Exploring Managerial Challenges Emerging from Procurement of Mineral Concentrates : Case study on Boliden

Sammanfattning: Procurement of copper concentrate is becoming increasingly more challenging as the general quality of concentrates are decreasing. Concentrates are now coming with higher shares of impurities and secondary materials, which makes them harder to process. These concentrates are refereed to as complex concentrates and has historically been purchased by refineries pursuing a high margin strategy, as it is cheaper for refineries to buy. As the global copper concentrate quality decreases, traditional smelters may have to revisit their procurement strategy in order to continue to be competitive and cost efficient, gradually moving towards a strategy which today is considered a niche. This notion raises several questions as to what situation future refineries might find them selves in, when treating increasing shares of complex copper concentrates. On that perceptive, this study addresses this topic from a holistic business perspective by investigating managerial challenges which may occur from procurement of complex copper concentrates. We did this through an exploratory investigation on two smelter facilities within Boliden Group, operating on with this procurement strategy. Our aim was to identify important aspects within the procurement itself, inventory management and processing. We conducted eight interviews with company representatives and analysed data on purchasing behaviour, inventory holdings and process quantities in order to understand critical aspects emerging from this strategy. From there, we identified one general challenge containing three sub challenges. We concluded that the management of risk and productivity balance was essential for the whole business, as complex concentrates aggravates already present supply chain and industry risks. Furthermore we saw challenges with maintaining sufficient and balanced inventory levels, due to arrival uncertainties and vague shipping agreements. Also, aligning goals and priorities was identified as a challenge. As complex concentrates have both attractive margin figures and complex processing requirements, differences in prioritisation surrounding profitability and process stability was evident. Lastly, we uncovered potential productivity losses when treating both clean and complex concentrates.