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Cerro Verde Mine, Arequipa, Peru
Specialty Consulting - Negotiation Assistance
New Construction and Additions
$850,000,000
300,000 tons per year
The Cerro Verde Copper Mine is located in Arequipa, Peru. It is operated by Sociedad Minera Cerro Verde S.A.A., a Peruvian subsidiary of Phelps Dodge, one of the world’s largest producers of copper. The expansion will allow Cerro Verde to mine a primary sulfide ore body beneath the oxide ore body currently in production. Mining of the primary sulfide ore body will triple the production of copper (from 100,000 short tons to 300,000 short tons) once full production is achieved. Construction of this expansion includes crusher/conveyors, agglomerating facility, stacker/conveyor and SX/EW facility.
Flour Canada, the engineering, procurement and construction manager (EPCM), contracted GREYHAWK’s client, Schuff Steel, the largest fabricator and erector of structural steel in the U.S., to manage steel fabrication. The original plan called for Schuff to sub-contract and manage all of the fabrication using a mix of American and Peruvian fabricators.
Changes in the project, not necessarily the fault of any one party, precipitated cost overruns and schedule delays. Faced with documenting the changes and diverting its resources from executing the work, Schuff instead hired GREYHAWK for its structural steel design, fabrication and erection expertise, to independently and objectively evaluate the causes of the changes and the impacts on cost and schedule. GREYHAWK, with the support of Schuff employees and resources, prepared a presentation to Fluor and Phelps Dodge seeking a request for equitable adjustment of $19 million.
Based on GREYHAWK’s analysis, presentation and negotiation strategies, Schuff Steel successfully collected $18.5 million.
Specific issues of the mine project dispute included:
- Contractual allowances
- Connection design in a highly seismic area
- Structural design criteria
- Shop drawing approvals
- Disruption, delay, and acceleration
- Loss of efficiency
- Interpretation of the AISC Code.
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