Mining Prospects

March 2010

Charu Bahri explores the expectations of mining equipment vendors from the mining industry and innovative green trends sweeping the sector.

In addition to pronouncing that the rules and regulations governing the development of mines and mineral conservation in the country will be scientifically formulated after obtaining the inputs of knowledgeable experts and other stakeholders, the Government of India’s National Mineral Policy 2008 enunciates policy measures in order to reduce impediments to investment and technology flows in the mining sector in India. The policy also seeks to strengthen the indigenous industry for the manufacture of mining equipment and machinery as well as facilitate the import of mining equipment and machinery.

Clear road ahead for technology

From the point of view of technology, these moves empower the mining industry to choose to obtain technology best suited to its requirements. As a result, it is not surprising that Meda Venkataiah, Executive Director, MSPL Ltd says, “We face no issues regarding the buying and importing of mining equipment.”

Unhindered by the unavailability of technology, MSPL Ltd, for instance, has introduced hydraulic drills capable of drilling between 40 m and 50 m per hour. Explaining the value of the new equipment, Venkataiah says, “Earlier, we used a number of small drills to achieve the required drill meter age. Now, we benefit from the performance of high-capacity hydraulic drills by saving a lot of time and money as well as achieving higher production. MSPL has also introduced new-generation hydraulic excavators to enhance the output of excavation in the mines. The higher capacity buckets fitted to these excavators are capable of handling material of a larger size and achieving higher tonnages. As these are fitted with computer-aided dashboards, the supervisory staff can avail data to better analyse the performance of various parameters.”

Opportunities galore

Mining equipment vendors also have reason to smile. Commenting on the present and upcoming opportunities in the mining and, hence, mining equipment sector, GVR Murthy, President - Caterpillar Business, TIL Ltd, observes that the future of the mining industry is promising, poised as it is to gain from the rising demand for commodities such as iron ore and copper, and the ongoing thirst for energy sources such as coal. “As India progresses to achieve a targeted GDP growth of 9-10 per cent per annum, the biggest bottleneck apart from infrastructure would be the availability of power,” he says. “As almost 70 per cent of the power generated in India is from coal, future opportunities in mining would centre on coal. The mining of coal is also witnessing the most growth at present. Of course, other growth stories are likely to be seen in iron ore and bauxite [aluminium] mining.”

In the view of Shib Bhowmik, President, Sandvik Mining and Construction, “Power and mega power plants are triggering a demand for mining equipment used in the coal sector. In fact, in addition to companies engaged in captive mining, a number of power companies are planning to import coal for which they require equipment to unload and handle the material in ports. The general upbeat mood of the economy and resumption of exports to China are also driving the mining of iron ore in the country, for which the demand for crushers and drills is expanding. Last, limestone mining is gaining ground as the increasing demand for cement continues to spearhead the launch of greenfield and bluefield cement plants.” Undoubtedly, as a Caterpillar corporate spokesperson also notes, the liberalisation of the mining sector will increase the proportion of private-sector investments in mining. This, in turn, will accelerate the adoption of world-class mining practices in India. “Accordingly,” he says, “we expect to see average truck hauling capacity increase from 30 to 40 tonne to 60 to 150 tonne depending on the mine size. In addition, we anticipate an increase in the application of software for purposes of machine monitoring and remote diagnostics. Finally, we believe mine site practices will witness a higher emphasis on site maintenance, such as haul roads and floor, as well as machine maintenance.”

Great expectations

A source at BEML reveals that coal mining will present major opportunities for mining equipment vendors, so too will the iron ore sector, as long as the country witnesses an increasing demand for steel and cement for construction. “Even so, the positive outlook could be made even better if the government takes steps to ease the process of obtaining clearances for mining activity. The mining industry would also benefit from the establishment of an institution like the Export Credit Guarantee Corporation of India Ltd to help mining companies in the private sector with funds to invest in modern technology,” he adds.

“The global mining scenario has been very bullish since the past four years and there are no visible signs of slowing down,” say business managers from the Construction & Mining Business Division, Atlas Copco (India) Ltd. “The road ahead for Atlas Copco, a major player in most markets including India, is bright, particularly as far as the coal, cement [limestone], copper, zinc and uranium sectors are concerned. We depend on all types of mines, be it captive or other mines and both categories are growing. As the demand for coal increases, the focus will be on underground coal mining where safety is a key issue. Atlas Copco will play a major role in providing rock support systems. We also expect to see a greater involvement of underground mining contractors in this field as shortage of trained manpower will otherwise hamper progress. Retired mining professionals are in great demand.”

Customer-focused solutions

The overall upbeat scenario in the mining sector is encouraging vendors of mining equipment to gain an edge by looking beyond generalised services to offer customer-focused solutions. The Construction & Mining Solutions (CMS) division of TIL, for instance, is the exclusive dealer for the sale and service of a comprehensive range of Caterpillar construction and mining equipment across North and East India as well as Bhutan and Nepal. To this end, TIL helps customers requiring solutions for open-cast mining to choose fleets that deliver ‘lowest cost per tonne’ of material moved. This is achieved by using the world-class Caterpillar expertise, simulation through fleet production and cost analysis (FPA) software, equipment investment analysis (EIA), etc. Caterpillar-manufactured hardware and mine-specific software also helps customers optimally manage the mines through the comprehensive ‘Mines Star’ system, which is a GPS-based truck dispatch, fleet assignment and MIS system.

In future, as companies engaged in open-cast mining look to enhance the capacity of their truck-shovel combinations, Murthy expects significant growth in the demand for ‘off-highway’ trucks used to haul the ore and the overburden, saying “These trucks can move at a speed of over 55 kmph and the largest truck can carry a payload of 400 tonne. Major mining companies are going in for larger machines in their existing mines, which would facilitate enhanced production of this equipment in India. This spells a boon for our mining products.”

Green features add value

The green buzz that is slowly making itself felt in the construction sector appears to be making inroads into the mining industry as well, perhaps because of increasing agitation by NGO activists clamouring for more responsible mining or possibly as a result of a natural evolution of technology. A BEML source observes that ‘green’ technology in the form of environment-friendly features is also slowly enhancing the technical specifications of available mining equipment, saying, “These features will reduce environmental pollution around mines and enhance productivity. While coming months will not see any major change in basic technology per se, the size and capacity of equipment offered will increase.”

Speaking of green technologies of use to the mining industry, Bhowmik sees a global trend towards the establishment of long-distance, over-ground conveyor systems to convey material from mines to power plants and ports. “While these electricity-based conveyor systems require a land corridor, they are still far more environment-friendly and substantively cheaper than using oil-guzzling trucks to transport bulky materials over considerable distances,” he says. “Conveyor systems also do away with dependence on the existing road infrastructure, which in many cases is not available in less developed regions. Sandvik has just signed a contract to design and build a 38-km-long conveyor from a mine to a port in Indonesia. Indian mining companies could also benefit from these types of conveyors. We are presently designing and commissioning a first of its kind 3.6-km downhill single-flight conveyor system for an iron ore mine in Chhattisgarh.”

Additionally, Murthy says, “Caterpillar equipment is fitted with noise and emission-compliant engines to minimise the impact on the environment. We also use a lot of smart electronics integral to large machines, which render the equipment more operationally efficient as well as help burn fuel more efficiently. Also, all our equipment is fitted with systems to avoid dropping oil on the ground.” Considering that at present, off highway construction and mining equipment is not required to meet stringent emission norms in India, these features are welcome indeed.

For its part, Atlas Copco has recently introduced several products with minimal environmental impact. These include the non-lube DTH Hammer, the new Aqua range of Atlas Copco Secoroc hammers that make use of special internal wear parts requiring no oil and hence causing no contamination to underground drinking water sources, unlike standard hammers used to drill bore wells that require lubricating oil that tends to contaminate underground sources. Smart Rigs - a new generation of drilling rigs that have very low noise levels vis-à-vis conventional rigs - have also been introduced as have silent demolition tools whose low noise levels make demolition silent, safer and faster. This new technology makes it possible to demolish structures in densely populated areas keeping surrounding structures intact.

Green endeavours by the mining industry

Leaders in the mining sector are also taking the initiative to introduce green technologies in their plants. Vedanta Group companies have played a leading role in this endeavour. For instance, the Lanjigarh alumina refinery of Vedanta Aluminium Ltd, a Vedanta Group company, is the first alumina refinery in India to adopt a zero discharge system, i.e. no water or effluent is discharged to any outside water bodies from the refinery. This has helped reduce the external water requirement by more than 60 per cent.

Hindustan Zinc, another company of the Vedanta Group, has also been a key initiator in adopting clean green technology. Today, the company’s plants run on state-of-the-art environment-friendly technology: Hydrometallurgical technology. This is being used in many zinc smelters,  while ‘Ausmelt technology’ is used in the lead smelter. Being a technology-driven company, the Hindustan Zinc project team has played a pivotal role in finding suitable eco-friendly technology that resulted in innovation in the form of ‘Cansolv technology’ in the lead plant at its unit at Chanderiya to control SO2 emissions by converting lean and varying SO2 concentration gas in sulphuric acid. In the research process, the team interacted with world-class technology providers such as Outokumpu-Lurgi of Germany, Cansolv of Canada and HG Engineering of Canada, to name a few. According to Pavan Kaushik, Head - Corporate Communication, Hindustan Zinc, “Hindustan Zinc is the first metallurgical industry in the world to use such technology and a number of companies from China, Brazil, Kazakhstan and also within India, have visited the plant to understand its operations.”

Hindustan Zinc’s processes and performance have evolved on the basis of safety, health and environment in tandem with sustainable development goals. The company constantly reviews pollution control and environment safety controlling and monitoring systems at all its mining and smelting units. Dust emission control plants, tailing ponds for solid waste disposal and secure containment, water reclamation systems, effluent treatment plants, gas cleaning treatment units, forestation and management of solid waste are some of the measures adopted by the company to keep its operations eco-friendly.

Maintenance woes

While procurement is no longer an issue, the maintenance of equipment is a different story altogether. “The marketing team convinces the buyer to invest in equipment after painting a rosier picture of the features and performance parameters of the equipment than actually exist,” laments Venkataiah. “But the marketing team does not come back when the buyer faces maintenance issues or does not enjoy maximum output in line with promises made during the finalisation of the order. At this point, maintenance personnel pay a visit and convey a different story about the limitations to performance vis-à-vis the agreed terms and conditions. I believe that large vendors are not too keen on post-sales service. Yet in the absence of technical know-how regarding the maintenance of imported equipment like shovels, dumpers and hydraulic drills, the buyer has to depend on the seller. Here too, there are deviations in services offered under annual maintenance contracts.”

As far as maintenance issues are concerned, the comments of Atlas Copco’s business managers are noteworthy: “Equipment manufacturers like Atlas Copco offer the latest technology to Indian organisations and we are simultaneously upgrading our skills to support such equipment on a long-term basis through maintenance agreements with guaranteed availability. We also expect to see more foreign-based mining companies setting up base in India and taking contracts.”

Now that’s what we call a mine of opportunities!

Opportunities for Mining Equipment Vendors: Market Projections and Likely Scenarios:

In Steel Plants:
• Average capacity addition per year for the next seven years: 5 million tonne
• Average capacity addition per year for raw material handling: 20 million tonne
• Average annual investment in mining equipment: Rs 1,000 crore

In Coal Mining:
• Most likely scenario: 60 per cent of the plan
• Expected capacity addition: 285 million tonne
• Average annual capacity addition: 40 million tonne
• Average annual investment in mining equipment: Rs 4,000 crore
• Investment in material handling area - 50 per cent of total investment - Rs 2,000 crore

In Iron-Ore Mining:
• Average capacity addition per annum for the next seven years: 20 million tonne
• Average investment per annum in mining equipment: Rs 1,000 crore

In Ports:
• Planned investment in development of ports in the next seven years: Rs 90,000 crore
• Most likely scenario: 60 per cent of the plan - Rs 54,000 crore
• Investment in material handling area - 15 per cent of total investment - Rs 8,100 crore
• Average annual investment in material handling area: Rs 1,150 crore

In Cement:
• Most likely scenario: 75 per cent of the plan
• Expected capacity addition: 150 million tonne
• Average annual capacity addition: 21 million tonne
• Average annual investment in mining equipment: Rs 9,600 crore
• Investment in material handling area - 5 to 7 per cent of annual investment - Rs 600 crore

For Pipe Conveyors:
• Proposed plan: 20 km per year @ Rs 200,000 per m
• Proposed annual investment: Rs 400 crore
• Most likely scenario: 60 per cent of the plan
• Expected annual investment: Rs 240 crore