Lynas Corporation
Building a New Business and Creating
an Organisation that meets its vision
HR Leaders Summit
8 May 2013
Introduction
3
• Imagine in that environment attempting to attract, on board and train
employees at a rate of 1 per day fo...
Company overview
4
Mount Weld Concentration Plant
Lynas Advanced Materials Plant
CLD Rare Earth Deposit
Mt Weld Project an...
5
Production process overview
Vertically integrated operations from mining at Mt. Weld to oxide production at the LAMP
Rar...
Mt. Weld Mine & Concentration Plant
6
Overview of Australian assets
Mt Weld Project and
Concentration Plant
Location of th...
7
CLD is the world‟s highest grade known Rare Earths orebody
Recent drilling on the western side of the CLD has increased ...
8
The LAMP facility is strategically located in Malaysia
Stable operating environment and a
sovereign credit rating of A3
...
9
Future milestones
LAMP continues to ramp up toward Phase 1 nominal
capacity (expected Q2 2013)
Commissioning of Phase 2 ...
10
REO demand growth outlook
Sector
CAGR
2012-2018 Rare Earths used
NiMH Batteries 3.3% La, Nd
Magnets 10.1% NdPr, Dy
Auto...
Sep „12 Nov„12 Q1„13 Q2 „13
11
Indicative timeline to first sales and operating cash flow
First
shipment to
LAMP from
Mt. ...
12
GFC
Community
Outrage
International
and Local
Reviews
IAEA etc
Political
Uncertainty
Sovereign
Risk Issues
Rare Earth
P...
The Challenge
A People and Culture Perspective.
13
• To create and build an organisation that is capable of surviving but ...
The Challenge - People and Culture Perspective.
14
Biggest Challenge for a start up company
• Align Organisational and Emp...
Psychological Frame
Human Behaviour – Seeking New Experiences and Reducing Exposure
to Unpleasant Experiences”
15
• Gray b...
A Biopsychological Frame
“Behavioural Activation System”
16
Behavioural Activation System (BAS)
• The BAS includes brain r...
A Biopsychological Frame
“Behavioral Inhibition System”
17
Behavioral Inhibition System (BIS)
• The BI also includes brain...
Psychological Frame – Mapping to People and
Culture Systems and Organisational Culture
18
• In an environment that is faci...
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
efficien...
-21-
Dimension 1 - The Way We Organise
The Challenge of Leadership
“The difficulty is that we have put ourselves to work i...
Principles of Lynas Way – The Way We Organise
-22-
• Role clarity- Accountabilities and Responsibilities Clear
• Levels of...
-23-
Role Clarity
• Clearly Defined Position Descriptions based on application of RACI Mapping
across the organisation
• E...
-24-
Stratums - Human Nature and Capability
 Organizational hierarchy is a natural human phenomenon and forms
according t...
-25-
Levels of Work (Stratums)
Levels of work define the relative complexity of the tasks that make up the
work requiremen...
-26-
Levels of Work (Stratum)
6 10 - 20 Years Value Delivery
5 5 - 10 Years Strategic Direction
4 2 - 5 Years Strategic De...
-27-
How Flat Should a Structure be?
Role Compression and Effective Organisation
Stated Organisation
Structure
A
B
C
D
E
F...
-28-
PROJECT
ENGINEER
TEAM LEADER
SPECIALIST
• Safety
• Industrial Relations
OTHER TEAM
LEADER
Role Relationships
Task Ass...
-29-
Dimension 2 - The Lynas Way
Work Allocation - CPQQRT
Whenever work is allocated to employees (assigned or initiated) ...
Dimension 2 - The Lynas Way
Work Allocation - CPQQRT
30
BIS Sensitivity
• Context ,Purpose, Quality, Quantity, Resources a...
Dimension 3 - Lynas Way – Values and
Behaviours
31
Values provide a framework that
• provide a sense of certainty in times...
The Lynas Way – Values and Behaviours
32
BIS Sensitivity
• Provides a Frame to fills gaps in Policy, Procedure and System ...
Dimension 4 – The Lynas Way People and
Relationships
33
• Toolsets beyond the Mechanistic
• Cultural Memes, Spiral Dynamic...
Dimension 4 – The Lynas Way People and
Relationships
34
BAS - Sensitivity
• Encouraging “Entrepreneurial” and “breakthroug...
Impact of the Lynas Way on Retention.
35
Lynas Labour Turn Over Rates are Respective Industry
Benchmarks (2011-Q1 2013)
23...
The Lynas Way – An Integrated HR Framework
for a “Developing Company Culture”
36
Lynas Corporation - Building a new business and creating an organisation that meets its vision
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Lynas Corporation tell their story on how they manage to attract and keep employees amidst a negative media environment where they are being claimed to dump radioactive waste

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Lynas Corporation - Building a new business and creating an organisation that meets its vision

  1. 1. Lynas Corporation Building a New Business and Creating an Organisation that meets its vision HR Leaders Summit 8 May 2013
  2. 2. 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
  3. 3. 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
  4. 4. 5 Production process overview Vertically integrated operations from mining at Mt. Weld to oxide production at the LAMP Rare Earths Solution
  5. 5. Mt. Weld Mine & Concentration Plant 6 Overview of Australian assets Mt Weld Project and Concentration Plant Location of the Mt. Weld Project & Concentration Plant Mt. 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
  6. 6. 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 9.8% 6.4% 4.9% 2.6% 2.0% 1.4% 1.1% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% CLD (Lynas) Mountain Pass (Molycorp) Duncan (Lynas) Nolans (Arafura) Hoidas Lake (Great Western) Thor Lake (Avalon) Kvanefjeld (Greenland) Source: Company filings Note: Figures may not sum due to rounding 1 REO (%) includes all the lanthanide elements plus yttrium Central Lanthanide Deposit Rare Earth Grade – Mt. Weld vs. some other projects REO grade (%) Lynas cut-off grade – 2.5%
  7. 7. 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 LANGKAWI Alor 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 GEBENG SOUTH SEA CHINA Tioman MELAKA
  8. 8. 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
  9. 9. 10 REO demand growth outlook Sector CAGR 2012-2018 Rare Earths used NiMH Batteries 3.3% La, Nd Magnets 10.1% NdPr, Dy Autocatalysts 6.0% Ce FCCs 8.0% La Metallurgy & FerroSilicon 3.4% CeLa Phosphors -1.2% Eu, Tb, Y, Ce, La Polishing 4.8% CeLa UV Cut 3.0% Ce Optical 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 Batteries 10% Magnets 27% Autocatalysts 7% FCCs 16% Metallurgy & FerroSilicon 13% Phosphors 7% Polishing 11% UV Cut 2% Optical Glass 3% Other 4%
  10. 10. 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 View Strong cash flows expected in the near term Nov „12
  11. 11. 12 GFC Community 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
  12. 12. 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
  13. 13. 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
  14. 14. Psychological Frame Human 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
  15. 15. 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
  16. 16. 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
  17. 17. 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”
  18. 18. Viewing HR System Elements with this Frame in Mind – The Lynas Way 19
  19. 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
  20. 20. -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.
  21. 21. 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
  22. 22. -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
  23. 23. -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
  24. 24. -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)
  25. 25. -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
  26. 26. -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 really happens I F G H J A B C D E Should be After Elliott Jacques “Requisite Organisation”; Cason-Hall 1989
  27. 27. -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.
  28. 28. -29- Dimension 2 - The Lynas Way Work Allocation - CPQQRT Whenever work is allocated to employees (assigned or initiated) the following information should be provided: CONTEXT Context 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.
  29. 29. 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.
  30. 30. 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
  31. 31. 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
  32. 32. 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
  33. 33. 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.
  34. 34. Impact of the Lynas Way on Retention. 35 Lynas Labour Turn Over Rates are Respective Industry Benchmarks (2011-Q1 2013) 23.50 18.9 12.2 14.2 0 5 10 15 20 25 Labour Turn Over WA Labour Turn Over MY Benchmark Lynas http://www.amma.org.au/assets/Policy/Papers/20130227AMMA%20Research%20Paper%20-%20Labour%20Turnover.pdf Hayes Industry Data – Gebeng Industrial Park – Pahang, Malaysia.
  35. 35. The Lynas Way – An Integrated HR Framework for a “Developing Company Culture” 36
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