Despite the reduced activity levels in the coal and mineral sectors, the trend is towards greater application of continuous mining systems, larger sized equipment and greater energy efficient systems.
Agith G Antony
Here are some statistics. If mining continues to grow at historical rates, Indian mineral downstream sector will become heavily dependent on imports, susceptible to global markets movement. India’s mining sector has grown at a slower rate compared to GDP, resulting in decrease in contribution of mining sector to India’s GDP from 1.3% in 2002 to 1.0% in 2012. With current growth rate, India will require 160 MT of iron ore import (10% of global seaborne), 300 MT of thermal coal import (25% of global seaborne trade) and 70 MT of met coal import (20% of global seaborne) in 2025. This will create uncertainty due to high dependence on imports, with possible supply shortages depending on global situation.
According to Rajesh Nath, Managing Director, VDMA the projections being worked to bring the country’s coal production level to 1,000 MT by 2018/19 mean a required annual growth rate of 18 % whereas the annual growth in the mining sector in India has been varying from 3 to 8%. Going by the country’s projection for the growth rate of 8 % in GDP, it would be a good achievement if the coal sector grows annually by 12 % in a consistent manner. This can be done by opening much large coal projects and make them operational in a shortest possible time. The aim should be to make the country self sufficient in coal. Opening the coal sector fully for commercial mining, to private investors to compete with CIL, is the key and answer for the country to accomplish self sufficiency in coal.
Mining is one of the core sectors that not only contributes to GDP, but also acts as a catalyst for the growth of other industries such as power, steel and cement. India’s mining industry faces a tough task ahead amid weak global markets, even as the government plans to fast track auctions and check illegal mining with satellite based surveillance. Despite endowment with huge resources of many metallic and non-metallic minerals, the mining industry has remained relatively small and stagnant, and its contribution to country’s GDP has fallen from 1.2 per cent to one per cent over the last decade.
“India has emerged as the fastest growing large economy worldwide in recent years. The most positive trend is that this scorching pace of economic growth will have to be supported by expansion in ca-pacity across India’s coal and mineral mining sectors. The government has set a massive target of achieving 1.5 billion tonne coal mining capacity by 2020. This will require massive capacity expansion from current levels. Hence, the demand prospects for mining equipments from coal and minerals look extremely promising,” states Sivasubramanian Natarajan, Managing Director, Thyssenkrupp Industries India.
The Deloitte report – Tracking the Trends 2016 vividly captures the prevailing scenario in the global mining market. ‘As commodity prices continue to hit historically low levels, mining companies are struggling to recalibrate. It doesn’t help that the industry faces a host of unresolved challenges from tumbling demand and declining grades to mounting stakeholders’ ex-pectations and lack of financing. Statistics from Off Highway Research cements the fact. Global prices of most minerals peaked in 2008 and witnessed a sharp decline after the global economic crisis unfurled. The market partially recovered thereafter and peaked in early 2011 before declining yet again.
Nath says, The general outlook for the global metals and mining market remains subdued due to the combination of a slower rate of global economic growth, particularly in emerging markets, and signs of an oversupply of several commodities, most notably iron ore and coal. Lower crude oil prices and a stronger US dollar are proving beneficial for miners by helping to lower operating costs. The uneven global economic recovery and divergent monetary policies continue to create uncertainty around medium-term supply and demand across the mining industry.
According to ICRA report compared with expectations around June 2015, the global markets have turned deeply negative with demand for construction equipment estimated to have declined 14%-15% and that for mining equipment by over 30% during CY2015. Almost all global mining majors have cut back their capital ex-penditure plans sharply since 2014 and capex is expected to hit a 10-year low in 2016.
However, according Samir Bansal, General Manager – India, Off Highway Research ‘a positive trend is visible since mid 2016 in the global demand for various minerals;’ this may augur well for the miners and original equipment manufacturers, as well.
The government has initiated steps to open up mineral deposits for FDI, allowing commercial mining of coal and pursuing large and long term MDO contracts. The industry feels that this will bring a paradigm shift in the mining methods and the way in which mining companies deploy equipment.
“Only ten per cent of India’s eight lakh sq. km of potentially resource-bearing area has been explored. Hence, exploration presents an enormous opportunity for both domestic and international players in the country. Our domestic PSUs alone will not be able to fully exploit this enormous resource-bearing area; they will require participation from Indian private sector entities and foreign participants. Therefore, the government’s steps to open up mineral deposits for FDI, allowing commercial mining of coal and pursuing large and long term MDO contracts is a step in the right direction, says Natarajan. He adds, “As the Indian mining sector opens up to more foreign participants, it will bring in international technology and best practices. This will lead to more mechanisation ensuring additional deployment of equip-ments per mining project providing a fillip to the equipment manufacturing segment.”
“Activity levels have been lower in the mining industry than in the road building industry. But it is still one of India’s more active industrial sectors at present. Generally speaking the prospects remain very good for equipment sales into the mining sector. And Volvo CE is well-positioned to meet demand. Coal India’s stated ambition of boosting annual coal production to 1 billion tonnes by 2020 still stands, and some reports even suggest the total could rise to 1.5 billion tonnes. There is only one way that such an ambitious target can be met, and that’s through the use of bigger equipment that can work more effectively, says Dimitrov Krishnan, vice president and head of Volvo CE India.
“Coal India’s move to almost double its output by 2020 has created a big opportunity for us. Deploying latest mining technologies, switching over to full mechanisation, and partnering with foreign mine developers and operators having requisite experience and know-how in coal mining are some of the key strategies to touch the 1 billion tonne target by 2020,” says H Jayaram, Managing Director & CEO, Gmmco.
To support the country’s mining needs, Gmmco offers a wide range of Caterpillar mining machines for surface and underground mining. From job site study and application study to fleet recommendation Gmmco’s sales team is equipped to give solutions to the challenges mining operation needs. “Gmmco has product support solutions such as Maintenance and repair contracts (MARC) which is an end to end product support solution where customers can completely entrust the maintenance and repair activities to GMMCO and operate machines at fixed cost and focus on their core business. MARC provides fixed hourly operating cost, guaranteed machine availability, spares, SOS and maintenance management all rolled into one. GMMCO also runs production contracts,” Jayaram adds.
India has also been affected by the global trends and the local issues such as illegal mining, land acquisition and rehabilitation, delays in government approvals and corruption, had accelerated the slowdown in mining activities.
Major demand for mining equipment emanates from coal, iron ore, zinc and limestone, according Bansal. “India is a major producer of minerals and ores, and important among them are mica, coal, barite, bauxite, iron ore, zinc, manganese and aluminium. Of nearly 87 minerals produced, four are fuel minerals, 10 metallic, 47 non-metallic, three atomic and remai-ning 23 are other minor minerals. The country has a large number of small operational mines but major demand for mining equipment emanates from coal, iron ore, zinc and limestone,” Bansal says.
“Demand for mining equipment peaked during 2008-2010, but declined thereafter until 2014. With government’s focus on increasing coal production, sales of mining equipment picked up during 2015, but is expected to decline in 2016 as power distribution companies are unable to buy power due to lack of funds, and increasing coal stockpile at the mines and power plants,” says Bansal.
According to him major equipment used for mining applications in the country are rigid dump trucks and large excavators, crawler dozers and wheeled loaders. Typically, rigid dump trucks are almost exclusively used for mining, except for a very limited use in large hydro electric projects. Crawler dozers of over 300 horsepower that constituted one-third of the total demand in 2015, are generally used in mining applications, while motor graders of over 250 horsepower that represented five per cent of the total sales are used to maintain the haul roads in large mines.
Crawler excavators in the 25-60 tonne segment are used for small mining/quarry applications and constituted nine per cent of total excavator sales in 2015, while ma-chines over 60 tonnes that are used in large mines accounted for only one per cent in unit terms.
Wheeled loaders are generally used for re-handling of mined material in India for wagon loading, at crusher site and also along with surface miners, but are very seldom used on the mine face directly. About two-third of all wheeled loaders sold in the country were destined for quarry/mining related applications in 2015.
Almost all large mining equipment are bought with full maintenance contracts (MARC/FMC) and are managed by the equipment suppliers who offer guaranteed availability and even guaranteed fuel consumption in some cases. These equipment boast of latest technological features to get highest productivity and lowest cost/tonne and invariably have electronic machine management system for performance monitoring.
Globally the focus is more on energy-efficient mining equipment for transportation, excavation, washing, and screening processes. What the scenario looks like in India? For Jayaram digital and data is transforming the way business is being done. “Solution selling will be the key ap-proach in the coming future. The next few years’ technology adoption will play a major role in our operations. At Gmmco we are moving towards technology ena-bled solutions in machines and connected job sites are remotely monitored through our equipment management centre. Our online sales of parts are fast catching up with customers.” Jayaram adds, “Caterpillar is highly focused on fuel efficient machines. With superior hydraulic systems and power train our machines are providing lower operating cost. Hybrid technology in engines and regenerative hydraulic circuits are improving energy efficiency in machines.”
According to Natarajan there is an increasing push towards eco-friendly approaches in everything from manufacturing to execution. Hence, going forward mining equipment for transportation, ex-cavation, washing and screening processes will have to conform to stringent eco-friendly norms. Additionally, even the processes for manufacturing such equipment will undergo changes to make it more eco-friendly. He further explains, “After India’s recent ratification of the Paris Agreement on climate change, the nation remains committed to additional cuts in greenhouse gases. Hence, going forward we expect additional pressure on the industry, both from the government and customers to ensure adherence to eco-friendly manufacturing practices.”
Thyssenkrupp has already shown the way with continuous mining at NLC India Limited at Neyvelli and CIL at Ramagundam. The company has also come up with innovative products/solutions such as pipe conveying and mega pipe conveying, Barracuda, a compact bucket wheel excavator(avoids drilling and blasting in mines) and skip conveying system ( reduces truck haulages for deep open cast mines). All these products/solutions help in reduction of carbon footprints and operational cost of the mines. “The need of the hour is ‘innovative technologies’ that enhance the production, productivity and efficiency in operation. This is the where Thyssenkrupp is focusing on the mining industry in India,” states Natarajan.
He further adds, “The continuous mining technologies would provide integrated mining solutions for the coal industry across value chain. Thyssenkrupp is fully prepared to support the Government of India’s ambitious plan in achieving the coal production target by 2020 in collaboration with key stakeholders.”
“In India, the focus is to establish solutions in the core mining production processes of surface mining, underground mining, strategic resource development, resource and reserves estimation, ore-body knowledge and mine planning. While technological intervention is strongly dri-ven by the nature of reserves and resour-ces in the ground, the production and economic models must include all elements of the value chain, from mining and processing to sales and marketing, over the potential life of the business. This has created a demand for technologies such as industrial automation and control systems, simulator-training, equipment control and guidance, advanced mine-sur-veying technologies, underground mining and surface drilling technologies, and machine guidance and control systems, which are compatible with enterprise resource planning software solutions,” writes Dipesh Dipu, Energy, Natural Resources and Infrastructure Expert. He adds, “While the trends towards greater application of continuous mining systems, larger sized equipment and greater energy efficient systems are sure to continue, automation is likely to become a more spectacular change in India in medium term. It may be anticipated that demand for mining’s industrial “Internet of Things,” and new simulation and optimization software will influence the industry in India and that the use of remotely-controlled equipment will be the most important development over the next 5-10 years.”
There is a very good potential for under-ground mining, especially in coal as this is preferred from environment perspective. In the last five to six years high capacity Room & Pillar systems as well as Long Wall systems have demonstrated their capability in CIL subsidiaries. Coal India has earmarked several mines for design and development by UG method in the next few years. Caterpillar underground mining machines have been in operation and established very good production benchmarks with various coal companies Coal India’s move to almost double its output by 2020 and touch 1 billion tonne target has created a big opportunity for all suppliers, states Jayaram.
According to the market research re-port, ‘Global Underground Mining Equip-ment Market’ by Technavio, the global underground mining equipment market is expected to grow at a CAGR of around 7% between 2015 and 2019. Rapid chan-ges in energy efficiency regulations by various governments across the world have pushed mining companies to adopt energy-efficient underground mining equipment. The growing mining activities in developing countries of APAC such as China, India, and Australia, are the major factors influencing the growth of the market. Also, the growing demand from coal industry will drive the underground mining equipment market.
“Several mining equipment manufacturers are focusing to launch energy-efficient mining equipment for transportation, excavation, washing, and screening processes, owing to the energy-saving policies. Atlas Copco has introduced an oil-injected rotary screw compressor which uses 50% less energy than an idling compressor. Many mining companies are also opting for mining equipment automation for improved safety and operational efficiency,” says Navin Rajendra, Lead Analyst, Heavy Industry, Technavio Research.
Another example is the P&H 2650CX hybrid shovel which is designed to deliver up to a 15% reduction in cost per ton when compared to large diesel hydraulic excavators – through a combination of reduced fuel consumption, improved availability, and decreased maintenance and repair costs. As per the company claims the hybrid shovel is engineered to blend the high productivity of electric mining shovels with the mobility and flexibility of diesel hydraulic excavators, and features an articulating hydraulic clamshell attachment to deliver a 65T payload, performing four-pass loads of 240T trucks with the capability of also loading 400Ttrucks. The 2650CX significantly reduces the number of on-board hydraulics, as compared to traditional large diesel hydraulic excavators, in some cases up to 50%.
Despite the general outlook for the global metals and mining market remains subdued, a number of policy measures initiated to revive the mining sector in India has have its positive impact on the sector. The projected requirement of major heavy earth moving machinery for opencast mines and equipment for underground mines for the next five years with matching infrastructural support augurs well for the equipment industry.
On the coal front, given the compulsions to double its production from the present 500 million tonne to one billion tonne, the coal ministry in consultation with Coal India and its arm CMPDIL has already finalised the roadmap which includes significant investments in heavy mining and earth moving equipment, IT systems and a host of allied infrastructure facilities. On the mineral front, after three successive years of output contraction, the production of metallic minerals has grown nearly by 20 percent. The recent move from the government to modify guidelines prohibiting sharing geological data is further expected to boost mining.
Bansal sums up on a high note. Mining sector is closely linked to infrastructure development, which in turn has a major influence on the overall economy and prosperity of the country. Therefore, in the long term, the coal, steel and cement sectors should show positive trends, which will benefit the mining equipment market.