Essentials for Enhancing Coal Production

Report
Essentials for Enhancing
Coal Production
K.B. Trehan – Director, Mining & Metals, IISD / INR
Agenda
1. Expand the reserve and resource base
2. Focus on enhancing productivity
3. Speed up clearances
4. Equipment approvals
5. Essentials for high capacity mining
6. International best practices in contract management
7. Avoid regulatory overkill
8. Summary
2
1. Expand the reserve and resource base
▪ India is amongst the lowest spenders on
mineral exploration in the major
economies of the world.
▪ The total exploration (regional,
promotional and detailed) drilling per
annum in coal and lignite is around 2.5
lakh meters per annum with a spend of
about Rs. 250 Cr. as against US$ 600
million in Australia
▪ The total quantum of drilling is to be
increased to 20 lakh meters per annum
with an outlay of around Rs.1500 Cr. - To
be outsourced in a big way and relevant
approvals to be expedited.
$ per Sq. Km
India
Australia
Canada
0
50
100
150
3
2. Focus on enhancing productivity
▪ Indian Coal mines have a
long way to go in terms of
productivity.
▪ The largest underground coal
mine produces around
1MTPA whereas in USA,
Russia, China, Australia and
South Africa, it is 10 MTPA.
Type of Mine
CIL OMS
(Metric Tons)
USA
(Metric Tons)
Opencast
10.73
68.20
Underground
0.84
20.88
Overall
4.92
39.60
Activity
India
US, Australia, South
Africa, Poland
Shaft sinking: 400 mts
36 months
12 to 18 months
Incline Drivage: 1000
mts
18 to 24
months
12 to 15 months
Roadway
Development
3 to 8 mts
per day
3 mts per operating
hour
Lack of investment in technology is the principal reason.
Contd.
4
2. Focus on enhancing productivity
▪ OC is a success story in India. Thanks to the vision of the mining
industry leadership –

Some of the Outsourced Opencast OBR contractors have Australian
level of equipment availability, utilization and productivity.

In UG Mines, Joy and Bucyrus operated CMs have set some
productivity records.
▪ To replicate these success stories…
Contd.
5
2. Focus on enhancing productivity
▪ Invest in “TECHNOLOGY, PEOPLE
& SYSTEMS” – Three pillars of
productivity.
▪ Focus on “Mining as a System”
instead of each piece to be
understood at all levels.
▪ Invest in “Training” – Shortage of
skilled manpower or political
difficulty of hiring right manpower.
▪ Coal companies should look at
“lifecycle cost of equipment and
cost per ton” instead of the cost
of initial acquisition.
▪ Investing in high cost of equipment
is worth only if they are going to be
productive.
▪ Training people in advanced
equipment and methods of working
is a must.
▪ Provide “funding for equipment”
(like some CIL collieries), as
banks do not have expertise in
lending to underground
equipment.
6
3. Speed up clearances
▪ The present clearances: mine lease, mine plan, environmental approval,
forest clearance take between 5 to 8 years; target it to reduce it to 2
years.
▪ EMP should take a maximum of 210 days but it takes 540 to 720 days.
▪ FC to be targeted in 150 days instead of 3 to 5 years.
▪ Banks have instructions not to lend to projects without completing land
acquisition, R&R (100%), forest clearance and environmental clearance So??
Contd.
7
3. Speed up clearances
The way forward
▪ Can we look at legally binding time limits?
Technical opinion
5 months
Opinion on forest land
5 months
Revenue opinion
5 months
Recommendation by State
4 months
Approval by the Ministry
3 months
▪ Put up for bidding only those projects with complete clearances:
 Land is acquired fully, R&R is completed, EC and FC are in place;
 The bids will then be reasonable or else speculator bidders would win and
projects will not take off.
8
4. Streamline approvals by DGMS
▪ DGMS and Coal Mining Companies in India
are credited with good safety record and
they are to be complimented.
▪ Concept and Awareness of “Zero
Dangerous Occurrence“ to be introduced
and reviewed for complete safety.
▪ The procedures are based on Coal Mines
Regulations of 1957 and Indian Electricity
Rules of 1956.
▪ There is a shortage of testing laboratories in
India. For roof supports, there are no labs,
leading to testing outside India thus,
resulting in delays.
No. of fatalities per million tons of coal
India
South Africa
USA
China
0
1
2
3
4
Contd.
9
4. Streamline approvals by DGMS
The way forward
▪ Once approved and tested in an internationally recognized laboratory
duly following internationally accepted testing processes, no further
testing in India may be insisted.
▪ Systematic Support Rules, which specify the support pattern in
underground mines, need to be revised continuously due to advances in
technology, equipment and understanding of the roof strata.
▪ In the absence of above changes, the equipment market would be
cornered only by a few established players, thus, stifling innovation and
customer choice leading to higher prices and slower pace of technology
absorption.
10
5. High Capacity Mining – Opencast &
Underground
▪ Identify high capacity – 20 to 50
MTPA opencast mines:
 Deploy high capacity HEMM
suiting mine specific conditions;
▪ In Underground Mines - 5 MTPA
longwalls and 1 MTPA per CM
board and pillar projects have to be
identified.
 Maintenance and repair
contracts
 Focus on faster mine development
using Roadheaders, Bolter miners
and achieve a progress rate of 3
meters per operating hour.
 Outsource development work
and other services
 Outsource development work.
 Spares from OEM with
performance guarantee,
strategic warehouse locations –
Minimize inventory carrying
costs.
 Invest in Longwall mines –ploughs
for thin seams and top coal caving
for thick seams, for improving
production, productivity and safety.
 Adopt global best practices in
mining technology and
management.
Contd.
11
5. High Capacity Mining – Opencast &
Underground
▪ Unless a critical market is created, no reputable OEM would invest in
India to produce the equipment – all major OEMs have factories in
China.
▪ In India too, all the Auto majors have manufacturing facilities – simple
reason being scale of the market.
 Application of Auger / Highwall mining technology
 Phase out manual mining
 Track daily productivity and costs
Contd.
12
5. High Capacity Mining – Opencast &
Underground
▪ Cost Management
 Daily reporting of productivity and costs
 Electronic shift planning capability through shift data collection
 Provide data validation and upload at the end of each shift
 Web portal reporting
Contd.
13
5. High Capacity Mining – Opencast &
Underground
▪ Improving Efficiencies
 Plan for the long term
 Mine planning
 Production scheduling
 Safety
 Wash Plants yields
 Equipment selection
 Appropriate infrastructure
 PLANNING, PLANNING & MORE PLANNING -- Always consider the
WHOLE production chain
Contd.
14
5. High Capacity Mining – Opencast &
Underground
▪ Integrate Systems & Technology
 Technology is often ignored, not understood, under utilized, poorly
implemented and managed
 New technologies MEAN CHANGE & MUST BE MANAGED
15
6. International best practices in
Contract Management
Issues
▪ Risk sharing between the employer and the contractor is not equitable:
LA, R&R, EC, FC need to be with the owner.
▪ Long term contracts do not have price variation clauses; and in contracts
with price variation clause, the formula weightages do not reflect the cost
components effectively.
▪ In composite EPC and Operations contracts, the liabilities of EPC phase
do not end till the operation phase is concluded – No major OEM is
willing to accept this.
▪ The acceptance criterion for performance tests are not clearly defined.
▪ Engineer’s role under the contract is that of a “referee” and not just
“owner’s representative” – this aspect is completely ignored.
Contd.
16
6. International best practices in
Contract Management
▪ Prepare model contract documents as done by NHAI.
▪ Model documents are prepared by Secretariat for infrastructure in the
Planning Commission and approved by the Cabinet Committee on
Infrastructure headed by the Prime Minister for Airports, Roads, Highways,
Power, Telecom and Railways.
▪ The same Secretariat could prepare and approve the model documents for
the coal / mineral sector also.
17
7. Avoid regulatory overkill
▪ Legislators across the world are competing with each other leading to
regulatory overkill
 Australia: Resource super profit tax, Strict Carbon Control laws
 USA : Closing down of coal based power plants which do not
meet the strict carbon emission norms
 Indonesia: Royalty based on index price fixed by the Government
 India: 26% profit sharing for coal and lignite companies
▪ Investors do not worry about regulations but they are looking for fair,
consistent and predictable application of regulations.
▪ Having an independent regulator who has the authority to regulate coal
prices is imperative.
18
8. Transforming the Indian coal sector
Summary
1. Expand the resource base by increasing the spend on EXPLORATION.
2. Invest in “PEOPLE, Technology & Systems.”
3. Focus on PRODUCTIVITY enhancement through TECHNOLOGY &
TRAINING.
4. Speed up forest and environment CLEARANCES.
5. Streamline equipment approvals by DGMS.
6. Identify high impact OC and UG projects and bring them to production
in a well defined TIME frame with TRAINED skilled manpower, tracking
operations SHIFTWISE, Cost Management & integration of Systems &
Technology.
7. Use international BEST practices in contract management.
8. Avoid regulatory overkill.
9. Lets be “VALUE CONSCIOUS” and not “Cost Conscious.”
19

similar documents