The role of the coal

chain in optimising
coal mine
development

Coaltrans Mine Efficiency Forum – Jan 2014

Andrew Keith – General Manager – JK Aurecon
 Alliance On A Page

CLIENT

Mine Development Scope:

• Study Management
• Resource Geology
• Mine Design
• Ore Characterisation / GeoMetTM
• Process (flow sheet) Design
• Infrastructure Design
• Minor/General Process Eng
• Major/Specialist Process Eng
• SD Consulting (SUSOPTM)

Provide: Provide:
• Ore Characterisation/GeoMetTM
• Study Management
• Process (flow sheet) Design
• Infrastructure Design
• Sustainable Development
• Minor/General Process Eng
Consulting via SUSOPTM

Sub-Consultants

Aurecon will help Flexible - can use client

select the best process Provide:
• Resource Geology nominated subs or
engineering specialist • Mine Design JKTech’s other alliance
and manage their • Major/Specialist Process Eng partners
input
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 Optimisation hierarchy

1. Strategic LOM – Enterprise Optimisation (eg Whittle)

2. Planning and Design – How will we achieve it? Locking in the

practicalities in more detail
• Mine planning
• Logistics chain

3. Operations modelling – Day to Day operations (eg dispatch)

• Operational improvements

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What is Coal Mining?

….the fact that coal and

iron ore have less to do
with mining than with
transport, economics and
infrastructure.

Hogsback – International
Longwall News – 9 February
2012

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 How bad can it be?

• 2.5% of major mining projects achieve “success”

(PWC 2012)
• Success = cost + schedule + scope + business outcomes

• Mining worse than

benchmark
• 35% of mega-projects succeed
• When projects fail they are “truly
miserable” (Merrow 2011)

• Only 21% of delays are due

to Technical issues
(Goldman Sachs 2011)

Merrow 2011 5
Linear Approach to Mine Development

• Exploration drilling =>>

• Geological model of resource =>>
Geology
• Ore quality in blocks =>>
• Mine model =>>
Mining
• Pit shell / mining plan =>>
• Processing plant design =>>
Process
• Product ore production =>>
• Infrastructure – transport, power, water,
Infrastructure
accommodation etc

“All models are wrong. Some models are useful”

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7
Global Trends in Mining

Declining grades

Increasing ore body

Complexities
• Spending 300% of
past costs on
exploration and
finding less

Caterpillar estimates for

same ore in 10 years
• Open pits will need
to mine 70% more
material
• Undergrounds on
average 400 to
600m deeper

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Increasing Remoteness and Challenging Geography

The “easy”
mines have all
been done.

“Indiana Jones” Pipe Conveyor - Happy

Valley Gold Mine – PNG
FLSmidth Wadgassen 2010

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Infrastructure now a critical cost driver

10
 Show me the money!! High impact
Mission critical cost
but less
impacts
Mechanisms Rating Base Case Data Rating
quantifiable
Pit Integrity

Phasing Gaps
Opportunity Assessment
Financial model
Schedule

Impact
Best Practices Applied
Cut-off Dependability

High
5-35% NPV uplift
Stockpiling
plus improved
Blending
Software Tools Rating Sustainability
Processing
Strategic
Products Software

Logistics Scheduling

Capital

Impact
Risk and Sustainability Rating

Low
Uncertainty
Social Impact Asset today
Activity Based
Costing Environmental
Basic Advanced
Theory of Political
Constraints
Infrastructure Legend Best Practice Rating
Geo-metallurgy
Not Applied

Partial
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Integrated
Linking infrastructure into mine planning
decisions

Geology “An integrated

approach
becomes vital as
Mining
the cost and
demand for
Process
power, water,
steel and other
Infrastructure inputs increase.”

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13
Case Study: Nickel Mine, Western Australia

Extension of mine to 2 new (deeper) Nickel Sulphide deposits

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Project Outcome - Optimised Case

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Holistic Solutions – Key Metrics

• Total cost to market

• Time to market

• Reliability of supply

• The ore chain is only as strong as its weakest link

─ In fact not even as strong

─ Complex system’s capacity < lowest capacity component

─ A chain of optimised links DOES NOT equate to an

optimised chain

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 Role of Operational Analysis in Coal Mine
Development
(Simulation Modelling, Numerical Optimisation)

Increase the chance of project success by quantifying

unknowns:
• Is the concept (coal chain) design the best way of maximising the
present value of the development?
• What is the proposed coal chain actually capable of?

Validate the operational performance of the concept/

design
• Is it feasible?
• What is the capacity (sustainable throughput capability tph/ Mtpa)?
• Effects of interactions within the system and with other operations

Direct link between the design and economics by

quantifying unknown delays and interface efficiencies
• More reliable information to determine whether the is project financially viable
• speculative assumptions are replaced with data driven estimates
(e.g. dump station utilisation, berth utilisation)

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 Simulation Modelling in Planning and Design

Preliminary performance and capacity estimates with

Preliminary operational calculations
assumed utilisation and interface efficiency
Concept
ꜜ • Quantitative economic comparisons of alternative
transport/ supply chain options. (Rail, truck, slurry
Strategic Numerical Optimisation pipeline, conveyor)
• Maximum value configuration concept (optimum train
size, electric vs. diesel traction, single or double track)
Prefeasibility
ꜜ • Robust operational performance and capacity
estimate
• Quantification of delays and interface efficiencies
Simulation Model Analysis • Analysis of alternative supply chain configurations
Feasibility
ꜜ • Strong link between design and project economics
• Optimisation of operational methodologies
Detailed Design
ꜜ
Same operating rules and decision logics as
Construction
Operations Planning Tool detailed simulation -> Supply chain actual
ꜜ
Operations performance is as estimated

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 Numerical Optimisation of Coal Chain Concept

25 300

• Minimise transport and port 20

250

Consist length (number of wagons)

handling costs

Breakeven Haulage Cost ($/t)

200
15

• Determine the best transport 150

method (rail, trucking etc.) 10

100
Diesel Haulage and Handling

• Important in setting initial 5

Electric Haulage and Handling
Diesel Consist Length 50
Electric Consist Length
supply chain parameters 0 0

(consist length, track 20 40 60 80 100 120 140

Throughput (Mtpa)
160 180 200 220

configuration, electric vs. diesel 400

traction etc.) 350

300

• Often left to intuition rather than

Single Track with passing loops Double Track

250 Short Short- Medium

calculated!

Throughput (Mtpa)
200

Very long
150

Long

100
Medium

50
Short-Medium
19
Short
0
Haulage Distance (km)

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 PT Kaltim Prima Coal (KPC) project
(detailed simulation analysis)

The simulation project included:

• Existing facility including
barging
• 2 expansion cases planned to
meet future demand
• Interactions between mine
products and sources,
shiploading, barging, and
transhipping
• KPC wanted to know the
capacity of each stage, plus
identification of when a 2nd
shiploader is required
Schematic representation of KPC
simulation model layout
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20
 Overview of Simulation model layout for the Tanjung
Bara Coal Terminal (TBCT)

Ship loading at
berths with ship
queue based on
Overland conveyors random arrivals
stacking to stockpiles 2 northern stockpile
lines or allows direct rows, with stacker,
loading stacker/reclaimers, and
stamlers

2 southern stockpile
rows, with stacker and
large reclaimers

Barging to offshore
trasnshipment

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21
 Comparison of expansion targets against
throughput capacity for all cases

Shiploader capacity results do not include barge throughput (barge

requirements/capacity shown in red)
500
Case 1 -Existing
450 Facility Expansion
Average Ship Total Time in Port [h/ship]

target 1
Case 2 - Adds OLC-
400 02 and Stockpile line
3 Expansion
350 target 2

300
Required
250
by barge
200 Capacity

150

100

50

0
22
10.0 20.0 30.0 40.0 50.0 60.0 70.0
Loaded Throughput [Mtpa]

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Example Animation
(Proposed Abbot Point Coal Terminal)

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Time is Money – Operational Readiness Pays!

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 A Systematic Approach – from early planning
through to operational improvement

• Operational readiness must be linked to each project stage

• Operational elements must be assessed and prioritised

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 Good system optimisation (debottlenecking)
Let down by Operational lack of Readiness

Outcomes and Lessons Learned

• Output increased to the upgrade capacity over an extended six month

period
• Shutdowns and planned maintenance function could have been much
more organised pre-commissioning of the OLC
• Additional modelling and further training on how the OLC affected
operations downstream would have led to a more rapid improvement
• Change of operational approach over time to direct load coal from
crusher to ship as much of the time as possible for maximum efficiency

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Conclusions

• The industry needs to better recognition of industry trends and

realities
• Coal chain (Pit to Port) has a huge contribution to Coal Mine
cost and viability.
• “Traditional” methods have been shown to be outdated and
produce poor outcomes.
• Holistic “i-GeoMetTM” approach proposed.
• Simulation and optimisation of the overall enterprise in general
and of the Pit to Port Coal Chain in detail present enormous
value adding opportunities.
• The science applied to the coal chain should be at least equal
to that applied to the resource and mine itself.
• Don’t forget the operators

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