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Thinking

Pit to port infrastructure

A coal mine close to a port

The following Thinking Paper is a reflection on an article from International Longwall News, 3 February 2012 - titled 'Hogsback and the problem with railways in Australia'.

The market perspective

Writing in International Longwall News on Friday, 3 February 2012 Hogsback reflected that:

  • The real problem facing resource development in Australia has less to do with digging the product out of the ground, than it does with getting the product to port, onto a boat, and to the customer
  • The many billions of dollars touted by mining entrepreneurs in resource and mine development is often overshadowed by the development cost of the heavy haul railway systems, deepwater port, stockyards, bulk material handling equipment, and fleets to turn the resource into money
  • The true cost of the project, including access to shared and new rail and port developments, can be astronomical

The development of robust, economical transport infrastructure is a key driver to sovereign economic growth.

Notwithstanding the value of undeveloped mineral resources, they are of little value unless brought to market. In a global context, Australia well understands the importance of such infrastructure making us internationally competitive and well placed to capitalise on what many have described as the greatest ever resources boom.

We well understand that mining the resource is only part of the solution – the balance is putting it to market at a competitive landed cost. Australia has solved many of the challenges developing resource nations are now facing.

Recent developments

Recent developments in remote monitoring and operations have spawned a surge in automation development in the mining industry. Remote Working Strategies is the phrase coined to describe the means by which modern mining – as contemplated by the likes of BHP and Rio Tinto – is now able to operate and control pits from hundreds of kilometres away.

These initiatives are extending beyond the mine gate with significant commitment to driverless trains and other initiatives aimed at increased site safety by moving people out of harm’s way and replacing them with machinery.

With automation of operations comes the opportunity to track the consignment along the logistics chain – and so is born the true pit to port whole of logistics channel.

Someone else’s problem Trains with cargo

Mining of just a few decades ago characterised rail and port logistics chains as someone else’s problem - a problem simply solved by someone else. Miners mine and someone else runs the trains down to the port.

This is, of course, an overgeneralisation in that Australia’s larger miners very early understood the true impact of these networks to the viability and competitiveness of their product. They understood and sought to maximise the value of integration of mine, rail, materials handling, and port across the entire logistics chain. Those decades ago, the only true way to have such absolute integration was to own all of the elements – your mine, loading your trains, that load into your port and then (sometimes) even onto your ships.

For the smaller miners this was not a viable option – so it was very much a case of placing your trust in someone else’s system, to the vagaries of someone else’s operations.

Remote monitoring has changed all of that and now miners can track their product from pit right through to the ship’s hatch – a true quality system; something which manufacturers and primary producers have long since been able to do. From a mine perspective, this sort of operational monitoring can be a very effective means of getting the most from rail capacity, reducing rail costs, and improving the competitiveness of rail relative to other modes of transportation.

All the easy projects are done

It is a given that all the easy projects are done – we are now seeing projects being developed in more remote, challenging, and marginal reserves. Hence, the logistics network – even those owned or controlled by someone else - is of critical importance to the resource developer.

It is no longer acceptable to simply leave the logistics chain to someone else. There is now an intrinsic link between the viability of the resource and the path to market.

It is a given that all the easy projects are done – we are now seeing projects being developed in more remote, challenging, and marginal reserves. Hence, the logistics network – even those owned or controlled by someone else - is of critical importance to the resource developer.

It is no longer acceptable to simply leave the logistics chain to someone else. There is now an intrinsic link between the viability of the resource and the path to market.

The ICCC (Integrated Coordinated Control Centre)

Long haul trainTrains are getting longer, and heavier – and smarter.

Trends in rail signalling, remote sensing, and in-motion sensing provides a wealth of information such that the cargo can be tracked across the whole of supply chain – from mine load-out to ship’s hatch and beyond.

We are seeing this at integrated coordinated control centres such as the ILC (Integrated Logistics Centre, Mackay, Queensland) and HVCCC (the Hunter Valley Coal Chain Coordinator, Newcastle, NSW).

Some of the most significant current trends in mining are in improving the operational efficiency of the logistics chain. This is where all of the supply chain players can benefit and play a part.

Technology has improved - longer, heavier trains made up of more powerful locomotives and higher-capacity wagons, so too has operations planning expertise. We are now seeing the benefit of integrated and coordinated operations. This means information sharing, coordinated problem solving, and opportunistic operations to drive supply chain throughput.

The logistics chain as part of the mining process

Put simply, the movement of the product by heavy haul rail, down to a port where it is stacked and prepared for export, is an intrinsic part of the mining process in that it can often mean the difference between viability and failure of a prospective and operating mine.

From a historical perspective, the growth of bulk resource export infrastructure has been a major contributor to the growth in export bulk materials in countries such Australia, South Africa and Brazil, and thus their sovereign wealth. As technical capabilities improved, railways were able to run longer, heavier trains made up of more powerful locomotives and higher-capacity wagons. Ports received and loaded ever bigger ships, and all the bulk materials handling equipment was likewise increased and improved to feed the supply chain. The opportunity for reducing operating costs and increasing capacity has provided a powerful incentive to push the limits of engineering capabilities.

We are now seeing longer, heavier, faster trains on smarter railways – where the system can be run as an integrated whole. Just as JIT (Just in Time) was the catch phrase of the 1980’s, XOT (Exactly on Time) is fast becoming the benchmark of heavy haul rail operations.

Integrated pit to port logistics chains Long trainThe challenge has always been to improve the efficiency of the entire export/import network. Step change improvements in just one element at the expense of inefficiency in others often yields no benefit.

Our experience shows that greater operational integration between the logistics chain elements, by simple means such as improved communications and coordination of operations, maintenance, and throughput, can show remarkable improvements for very low investment.

The traditional response to a problem has been more infrastructure. A more effective approach would be to take a whole of supply chain perspective with a view to improving each element of the chain to its optimal efficiency before resorting to the expense of more infrastructure. This approach would start with the clear identification of the intrinsic interdependencies of the various elements and how each impact upon each other to diminish the overall effectiveness of the chain as a whole.

Many organisations leap to an infrastructure intensive solution, often working on an incentive of payment for building something. Constantly seeking to innovate, Aurecon’s focus is more on improving operational efficiency in a master plan approach which contemplates expansion steps to deliver the nominated target tonnage at the lowest cost. We are committed to working closely with our clients to deliver out of the box thinking on some of the world’s most complex and important development projects.

Technology is making the logistics chain the competitive battlefield for smart resource exporters – and many are looking at what their competitors have done, are doing, and are learning from their experience.

 

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