How to Avoid Project Delays Like Hindustan Copper Ltd's Latest

Hindustan Copper Limited (HCL), a public sector enterprise of the Government of India and a Mini Ratna-I CPSE, signed a Memorandum of Understanding (MoU) with the Ministry of Mines, Government of India, in New Delhi on March 25th of this year. The MoU outlines the business plan for the financial year 2014-15. The company stated a goal of 35,000 MT of metal production from their mines.

Mandatory Approvals Cause Delay

As it stands their current goal states an increase in their production capacity to 12.41-million tons per year. This represents an increase of almost four times their current output. However, it appears that Hindustan Copper Limited is probably going to fall short of the deadline for this significant increase set for 2017/2018. Delays in securing mandatory approvals have been identified as the deadline killer for this vertically integrated copper producing company.

HCL’s plans for the large increase in production involved the impressive investment of approximately $580 million. A significant contingency of the plan was dependent on the expansion of Malanjkhand, the company’s largest copper-producing facility, in the central Indian province of Madhya Pradesh. The Malanjkhand mines comprise over 70 percent of India’s overall copper reserves, representing a wholly necessary component of the mining company’s plans to increase its production.

Malanjkhand is situated very near to the Kanha National Park, and herein lies the problem. The National Wildlife Board (NWB) never provided their approval for expansion of the Malanjkhand mines, leaving the appeal stagnant for over two years.

Approvals and Comprehensive Due Diligence

HCL is a majority government owned and managed miner, and therefore its investments were approved by the Cabinet Committee for Economic Affairs, and the company had also approached the Project Monitoring Group which is supposed to address stalled projects. While HCL did execute due diligence in some areas, it did move forward when it shouldn’t have in other areas, such as awarding contracts to various venders without the required approvals in place. Comprehensive due diligence across the board, improved communication, and improved policy based project management may have helped HCL stay on target with their increased production plans.