern and confusion with respect to who can ask who to do what - In these situations the employee needs to be given clarity on what type of work can be assigned to them and by whom.
-29-
Dimension 2 - The Lynas Way Work Allocation - CPQQRT
Whenever work is allocated to employees (assigned or initiated) the following information should be provided:
CONTEXTContext gives clarity around why the task exists, by describing the events/activities/changes that have lead to it at this point in time.
PURPOSE Purpose is the objective of what needs to be achieved in relation to the task being assigned and should flow directly from the context.
QUANTITY Quantity is defined as the numeric value attached to any task and represents the amount of what ever has to be achieved.
QUALITY Quality is defined as the standard that has to be met and can be either objective or subjective
RESOURCES Resources are defined as the materials, information, people, money, accountabilities and authorities allocated to the individual to effectively complete the task.
TIME Time is the deadline or time available for completion of the task.
Dimension 2 - The Lynas Way Work Allocation - CPQQRT
30
BIS Sensitivity
• Context ,Purpose, Quality, Quantity, Resources and Timing (CPQQRT)
• Reduces Anxiety for BIS ensures that all information and resources for task completion are described on task initiation.
Dimension 3 - Lynas Way – Values and Behaviours
31
Values provide a framework that
• provide a sense of certainty in times of rapid discontinuous change
• provide a reference for when the systems, process and procedures that are either immature-under developed or not in place – a typical start up
.
Care RelationshipRespect Integrity Courage
The Lynas Way – Values and Behaviours
32
BIS Sensitivity
• Provides a Frame to fills gaps in Policy, Procedure and System and where people need something to connect with.
BAS - Sensitivity
• Explicitly States Organisational Acceptance for Breakthrough Thinking and Risk Taking
• Encourage organisational time and space for people to try something new
Dimension 4 – The Lynas Way People and Relationships
33
• Toolsets beyond the Mechanistic
• Cultural Memes, Spiral Dynamics
• Developing the Corporate Heart as well as Minds in Corporate Conversations and when problem solving
• Formalised Training in 21st Century leadership Topics, modelled in project teams and change efforts
• Thinking beyond socialised norms to challenge the role that corporations play in “Shared Value”
• Application of “breakthrough thinking” techniques to creating shared value
• Visioning – “Remember the Future” – pre meditative states to allow access to subconcious problem solving and goal setting
• Shared Value Conversations at the heart of corporate
Dimension 4 – The Lynas Way People and Relationships
34
BAS - Sensitivity
• Encouraging “Entrepreneurial” and “breakthrough Thinking Approaches” – Higher Levels of Thinking; Spiral Dynamics; Deep Change
• Feeds Novelty Seeking, Encouraging Attainment of Goals not yet realisable
BIS Sensitivity
• Emotional Safety Creation through Values Based Discussions and EQ toolsets
• Heart as well as Mind Applied to Problem Solving and People Decisions mitigating anxiety potential negative outcomes.
Impact of the Lynas Way on Retention.
35
Lynas Labour Turn Over Rates are Respective Industry Benchmarks (2011-Q1 2013)
Labour Turn Over WA
Labour Turn Over MY
0
5
10
15
20
25 23.5
18.9
12.214.2
BenchmarkLynas
http://www.amma.org.au/assets/Policy/Papers/20130227AMMA%20Research%20Paper%20-%20Labour%20Turnover.pdf
Hayes Industry Data – Gebeng Industrial Park – Pahang, Malaysia.
The Lynas Way – An Integrated HR Framework for a “Developing Company Culture”
36