七妹导航

While the global mining industry is on the decline, India is witnessing a reverse trend. Many international mining equipment manufacturers are showcasing their products at BAUMA 2016, Germany, in a big way, at a time when Coal India is pursuing a multipronged strategy to meet the coal output target of one billion tonne by 2020. The state-owned mining major has estimated a capital investment of Rs 57,000 crore over the next five years to increase production to 908.1 million tonne, as part of the roadmap for one billion tonnes coal production by 2020. According to the Coal and Power Minister Piyush Goyal, the tentative capital investment projection for 2015-16 is Rs 5,990.5 crore, 2016-17 is Rs 8,282 crore, 2017-18 is Rs 14,539 crore, 2018-19 is Rs 14,635 crore, and 2019-20 is Rs 13,529 crore. This is a big opportunity for large mining equipment manufacturers from the government sector in the coming years.

Similarly, in the private sector, following the auctions of coal blocks by the government, on-ground action has already commenced with overburden removal at many locations, with others to follow in due course of time. Logically, as soon as the coal seams are reached, the doors will open for large mining shovels, excavators, draglines, loading tools and even dozers, presenting long-term prospects. Primary deployment of large mining equipment will be in the coal mining sector for overburden as well as prime coal mining, followed by cement, metal sector (iron ore, zinc, bauxite), and large irrigation projects.

Market vision
Coal India emerges as the single-largest potential customer for large mining equipment, during the upcoming future, says the industry. Some private mine developer-cum-operators (MDOs) and other mining segments will also add to the growth kitty. There is a huge demand for various metals and minerals in the country as there is still a demand-supply gap. Coal and iron ore will continue to be the growth drivers of the industry in the long run. Operations of coal blocks recently auctioned by the Coal Ministry along with upcoming auctions of coal mines will fuel growth. The demand for ultra-large mining equipment will see a growth in the next couple of years down the line as there will be production pressure on MDOs/mine operators who have now invested money to get the auctioned coal mines. Large machinery can move earth at a very rapid pace and hence production capacity can be quickly revamped.

Arvind K Garg, Vice President and Head-Construction & Mining Machinery Business, Larsen & Toubro, provides the overall market perspective, "The market for ultra-size mining equipment in India is still in a nascent stage when compared to markets in major mining countries globally viz, USA, Canada, Australia, Chile, Brazil, Indonesia, South Africa, etc. However, with the present government's commitment to open up mineral deposits for FDI, allowing commercial mining of coal and pursuing large and long term MDO contracts, we are confident that India will soon see a paradigm shift in the mining methods and the way in which mining companies deploy equipment. We shall witness deployment of state-of-the-art large size mining equipment in India for large scale mining operations in the years to come. This will further be consolidated because of the growing concern for environment, health and safety in the mining industry.

Shib Bhowmik, Country Head, Joy Global (India) Ltd says, "Because of the Central Government's ambitious coal mining target, we foresee good potential in the next few years in coal mining. Also, this ambitious coal production target will require opening higher capacity mines and technologically advanced and reliable large mining equipment.'' He adds, "We estimate that equipment, parts and service related to both surface and underground mines will be several billion dollars.''

"Large mining equipment is primarily used in Coal India subsidiaries and some corporate mining companies viz, Vedanta, Reliance etc. A few MDOs have started experimenting with imported and used mega mining machinery that is now available across the globe at throwaway prices because of the global recession,'' says Ranjit Ravindran, Head-Business Development & After Market-Mining, Voltas Ltd, Mining & Construction Equipment Division. Samar Pal, National Head, Mining Business, Liebherr India Pvt Ltd elaborates the market vision, "We have seen increase in enquires for large mining equipment segment in India in the last six months. Public Sector Units (PSUs) contribute to most of the increase in enquiry. From private miners, contractors or MDOs, the enquiry flow has just begun to come in. Large mining equipment segment is set to grow. Government's will for growth of the sector is visible, but land and environment regulatory hurdles remain as it is. Global commodity prices are at their lowest with lowest level of capital expenditure globally. Capital investment in the mining segment in India can be done with significant cost savings, as every manufacturer is eyeing this market. We have already seen record low pricing in recently concluded large equipment tenders. Opportunities are there, but pricing will remain a concern for manufacturers in the short run.

Large mining equipment's entry depends on different phases of project implementation. Summing the total numbers in different detail project reports of forthcoming and initiated projects, it becomes a whopping number. Post 2009, large mining equipment has entered in bulk for three large coal projects and one ongoing metal mining project only. It was fairly inconsistent and unpredictable till date, specifically in stagnating years of 2013 and 2014. If, (i) commercial mining is allowed, (ii) cost of imported coal and commodities go up to their previous highs in the near future, (iii) land and regulatory bottlenecks are removed, and (iv) domestic commodity demand increases, a giant leap in large mining equipment will come. We understand the cost of coal mining will go up for new coal mine blocks due to the fees committed in reverse auction with an enhanced time frame to begin. At the same time, PSU coal mining companies are enhancing production and still now the offtake is coping up with that enhancement. Further, longer tenure overburden removal contracts are getting issued by coal PSUs where prices are not going up. Coal India's 55 per cent production comes from outsourcing to overburden contractors. All these put together indicates good news, as a rising demand in equipment with a bad news of immense pricing pressure due to customers' cost pressure.

To reach 1.5 billion tonne of coal from presently achieved 0.5 billion tonne, mining activity has to go up six-fold at least, considering the increase in average stripping ratio required to reach that figure. Stripping ratio is the quantity of earth to be removed to mine a tonne of coal. The present fleet will be multiplied by six times at least. The last major bulk mining equipment entry in Coal India has happened almost 12-15 years back. Obviously, there will be an increase in sizes of equipment. India will be requiring additional 50-70 units of 6-7 cu m excavators per year at least, 35-50 units of 12-15 cu m excavators per year for next five years to reach where it has planned to reach. It is associated to 500 Pcs demand of 100 tonne dumpers per year for next five years. All these are excluding the replacement business. Almost Rs 5,000 crore per year at least for large mining excavators and dumpers will be spent. A Krishnakumar, Vice President - Sales and Marketing, Tata Hitachi Construction Machinery Company Pvt Ltd, says, "Coal production contributes to more than 50 per cent of the overall mineral production in India. Of this over 90 per cent is through Open Cast mining. The Government has a stated objective of reaching one billion tonne of coal production in the next five years, which implies a double-digit growth on Y-O-Y basis. This is an ambitious target. To achieve these levels of coal production the deployment of large mining equipment has to increase. The last two years have seen a significant growth in the volumes of large mining equipment in India. In certain categories of mining equipment, it has in fact doubled compared to the previous years.''

Y-o-Y growth trajectory
Market will primarily cruise forward in a 'U' growth trajectory, predicts the industry. "During the first 2-3 years of this growth period, the key will be sweating the existing equipment fleet and increasing their availability and utilisation. This can be achieved by partnering with reputed OEMs. The year 2016-17 and 2017-18 will see things taking shape on the ground and we expect growth in mining equipment to double by mid-2017 onwards,'' says Ravindran.

"As major mining leases for coal, iron ore, bauxite etc, still vest with public sector units - PSUs/ government companies will continue to remain as major buyers in the foreseeable future. Coal India has plans to double its coal production to one billion tonne, by FY19-20, which will be a major demand driver for mid- to large-size mining equipment. We also envisage that some of the large limestone mines will graduate to large size equipment. Coal India has plans to purchase large quantities of ultra class mining equipment to meet its ambitious production plan for the next five years. This will be the primary driver for growth of ultra class mining equipment in India. Major captive coal blocks (of state power utilities and others) are also expected to commence operations during FY16-17 through the MDO route. This could open up opportunities for large size mining equipment as well. As estimated by us, the market for large size mining equipment (loading equipment with 6.5 cu m bucket and above, rigid dump trucks of 60T payload and above, bulldozers of 350 HP and above, motor grader of 200 HP and above) is expected to grow at approximately 12-15 per cent CAGR during the next five years from the current level of 700 units and Rs 1,800 crore. We foresee a demand growth of approximately 18~20 per cent CAGR over the next five years,'' elaborates Garg, providing data-based assessment.

"We will eye 20 per cent market share in the next five years. Over the next two years, we will look for 12-13 per cent market share in excavators,'' asserts Pal.

Stumbling blocks to the growth story

• Used and rental equipment are typically construction machines being used today in mining applications which will be unsafe in new and bigger mines and will not find application in high productive and safe mining conditions.
• Used and rental equipment for mining will be niche markets, particularly for the large class. Ultra large class mining machines are usually bought by operators/owners when they have to operate the mine for a longer period; in many cases it is close to a decade, even two decades or more in case of cable shovels and hence, rental will never be a viable option for long-term work. Used machinery of ultra large class will have a niche market but can only be offered by service providers who are able to source genuine OEM spare parts and provide life-cycle contracts for the equipment. Further, with global recession at its peak in mining equipment, the cost of new machinery has come down drastically.
• There's a time lag involved in environmental clearance of coal blocks.
• Land acquisitions and rehabilitation costs have to be factored in.
• Industry has to get over the reluctance of financiers to lend project finance to coal and power plants.
• A subdued global mining scenario is likely to see major OEMs to focus aggressively on the Indian market which is expected to grow substantially.
• We can also expect some shift in the approach by some Indian players - they are likely to source used equipment available in other markets, and deploy them for projects in India.
• Given the large capital expenditure to meet the burgeoning demand, operating lease is expected to be the preferred route of equipment acquisition by the private sector as compared to the current mode of ownership facilitated by loans from banks or NBFCs.

Key success factors

• Technologically superior products with low cost of ownership over the lifecycle contract.
• Ability to offer flexible support solutions to end customers with the machines, like O&M contracts, FMC, MARC, LCC etc.
• New and cleaner mining extraction technology for greenfield projects viz, IPCC, surface miners etc.
• In the later years, it will be important to start fewer mines but with much higher production and related infrastructure than what they have today - both in underground and at the surface. During these years, it will be necessary to partner with bigger and professional contractors, global MDOs and reputed and reliable global equipment manufacturers. Also, imbibing safety practices all across will be the key.
• On-site maintenance support is a key tool that determines product procurement by the customer. The impact of on-site support is so high that one can straightaway compare it to oxygen which is required for any living organism to survive on Earth.
• Extreme paucity of skilled maintenance personnel for these kinds of specialised equipment.
• Used or rental equipment may be initially attractive from the debt point of view.
• Effective targeted on-ground achievement vis-a-vis planning.
• Timely commencement and hurdle-free operations of major upcoming projects in mining sector will be crucial.
• Concerted efforts to address land acquisition, R&R issues and regulatory matters will be critical to give the required momentum to the mining industry.

Role of technology
World class, latest and India-centric upgraded technologies in various categories of these high value equipment are likely be major selection criteria by the potential buyers.

Garg is very articulate in defining the role of technology, "Technological innovations and integration, and implementation of the same in mining equipment brings a lot of advantages to customers and are therefore major criteria for equipment selection. Remote monitoring of equipment is possible today with equipment tracking systems incorporated in the equipment. Komatsu is the pioneer in this field. We have a patented KOMTRAX system which enables visibility of operational information to the customer on their laptops/mobiles/other palm held devices.''

He adds, "We also have Vehicle Health Monitoring Systems (VHMS, alias KOMTRAX Plus) which gives a plethora of information about the equipment. This will help in understanding the health of various components in the equipment, the duty cycles, type of usage, operator skills, planning scheduled maintenance, taking up preventive maintenance programme etc.''

Komatsu has also introduced Autonomous Haulage System (AHS), which basically is operation of the equipment without operators, from a remote central control room facility. In India, most of the major customers attach high importance to the superior technology and other features which are offered by OEMs in their equipment. "We are slowly seeing the trend of major customers (like Coal India, SCCL etc) also insisting on minimum Tier-II compliant engines in large size mining equipment. Majority of the private sector customers insist on engines complying with latest emission norms so that they can contribute in their efforts to minimise the impact of mining activities on our environment,'' says Garg.

On the other side, Bhowmik emphasises, "Safety is paramount and this can be achieved by reducing interface between people and machine through automation and must be done. Emission and environmental impact can be reduced through hybrid technology which Joy is using successfully in loaders. Electric mining shovel reduces/eliminates emission compared to excavators. Emission can be controlled by reducing trucks and using in-pit crushing and conveying technology (IPCC) wherever possible.''

Ravindran says, "Technological advancements in products or hybrid technology, greener technology will be a key competitive advantage for OEMs in future. Concerns on global warming and pollution have brought countries across the globe together and enough emphasis is being laid on stringent environment norms to be adopted by mining companies worldwide. This will pave the way for greener technologies in mineral extraction.''

Gearing up to meet multi-faceted challenges
Mining and construction equipment manufacturers across the globe are facing challenges because of a mismatch in the demand-supply chain. In a sluggish economy where commodity prices are crashing everyday, mining companies and equipment manufacturers are bleeding. This will continue to happen till there is an auto correction in each part of the economy. Political environment, environmental concerns, mergers and acquisitions across the globe are some of the major challenges that we face across the mining and construction industry.

"The Voltas team across business divisions inherits SWIFT characteristics (Smart thinking, Winning attitude, Innovation and initiative, Flexibility and agility, along with Team work). The company has been able to withstand the storm of economic recession, mergers and acquisitions happening across the globe and still continues to offer its customers state-of-the-art mining and construction equipment with world-class value added services like maintenance contracts, service contracts, life-cycle contracts, parts cap contracts, spare parts depot and rate contracts, etc,'' says Ravindran.

On behalf of the industry veteran Larsen & Toubro, Garg comments, "Purchase selection criteria are based on policies which have been framed a long time back. However, we are seeing concerted efforts by the stakeholders to review and revise these policies, wherein due credit shall be given in the purchase decision for various factors like technological aspects of the equipment, safety aspects, emission norms, infrastructure, reliability and capability of the supplier/distributor in India for after-sales product support, training capability including simulator training etc. We are confident that in the short- to mid-term, we shall be able to see such changes in future purchase criteria in the public sector purchases. The reputed and major players in the private sector including contract mining companies have a clear understanding that large-size mining is about long-term partnerships with a win-win approach. We are working with all our customers with this approach to create value and mutually rewarding business partnerships.''

He adds, "We offer end-to-end solutions to customers in the Indian mining sector. We have a dedicated application engineering team which assists a customer in the planning stage (for mine planning, equipment selection etc). We also undertake full maintenance contracts of the equipment with assured availability guarantees to the customer for the equipment. We have an onsite service team stationed at the customer project site with full-fledged infrastructure to attend to the equipment under full maintenance contracts and other support programmes. In addition, L&T has five full fledged mother service centres in India, which are strategically located near the mining belts. These service centres are fully equipped to carry out major repairs/overhauls and testing of the major assemblies of the equipment. This provides a cost-effective, value-added solution to our customers and helps them reduce their LCC. We are also focused on preventive maintenance through Recons/Remans as opposed to breakdown maintenance, which improves equipment availability in addition to lowering the hourly operating cost.''

On training, Garg says, "Training is another important and valuable proposition we offer to our customers. We have a full fledged Central Training Centre in Kanchipuram, near Chennai. We also have 5x Regional Training Centers across India, to impart training programmes to customers' operators, mechanics, safety staff etc. Our training centers are accredited to IESC and offer a wide range of programmes for the industry in line with the Prime Minister's clarion call towards Skilling India.''

Pal joins in, "Everything in the market is not in order such as NPA issue of banks, exposure of private mining companies with financial institution and risk appetite of investors of private mining companies. Still we sniff an opportunity and have prepared ourselves in terms of support infrastructures in view of present business. The key success factors will be: (i) Product - Established global product, which we have; (ii) Place - We are setting up supports at strategic mining locations; (iii) Promotion - We are reaching out with attractive solutions to mining companies; and (iv) Price - We are offering a support package for a competitive cost per tonne pricing. Consistency will be the key to success here. We will keep a close eye on developing equipment prices in the next three quarters.''

Importance of aftermarket support
In India, primary selection of mining equipment is done based on cost per tonne or cubic metre of material removed. The features which customer perceives are required for regulatory compliance; achieving effective low cost per tonne or cu m creates interest in the customer. Till date, Indian customers opt for very less optional features with respect to their foreign counterparts. However, we have noted some transformations in the customer's demand. Training of operator and maintenance crew with modern techniques and training equipment is quite common nowadays. The next is the truck dispatch system compatibility with equipment data download facility. World-class value added services are being offered by Indian players, like maintenance contracts, service contracts, life cycle contracts, parts cap contracts, spare parts depot and rate contracts, etc.

On-site maintenance support for mining machines is obviously a very critical aspect since it is directly linked to equipment availability, utilisation and operating cost. LCC is a major factor in equipment selection criteria, especially for large size mining equipment. It will ensure guaranteed cash flows as per the projection during the life cycle of the equipment. Major operators are offering long-term Full Maintenance Contracts (FMC) to customers with guaranteed availability of the equipment. On-site project management teams take care of full and complete maintenance of the equipment, which ensures absolute peace of mind to the customer with predefined and guaranteed cash flow over the tenure of the FMC.

Again, on-site maintenance support is mandatory and crucial, as mid- to large-size equipment utilisation is approximately 20-21 hours per day. Any breakdown has to be attended to immediately and the equipment has to be put back to work, failing which the entire fleet and the mine production will be affected, which in turn will have bearing on other aspects of the customer's business. Hence, critical factor is the MTTR (Mean Time to Respond and Mine Time of Restore) capability of the OEM and their distributor/service provider.

What lies ahead?
Major global players are yet to venture into the Indian coal mining sector, as the law currently does not permit commercial sale of coal. This is however likely to change in the near future.

Contract mining India 

India's ambitious plans of more than doubling the mining production within a fixed time frame makes it certain that contract mining will play a significant role in this endeavour. Garg opines, "Reputed and major contractors are well aware of the global best practices and they are trying to imbibe and implement such good practices in India. Some of the major contract mining companies are also working in foreign countries and are trying to bring the global best practices to India.? He adds, ?To boost the coal production rapidly and meet the demand for domestic coal, major mining companies like Coal India, Singareni Collieries etc, are increasingly outsourcing overburden removal through long-term contracts. We expect this trend to grow and hence deployment of large-size mining equipment will be necessary. This will also be cost-effective and generate benefits like enhanced safety and reduce carbon footprints." Ravindran optimistically comments, ''Contract mining will increase in the coming years and will move from simple overburden/earth removal jobs to complete mining including coal or iron ore. This is bound to happen as outsourcing will rationalise costs for mine owners in a challenging economy." Although positive, Pal advises a cautious approach by saying, "Contract mining is evolving in India. About 55 per cent of PSU coal companies' production is done by contract miners. For private blocks and blocks to government dispensation route, engagement of MDOs is advised. It has a future in India. With increase in regulatory and quality compliance, contract mining will call for more discipline in the coming years. The geological and mining challenges will increase in newer projects. Knowledge, technology and experience possessed by global mining companies will be required to win coal in these assets. We will see entry of international MDOs in coming years. But right now, we have seen aggressive bidding in recent MDOs where a low and aggressive price has been committed over a very long tenure, taking most of all risks involved in a greenfield mining project. Unless this desperation settles down and reasonable margin is ensured in MDO contracts with risk justifiably shared between principal and MDO, we cannot say contract mining in India is a sustainable profitable venture."

Key Performance Indicators

• Acquisition cost
• Total cost of ownership
• Total life cycle cost
• Return on CAPEX
• Technology
• Safety features
• Ergonomics for operator comfort
• Reliability
• Productivity enhancement
• Highest physical availability
• Consistent utilisation: at least 5,000 hours per year
• Cost per tonne
• Lowest OPEX
• Differentiation in service quality and timeliness
• Total life cycle management
• Fuel efficiency
• Emissions' compliance
• Brand image and reputation

Equipment combinations Larsen & Toubro:
A range of mining combos from Komatsu

• PC8000 Excavator (42 cu m bucket) with 930/960E Dump Truck (320/360T payload)
• PC5500 Excavator (34 cu m bucket) with 830E Dump Truck (240T payload)
• PC4000 Excavator (22 cu m bucket) with 730E Dump Truck (190T payload)
• PC 2000 Excavator - HD785 (100 T payload) Dump Truck combo for 5 million cu m per annum
• PC 1250 Excavator - HD 465 (60 T payload) Dump Truck, a very popular combo
• 250 tonne class PC 3000 Excavator with 16 cu m bucket capacity. Perfectly matched with HD 785 Dump Truck

Range of wheel loaders

• WA470 (4.5 cu m bucket)
• WA500 (5.0 cu m bucket)
• WA600 (6.4 cu m bucket)
• WA700 (8.7 cu m bucket)
• WA800 (10 cu m bucket)
• WA900 (13 cu m bucket)
• WA1200 (20 cu m bucket)

Support equipment

• Bulldozers: D155 (360 HP), D275 (450 HP), D375 (636 HP), D475 (900 HP)
• Motor Graders: GD705 (200/250 HP), GD825 (280 HP)
• Wheel Dozers: WD420 (224 HP), WD500 (315 HP), WD600 (522 HP), WD900 (853 HP)

Voltas:
-Excavators: 10-45 cu m bucket size
-Loaders: 10-45cu m bucket size
-Dump Trucks: 100-400 tonne payload

Liebherr: 

• Mining Excavator: R9100 (7 cu m) to R9800 (44 cu m)
• Dump Trucks: T264 (240 tonne); T282C (400 tonne)
• R996B-T264 combo achieves 10 million bank cu m per annum
• R9800-T282C combo achieves 15 million bank cu m per annum
• Offers choice of diesel or electric prime movers

Joy Global:
Equipment combinations for production above 3 MTA

Underground Mining
-Road Headers
-Continuous Mining Machine
-Sizing Machine
-Feeder Breakers
-Shuttle Cars
-Roof Bolting Machine

Tata Hitachi

• Excavators: 45T (3 cum bucket) to 800T (40 cu m) shovels
• Rigid dump trucks: 35T to 290T class

- Shankar Srivastava