Coal still powers Europe
By Tristan Anwyn
European coal is in the throes of some mixed fortunes at the moment.
Coal-fired power supply rose as much as 15 percent across Europe last year, and black gold has won out over gas in terms of market share.
“High coal usage is still expected to continue for several more years, though to a lesser extent, as some ageing coal plants get decommissioned,” says Frost & Sullivan Energy Industry Director Harald Thaler.
“However, there is considerable coal capacity under construction, in particular in Germany and the Netherlands, with most of this new capacity coming online in late 2013 and 2014. Beyond the EU, new plants are also under construction in Turkey and the Balkans. In addition, two coal plants have just been completed in Germany,” Thaler says.
Beyond what is currently under construction, however, the future projects pipeline looks fairly weak. The key German market, which is seeing substantial capacity additions due to the projects currently under construction, still suffers from overcapacity despite the looming gradual phase-out of nuclear power, according to a report by Frost & Sullivan.
The prospects for coal plant orders in Western Europe over the next few years are limited, given existing thermal overcapacities, weak industrial demand and strong opposition to coal plants. However, in Europe as a whole, there will be a few hotspots of activity amidst a generally depressed European outlook.
The EU country with the best outlook for new coal plants is Poland, although the story even there is one of slowing down investment. In the longer term, there could be a challenge to coal’s dominance in the Polish power sector from shale gas but only over the next few years will it become clearer how much gas is actually realistically extractable.
The positive signs do not, however, take away from the fact that coal production across Europe as a whole has fallen in the last year, with decreased demand, weaker coal prices, and cheap imported coal all emerging as threats to Europe's coal mines. Add in global concerns about global warming and the safety of mining, and it's easy to see why coal mining is having a bit of a rough ride of late.
Here is a look at the current ups and downs of Europe's coal mines.
Mixed Fortunes in Poland
Poland has a long and proud coal mining industry, with mines being heavily subsidized by the government. This means that, to a degree, Poland's mining industry has been protected from some of the turmoil that has hit the mining industry throughout Europe.
There is a general trend now towards privatizing Poland's coal mining industry, and with some large producers in the country that could bode well for Poland's coal mining future.
For example, Jastrzebska Spolka Weglowa, one of Europe's greatest coking coal producers, was among the first to be floated on the stock market.
Although mining in Poland is still facing the challenges of meeting EU environmental legislation and the ups and downs of the market in general, demand for coal in Poland still currently outstrips domestic supply, meaning there is still money to be made and security to be found in the Polish mining industry for the time being.
High Yields, Low Safety in Russia
Russian mines are among the most prolific in Europe, frequently ranked among the top three produces throughout Europe. However, Russian mining is frequently overshadowed by its safety concerns and high profile mining disasters.
Lethal mining disasters are an uncomfortably frequent occurrence in the country: 18 people died in a blast in the Komi region earlier this year, at least 66 died in an explosion at the Raspadskaya mine in 2010, and 110 perished in an incident at the Ulyanovskaya mine in 2007.
Russian mine incidents are frequently blamed on methane explosions and a lack of safety regulations, although some improvements have been made to mine safety since the fall of the Soviet Union.
In terms of production the future is potentially good for Russian mines, with coal production estimated to climb to 400 million metric tons by 2020.
However, with increased production comes the increased risk of incidences, something which Russia's coal mining industry will have to tackle as a matter of urgency.
UK Industry Struggles
Mine safety in the UK is among the best in Europe, with fatalities thankfully much fewer than in Russia. Many UK mines employ new and innovative technologies to increase safety, such as installing better gas drainage systems and ventilation, and better combustion controls.
The use of rock bolts instead of colliery arches has meant a decrease in the amount of manual handling operations performed by miners in UK mines, making use of better observational systems to install the bolts.
However, it's not all a bed of roses for UK mines, with mines closing leading to job losses in traditional mining areas.
One of Yorkshire's most prolific mines, and one of the last deep mines in the UK, closed this year; the Maltby Colliery was brought to a standstill by its owners after excess gas and water rendered the mine unsafe for use.
With France closing its last mine to little fanfare, and Spanish miners spending part of 2012 in violent clashes during protests over a lack of funding, it's clear that mining in Europe is very much a mixed bag right now.
Turkey and the Balkans
The other large European market for new coal plants will be Turkey, according to the Frost & Sullivan report. Driven by a rapidly expanding economy and a desire to reduce its reliance on imported natural gas, the country is seeing significant coal investments. Turkey has seen higher order numbers in terms of units, but the size of these plants is smaller and they have tended to be of the subcritical variety.
Apart from Poland and Turkey, there are also expected to be opportunities in the Balkans. Countries such as Serbia, Kosovo and Bosnia-Herzegovina will offer the best prospects. The region does not participate in the EU’s carbon trading scheme (though recent developments make this increasingly less relevant) and there is less opposition to coal plants compared to Western Europe. Moreover, there is the potential for power exports as the region as a whole has fairly tight reserve margins and governments are keen to utilize abundant local coal reserves.
Over the longer term, only a successful commercialization of carbon capture and storage will reignite coal project development in the core markets of Western Europe, but this is not expected before 2030.
The industry faces a battle against cheap imports and environmental mandates, and it's vital that mining operations look to the future both in terms of safety and investment in keeping the industry alive it if is to survive.
About the Author: Tristan Anwyn is an author who writes on subjects as diverse as health, marketing, Ray Debbane, and SEO.
Mining 4.0: How innovation is shaping mines of the future
Mining may be the gateway to the world’s carbon neutral future. Green energy storage systems, for one, are largely dependent on minerals. According to the World Bank Group, clean energy needs will escalate demand for rare earth minerals by nearly 500% by 2050.
While this growing demand holds much promise for mining companies, it also creates new challenges. Mining operators must navigate the ever-present highly cyclical market conditions and capital-intense operations. Recent trends layer on additional challenges, such as the progressive retirement of the industry’s most experienced workers, increasing regulatory pressures, and rising energy costs. To proactively manage these multiple challenges and capitalize on rising demand, mining companies must innovate and lower operating costs to remain both profitable and viable.
Why the urgent need for innovation?
Leading mining companies have shown that lower operating expense (OpEx) is a pre-requisite to on-going business success. This need is driven by the cyclical mining market and ever present,, hefty capital requirements, both of which are inherent in the mining industry. And, when demand is high, the OpEx cost component of unplanned downtime grows steeper. Data indicates that, in mining operations, the root cause of OpEx overages lies in maintenance issues that impede operating efficiencies and incur unnecessary costs. Left unaddressed, these gaps will prevent mining companies from fully capitalizing on increasing demand.
According to McKinsey, mining companies have historically struggled with significant productivity declines, as shown below. In recent years, there is evidence that a slow recovery is underway, however, full resolution is in its’ infancy, primarily rooted in maintenance cost optimization.
Other data points on current mining operations underscore the urgent call for innovation and change:
- 70% operating efficiency due to breakdowns and stalled production, which translates to real potential for increased productivity and throughput
- 30-50% of mining operations costs spent on maintaining plant, fleet and equipment, so, the magnitude of potential improvements on bottom-line profitability is significant
- 3-5X cost for urgent repairs and corrective work requests versus planned maintenance, often made evident by tracking the percentage of work orders managed through the planning office.
While change is always difficult, the promise of technology (and Industry 4.0, Mining 4.0) is a welcome and required one for mining companies. Digital technologies and automation, or Mining 4.0, is defined by smart equipment, drive data-driven (and thus better) decisions, catalyze connected communications and provide easier, more affordable maintenance. From there, mining companies will be able to speed up production, reduce downtime and boost employee safety – three pillars that have challenged mining operations for years.
The first step: Predictive maintenance via condition monitoring
As the first step to regain operational optimization and lower costs, mining companies must get “ahead of the curve” and prevent process interruptions and unplanned downtime. The key is predictive maintenance via condition monitoring systems. By proactively assessing equipment health, mining operators can be alerted to developing failures before they occur and schedule planned repairs at the lowest possible cost and with minimal impact to production.
Condition monitoring systems are based on the principal that failure is a process, not an event. By monitoring asset characteristics, latent anomalies become apparent well before full failure, allowing for low-cost interventions, root-cause analysis and proactive planning for resolution, thereby mitigating process interruptions. Concurrent with deployment of well-engineered predictive maintenance strategy, a thorough rationalization review can minimize unnecessary or redundant maintenance tasks and, in many cases, eliminate human-induced failure modes.
Maintenance optimization is a powerful lever – and the first step -- to achieving and sustaining lower production costs in mining.
When 14% equals $8 million
Consider this PwC mining example, where predictive maintenance enabled a 14% reduction in maintenance spend by mitigating unplanned downtime to deliver US $8 million savings in operating expense (OpEx).
Goal: Reduce unplanned downtime
Solution: Condition monitoring system on critical equipment
- Condition monitoring insights provide operator alerts of potential failures.
- Proactive scheduling of repairs moves resolution to occur during planned maintenance, partial outage periods or normal equipment rotations.
- Asset availability and reliability increases, production interruptions are minimized and maintenance costs are reduced.
Result: 14% reduction in maintenance spend generates US $8 million in OpEx
Source: PwC “Balancing Uptime and Working Capital: Maintenance and Inventory Strategies in Mining”
Reliability and employee safety
The example above illustrates the dramatic improvements to operating expense as mining operators move from reactive / unplanned to proactive / planned maintenance. With decreased downtime, overall operational reliability also improves and with it, a metric of paramount importance in mining: employee safety.
Studies indicate that more reliable operations are safer operations. That’s because technology serves to reduce human-to-machine interaction and urgent, reactive work declines. For one industrial company, as shown in the graph below, an OEE (Overall Equipment Effectiveness) improvement of 52% delivered a safety improvement of 69% during a 10-year period.
Customer Case Study: Slurry pumps
Let’s look at specific mining applications ripe for optimization and maintenance cost savings. The first is slurry pumps. In mining pumping stations, pump failures are responsible for 97% of unplanned maintenance costs. Pump reliability, however, is crucial in the areas of safety, environmental impact, and efficient transportation.
Key characteristics of slurry pumps can be monitored so that timely analysis of impending issues enable early detection of issues at inception and prior to failure. This avoids unplanned maintenance, unplanned downtime, and averts lost revenue.
In slurry pump applications, dynamic pressure sensors can be used to detect reciprocating diaphragm failures, providing a novel diagnostic to increase pump reliability. The solution is based on these design principles:
- The hydraulic fluid flexes the diaphragm
- When the diaphragm flexes, slurry is discharged
- Abrasive, corrosive slurries prohibit pressure sensor installations in slurry valves
- Thus, dynamic pressure monitoring of the hydraulic fluid assesses the effectiveness of slurry discharge
The result? A savings of US $3 million per year, based on maintenance cost recovery and capacity increases for a 10-pump station.
Customer Case Study: Haul Trucks
In mining operations, haul trucks are another critical asset, as they are relied upon to move raw materials. Alignment of extraction speed to transportation speed is required to keep operations flowing smoothly. Mining operators have invested in larger, automated haul trucks to facilitate this timing alignment and optimize logistics. Thus, haul trucks and their operational health is a key enabler of production reliability in mining operations.
Monitoring haul truck health to ensure reliability, however, presents unique challenges. Because haul trucks are in constant motion, data collection at precise and crucial times with linkage to a monitoring center and diagnostics requires innovative thinking and design.
For one mining company, a custom engineered solution for the haul truck’s control system was designed and installed. The system was devised to monitor haul truck health in two distinct operating states so that changes in the various failure mode characteristics could be accurately identified:
- Running and loaded. In this state, vibration data is collected while the truck is running, loaded and in reverse mode (braking the truck using the electric motor of the electric wheels).
- Unloading. During unloading, vibration monitoring data is collected when the haul truck dump or bucket is being raised.
The result? An estimated savings of US $5 million per year, based on an iron mine fleet of 30 trucks operating at 80% capacity.
Outcomes like the examples above are possible for mining operations via innovative condition monitoring systems. There are many other condition monitoring mining applications, such as wireless sensors for hoist systems and continuous monitoring for SAG (semi-autogenous grinding) mills that deliver transformational outcomes. The ultimate payoff for mining companies occurs when these applications and systems scale and interconnect into an operation-wide solution, enabling more holistic optimization.
Benefits of condition monitoring
Condition monitoring is part of Mining 4.0, the transformation driven by the adoption of automation and digital technologies. Mining 4.0 inherently supports the infrastructure and process requirements for condition monitoring systems. Specifically, Mining 4.0 will facilitate capabilities such as digitization, automation, analytics, artificial intelligence and machine learning, establishing a powerful foundation for predictive maintenance solutions and innovation.
Technology and predictive maintenance benefits have the potential to transform mining operations, starting with condition monitoring. In addition to managing and minimizing the impact of failures, mitigating downtime and reducing maintenance costs, condition monitoring systems also help to increase worker safety, reduce energy consumption and meet environmental requirements.
These benefits unleash significant potential for radical and positive changes in mining operations. All condition monitoring systems, however, vary in scope and effectiveness, so proper selection of a design and enablement provider with full-scale capabilities and proven expertise can impact outcomes significantly.
Innovation beyond technology
While innovation and transformation hold great potential, mining companies must go beyond reducing maintenance costs and implementing technology solutions. Companies must work differently and work smarter to capitalize on the full potential of digital technologies and holistic data strategies that deliver operation-wide benefits. For successful adoption, overcoming internal organizational barriers and cultural challenges to digital adoption is equally essential.
To reduce pressure on capital-intense mining operations, condition monitoring solutions can be “self-funding” initiatives on the journey toward Mining 4.0 as operational benefits of condition monitoring are realized progressively from the early stages of implementation.
The way forward for mining companies is clear -- and full of promise. As the world increasingly relies on mining to produce the minerals needed for green energy, innovative mining leaders will usher in an era of profound global transformation that ultimately benefits us all.
To learn more about condition monitoring systems in mining operations, please reach out to speak with one of us or another experienced professional at Baker Hughes.