Category: Mines and Quarry

According to an AWD Group spokesperson, the CLG970E delivers a customer-focused, high quality 70-tonne excavator that is ideal for large scale quarrying operations.

A Chinese earthmoving equipment supplier has partnered with an Australian capital equipment distributor to re-launch its brand on the east coast.
The AWD Group, which is based in Sydney, has announced a partnership with Chinese earthmoving plant and equipment giant LiuGong Machinery Corporation.

The agreement between the two parties will see AWD Group, which has traditionally distributed Dieci telehandlers to the Australian market, supply LiuGong wheel loaders, excavators, forklifts and skid steer loaders in New South Wales, Queensland, and the Northern Territory. In Victoria, AWD will supply LiuGong wheel loaders, excavators and skid steer loaders.

The first LiuGong machines for the AWD Group will arrive in Australia in February 2016. They will comprise excavators ranging from four tonnes to over 70 tonnes and wheel loaders from 11 tonnes to 30 tonnes.

The largest of the excavators will be the 45-tonne CLG945E, the 48-tonne CLG950E and the 70-tonne CLG970E. They are equipped with Cummins diesel engines, have net power of 280kW to 338kW and dig depths from 6.5 to 7.8 metres.

“LiuGong’s products include some big machines which are ideally suited to large scale quarrying and mining operations such as their 50-tonne and 70-tonne excavators,” an AWD Group spokesperson told Quarry. “Built with the latest component technologies and many advanced processes, and developed with LiuGong’s product development process and product life cycle management tools, the 970E delivers a customer-focused, high quality 70-tonne excavator, which is ideally suited to large scale quarrying operations.”

The largest of the wheel loaders will be the 20-tonne CLG862G, the 24-tonne CLG877G and the 30-tonne CLG890H. The loaders are also equipped with Cummins diesel engines, have net power of 165kW to 248kW, and feature bucket sizes between 3.5m3 and 5.4m3 and breakout forces from 198kN to 251kN.

“LiuGong’s 890H wheel loader gives its operator maximum control over the equipment,” the AWD Group spokesperson continued. “The machine’s engine perfectly matches its multiple working and gear shifting modes, providing maximum traction and speed. The electronic fuel injection system offers a wide range of combustion options and helps to reduce cost in use. It features a Cummins engine and the latest ZF automatic electro-hydraulic transmission, making the loader’s shift a smooth process. In addition, the 890H has the most spacious cab interior among Chinese brands and provides a car-like operating experience. With a bucket capacity of 7m3, this machine suits duties in quarrying applications and can be used for loading blasted material at the face into haul trucks.”

Capital equipment provider
AWD Group first flagged in August its intention to become a leading provider of capital equipment service and parts support. The alliance with LiuGong will certainly bolster that goal.

“We are very excited about this opportunity to bring world class products to Australia,” AWD Group chairman Paul Jenkins declared. “We see this as an opportunity for the existing LiuGong customer base in Australia to receive increased parts and service support in the eastern states.

“This is also an opportunity for existing AWD Group customers to expand on their ownership and ensure they are able to get support from one service organisation”, Jenkins added. “Customers will be able to hire these machines as well as purchase them via our rental arm Rough Terrain Plant Hire who will be adding these machines to their fleet.”

Quarry was informed that the quarry-spec LiuGong machines will figure prominently in AWD Group’s marketing plan in 2016 and that the Group will appoint a dedicated sales representative for the quarry segment. The LiuGong machines are also expected to address demand from the quarry industry for rental equipment and will be available to hire in regional Australia via Rough Terrain Plant Hire.

Demand for mining equipment is predicted to grow seven per cent annually to US$140 billion through to 2019.

While growth slows as it normalises from the heights of the mining boom, an eventual upswing in commodity prices is expected to drive increases by 2019, fuelling mining equipment demand, according to a Freedonia report.

Off the back of this a growth in manufacturing output is expected, particularly in the developing world, whilst a growth in construction levels in the developing world is forecast to bolster this increase in mining equipment demand.

The largest growth area is expected to be drills and breaking equipment.

“These units are used almost universally across all mining operations, especially during the exploration phase of a project; additionally, the growing use of in situ mining techniques, where these products are a primary type of equipment employed, will boost demand,” the report stated.

Crushing and screening equipment is predicted to see the second largest increase in demand, followed by surface mining machinery.

“However underground mining equipment demand will grow at the slowest rate of any major product type, with much of the deceleration occurring in China,” Freedonia explained.

“Over the past decade China has invested heavily in underground mining equipment to improve the safety and productivity of its coal mining operations. However, much of this mechanisation drive has been finished, limiting future sales opportunities.”

Although, China will remain the largest market for mining equipment sales in 2019.

Despite this wider predicted growth, Australia is unlikely to reap many of the benefits, with much of the demand forecast to come from the developing world.

“Many developing countries have significant metals and coal mining industries that require substantial levels of capital investment,” the report said.

“Developing nations are also the most intensive users of mining equipment, when measured against mining output, due to the level of capital spending required in metals and coal mining operations.”

More restrained levels of growth are forecast from developed nations, although there will be a jump in demand in Western Europe as construction rebounds.

Overall, coal consumption and associated mining output is falling in many industrialised countries, as regulatory mandates lead to greater use of other energy sources, negating much of the demand for larger pieces of capital equipment.

BHP plans to cut around 30 per cent of its full time equivalent employees at Olympic Dam by FY17, BHP says.

According to a BHP spokesperson, the workforce reduction would consist mostly of contractors and other FTE employees, with the cutbacks relative to FY15.

This latest announcement follows the miner’s plan to cut 380 positions from the operation, and marks the fifth planned round of reductions at the mine.

It comes as the mine attempts to increase tonnages from the operation, forecasting 200,000 tonnes of production from FY16 to FY19, rising to around 220,000 tones of production capacity by FY19, while at the same time driving down costs.

“We have the industry’s largest copper resource and our business will gain momentum over the next two years with lower costs and higher production across our major assets as we safely improve productivity,” BHP’s president for copper, Daniel Malchuk, said.

“Olympic Dam unit costs are expected to fall 48 per cent by the end of the 2017 financial year to US$1 per pound,” Malchuk said, “repositioning the asset at the low end of the cost curve.”

South Australia’s government has announced a massive $20 million investment into the state’s copper industry.

The PACE copper initiative was created to address challenges facing the state’s resources industry.

It began in September, following the launch of a consultation paper called “The Direction Paper on the Copper Strategy”, which sought the views of industry, regional and Aboriginal communities, and other stakeholders on how to tackle some of the issues that could prevent South Australia from reaching its full potential as a copper producer.

The latest development under this plan is a $20 million investment, which is expected to generate more than $400 million of additional exploration and create up to 1000 jobs.

The South Australian Chamber of Mines and Energy (SCAOME) welcomed the announcement.

“It’s great to see the South Australian government listening to the industry and responding accordingly,” SACOME chief executive Jason Kuchel said.

“The government recognises the just one single mine can be a game changer for the State’s economy.

“This initiative is aimed at assisting the junior exploration sector, which is the powerhouse of finding new discoveries, to focus their very limited resources on even better targets that will be defined by this additional data.”

Iron ore has finally slipped below the new US$40 per tonne watermark.

This is a worrying new low for the market, as the iron ore futures fell under the US$40 per tonne price point, according to Bloomberg.

The SGX AsiaClear contract price for January slumped to US$39.67 a tonne, and marks a return to prices not seen since before the Global Financial Crisis, in 2007.

The MBIOI-58 Premium Index was even worse, ending the month at US$38.15 per tonne.

Last month independent analyst Andy Xie forecast that the commodity would slip below US$40 per tonne, and will trade just above US$30 per tonne next year.

The former Asia-Pacific head economist at Morgan Stanley previously pointed to the steel industry reaching a crisis point, adding they needed to cut production to drive demand.

This new ‘normal’ comes as the SteelIndex reaches its lowest point since records began nearly a decade ago, after the spot price at the Chinese port of Tinajin fell to just above US$43 a tonne.

The situation is not as dire right across the market, however, with Metal Bulletin recording a spot price of US$42.97 a tonne, which was still a fall overnight.

Conditions are likely to get worse as reports emerge forecasting more than 100 million tonnes of new iron ore supply will hit the market.

According to Fitch ratings, more than 145 million tonnes will be added to current supply levels over the next two years, with Gina Rinehart’s Roy Hill iron ore mine getting closer to export as ships near its port.

These figures from Fitch are an additional 10 per cent on existing levels, and solidifies the likelihood of the iron ore markets lack of recovery in the near term.

“The closure of high-cost iron ore mines has been slower than we previously anticipated, despite the sharp fall in iron ore prices since 2014,” Fitch said in its report.

“Global demand, led by China, has also been weaker than we previously anticipated, and is likely to remain muted through 2016.”

Mining investment in Australia is set to decline sharply over the next three years, resulting in 20,000 job losses.

A new report by BIS Shrapnel – Mining in Australia 2015 to 2030 – predicts the current state of contraction to continue in mining, falling a further 58 per cent over the next three years.

Despite this grim outlook for investment, and the corresponding effect on junior miners and explorers, mining production is actually expected to increase six per cent annually over the next five years, in turn driving an increase in operational activities and export volumes.

“We haven’t hit bottom yet on commodity prices or investment, which will continue to be a key drag on Australian economic growth from here,” Adrian Hart, BIS Shrapnel Infrastructure and Mining Unit senior manager, said.

“While mining production will continue to rise strongly, led by new LNG exports, the facts are that this growth will be far less employment intensive than the investment phase, albeit offering contractor opportunities for maintenance and facilities management.

“Indeed, we are forecasting a further 20,000 job losses in the mining industry over the next three years, on top of the 40,000 direct job losses since the investment peak.”

Previously speaking to Australian Mining, Hart explained the current state – and future – commodities in Australia.

“We’re near the trough for coal, iron ore, and base metals,” Hart, told Australian Mining.

“Coal is still likely to see another 12 to 18 months before stabilisation, but when it comes to oil and gas there is still a way to fall, and it will damage the [Australian] economy for years,” he said.

“The investment downturn will continue in oil and gas, and will hurt the Northern Territory and Western Australia.

“It reached a peak of $40 billion, and is slated to fall to $16 billion at the trough, and we aren’t yet near that point.”

The BIS report aligns with a study by Newport Consulting that found investment is at an all-time low but is showing some very early signs of ‘green shoots in a cold market’.

Built from interviews with 50 mining executives, Newport suggested there was a “slight revival” in attitudes towards the state of the market.

Of those interviewed, 16 per cent of mining leaders said they were cautiously optimistic about growth prospects in the next 12 months, and leaders who showed no signs of optimism fell from 93 to 84 per cent.

Regardless of these minor improvements on the impoverished sentiment of the last three years, capital expenditure continues to plunge, as the number of leaders reporting a reduction in capex jumped from 44 per cent up to “an overwhelming” 78 per cent, which Newport said was the most pronounced capex reduction seen in five years of reporting.

According to one president of a $34 billion company: “No Capex is being approved. As a new business we are seeking to reduce our back office costs. We will become lean and mean while supporting essential Capex spend in production.”

Four out of five mining leaders are planning workforce reduction, in line with BIS Shrapnel’s findings, and up 50 per cent on last year’s retrenchment intent, while none indicated plans increase boots on the ground or administrative and managerial roles.

For junior miners and explorers this dearth of investment may spell doom.

Access to capital, investment, and funding are the number one concerns for junior miners and explorers according to the annual junior mining and exploration (JUMEX) companies report.

“This has been the number one constraint for the past three years,” Association of Mining and Exploration Companies (AMEC) CEO Simon Bennison explained.

According to a recent report by SNL Metals, there has been a 50 per cent drop in the number of financings by companies with annual revenue of less than US$500 million; this represented the lowest number of financings by exploration companies since at least January 2012.

“Things appear most dire in Australia, which attracted 15 per cent of total financings in 2013-2014 but has fallen to only 5 per cent of 2015 financings to date,” SNL stated.

When it comes to actual cash on hand, the situation is grimmer still.

Approximately 30 per cent of Australian juniors have less than $500,000 in capital while close to 10 per cent have less than $100,000.

“With half of our respondents planning a fund raising within six months and 29 per cent having a cash balance of less than $500,000 competition for capital remains extremely fierce and unfortunately there appear to be few positive signs of any improvement in investor interest in the short term,” Grant Thornton’s JUMEX report said.

However the BIS Shrapnel report was not completely pessimistic about the state of mining.

It predicted that the growth in production, as the industry shifts from the investment heavy construction phase into a new era of output, and the growth in maintenance operations aligned with this development, will expand over the next five years.

“Overall, BIS Shrapnel estimates the mining industry represents around 20 per cent of the national economy, given strong growth in production and related services combined with a (falling) level of investment,” BIS stated.

“In terms of production alone, the mining industry represents nine per cent of the national economy.”

“A significant volume of capital that has been injected into the mining industry is still to fully translate into expanded mine production,” BIS Shrapnel economist and report author, Rubhen Jeya said.

“The value of mining production has grown at an annual average rate of 7.1 per cent over the past five years – and there is more growth to come. Mining production is forecast to expand by over one third again over the next five years – around double the pace of the national economy – taking the value of industry output to $186 billion in Gross Value Added terms (GVA) by 2019/20.”

However the continuing oversupply affecting the market coupled with a slowdown in Chinese demand and expected growth in Indian demand not materialising is continuing to choke the market.

Eventually, the current strike in investment will eradicate the oversupply and allow stabilisation and recovery in commodity prices, but this is not expected until towards the end of the decade,” Jeya said.

“Even at sub-seven per cent per annum economic growth, China is still adding the equivalent of another Australia each year to the value of its economy; as China continues to shift its engine of growth from investment to consumption, we will eventually see a staggered recovery across most metals and minerals, particularly those which will service the growth in middle class consumer demand, such as copper, gold, and base metals.”

A $US1.9 billion ($2.64 billion) bauxite mining project has been approved by Rio Tinto in Queensland. Called Amrun, the site will initially produce 22.8 million tonnes per annum of the mineral ore used to produce alumina and aluminium.

The site, located 40km south of Weipa near the top of Queensland, will include construction of a mine, processing infrastructure, a power station, storage as well as a new port containing barge, ferry and ship loading facilities.

Production can potentially be ramped up to 50 million tonnes per annum: Rio Tinto envisions the site as replacing production from the depleting East Weipa mine. On opening, it will increase overall bauxite exports from Queensland’s Cape York by about 10 million tonnes per annum.

Rio Tinto chief executive Sam Walsh called it a tier one asset that would deliver significant benefits to the company’s stakeholders.
“This long-life, low-cost, expandable asset offers a wide variety of development options and pathways over the coming decades,” explained Walsh. “We are establishing Cape York bauxite as the product of choice for the Chinese seaborne market with consistent quality, security of supply and strong technical marketing support. Amrun will be significant in helping to meet growing bauxite demand from China.”
Queensland Premier Annastacia Palaszczuk said the site would support the ongoing employment of 1400 people in Weipa as well as the 2000 or so people at bauxite refineries in Gladstone. During construction, the site would employ an average workforce of 600 people over three years.

Site establishment works are expected to start in December. The first shipment of bauxite is scheduled for 2019.

Cadia mine’s 1 SAG mill is back in operation following a breakdown earlier this year.

The mill broke down in late October, raising some concerns as the 1 SAG mill processes more than two thirds of all throughput at the mine.

According to Newcrest the issue has now been rectified.

“Following repairs and a period of operational testing, Concentrator 1 SAG mill at Cadia is now operating at full capacity,” Newcrest said in a company statement.

This is well ahead of the December target some in the market put forward for eventual repair.

“Engineers have determined that he mill motor will eventually require a full rewind,” Newcrest added.

“The timing of the rewind will be subject to the availability of long lead time parts and will be incorporated into the maintenance schedule when it is considered convenient or appropriate to do so,” it said.

“Installation of the conveyor to bypass the mill, transporting ore from the high pressure grinding rolls to the ball mill circuit, remains on schedule to be completed in early December 2015; this will provide future operating flexibility.”

The stockpiles of ore generated during the mill’s downtime over the last five weeks will reportedly be processed by the end of the current financial year, meaning Cadia’s cost, capital, and production guidance is unlikely to be significantly changed.

Newcrest Mining Ltd Quarterly Report

Mining companies across the world face challenging market conditions including price volatility, rising costs, and a lack of financing.

According to the Australian Government’s recent Resources and Energy Quarterly, a combination of weak growth in consumption and strong supply growth placed considerable downward pressure on commodity prices in the first eight months of 2015.

The downturn in commodity prices has pushed many companies to implement cost cutting programs to remain profitable.

Now more than ever, there is pressure for mining companies to increase value by leveraging new technologies such as the cloud, automation, analytics, artificial intelligence and mobility.

These technologies have created an entirely new ‘As-a-Service’ business model, where the whole is more powerful than the sum of its parts.

This is the ‘Power of AND,’ integrating software, infrastructure AND business processes on demand, providing companies with plug-in, modular, scalable AND consumption-based services.

Adoption of this model is allowing mining companies to receive plug-in, modular, scalable and consumption-based services, which in turn enable more agile, robust and cost-effective business services.

Though the As-a-Service model provides a number of opportunities for larger businesses, it’s largely under-utilised, according to a recent study from Accenture and HfS Research.

Results from a survey of more than 700 enterprise service buyers, advisors and service provider executives revealed that all Asia Pacific enterprises surveyed saw the As-a-Service economy as significant for their organisation, with 23 per cent saying it is critical.

Despite this, only 8 per cent believe their core enterprise processes are currently delivered As-a-Service, and almost half (46 per cent) do not expect their core operations to be delivered via the As-a-Service model for at least another five years.

The research suggests that small and medium sized enterprises are more likely to adopt this model, meaning larger companies may be at risk if they do not look to move away from older models to keep up with evolving business practices.

Rio Tinto is one example of a large mining company adopting an As-a-Service business model solution.

Moving to a new information systems and technology delivery model, Rio Tinto is merging core enterprise information systems and technology to a cloud-based, As-a-Service solution.

The program will include the modernisation of the company’s existing enterprise resource planning and information management platforms, and consolidate and host these applications on the cloud.

Due to the increased business agility – in addition to the cost flexibility and lower infrastructure prices that are inherent in cloud services – Rio Tinto expects to find substantial cost savings with the adoption of the new model.

Costs are also flexible due to the pay-for-use pricing, and services are scalable based on business demand.

Rio Tinto’s move to the modern business model demonstrates the ways in which mining companies drive innovation and value from an As-a-Service model.

Modular designs allow mining enterprises to mobilise and demobilise their services rapidly as necessary, to choose the service levels and create variable cost models inside their own business. By using this approach, mining enterprises can ‘plug in’ to access services quickly in a matter of weeks or even days.

The model is also scalable, so companies can ramp up and down their activities to match actual business volume needs.

Overall cost reduction is another major benefit – for a significantly lower total cost of ownership, buyers can access up to date software platforms, rather than implementing them from scratch. In addition, with this model companies only need to pay for what they actually use, rather than having to commit to functionality and capabilities they may not ever need.

The model operates on a basis whereby both buyer and provider make the commitment to achieve specific business outcomes.

The vendor agnostic nature of the As-a-Service model is another useful feature for many companies.

They benefit from the knowledge and experience of a number of IT providers, and assemble a combination of solutions that work to achieve the desired business and performance outcomes.

The competition ensures providers are committed to innovations in business processes, which protects the buyer from potential problems stemming from upgrades and change.

Procurement is a business process that can benefit immensely from an As-a-Service delivery model. A recent Australian report from Mining IQ identified procurement as a critical area for mining companies to optimise costs in order to survive in the volatile market.

The respondents in the survey ranked the automation and standardisation of procurement processes to improve efficiency as the number one priority for mining procurement activities in 2015. Despite this, only 38.5 per cent of respondents were found to have automated functions in their supplier and purchasing processes, while 34 per cent of respondents indicated automation of procurement processes was not even on their radar for the near future.

The banking and finance industry is an example of a sector achieving greater efficiency and value in procurement through the As-a-Service model.

For example, Deutsche Bank is undergoing a procurement transformation, automating its source-to-pay process, including invoice processing and contract compliance management and migrating the bank’s current on-premise procurement IT platform to an on-demand, cloud based solution.

This update has helped Deutsche Bank demonstrate a 15 per cent savings in both procurement operations and operational IT costs.

As a result, the bank has seen improved cost control, faster procurement processing and a streamlined transaction process. Mining companies could achieve similar value in their procurement process by applying the As-a-Service approach.

Adopting the As-a-Service model is not always an easy task for large companies.

Learning how to buy services piece by piece, creating awareness in the organisation about changes to the overall strategy and addressing talent gaps in areas like analytics and automation are challenges faced by many organisations.

Whilst the As-a-Service model will require strong leadership it is what is needed to drive future cost savings, increase productivity and achieve world class operations. The challenge for miners is when, not if.

*Nigel Court is Accenture’s Asia Pacific Mining Lead.

Hexagon Mining has been contracted to supply its MineSight mine planning software to three European customers.
Hexagon Mining’s London office has won contracts with Turkish companies Alacer Gold and Polimetal Mining, and Ellatzite Med of Bulgaria, who will be using MineSight software for their mine planning needs. All three companies chose Hexagon Mining for its proven technology and customer service.
Baris Cakir, Chief Planning Engineer at Polimetal Mining in Ankara, Turkey said Hexagon Mining’s strong planning tools and very flexible MineSight Implicit Modeler were key reasons behind their decision to choose the software. He added that Hexagon Mining also delivered high quality customer service including using Turkish speakers and providing excellent technical support.
MineSight software is used widely in Europe, especially in Turkey and not only in the country’s mines. Istanbul University has adopted MineSight for mining courses while interest in MineSight-related studies has been so high at Osmangazi University in the northwest Turkish province of Eskişehir that new courses have been added and more licenses dispatched. Dr Mahmut Yavuz and Dr Mehmet Aksoy use MineSight in the school’s undergraduate elective course, Computer Applications in Mining, which covers open pit mine design.
The popularity of the course prompted Osmangazi to introduce a second course for computerised underground mine design. According to Dr Yavuz, MineSight is the best software in the mining industry to design underground and open pit projects.