23 October 2019

Industry Focus: Mining Equipment

Adopting Industrie 4.0

 

The government’s focus on doubling metals and minerals’ production bodes well for India’s mining industry. But to meet its stated goal, Indian mines need mechanisation and automation to double its output. Therefore it would do well to adopt the German strategic initiative Industrie 4.0, which is considered as the fourth industrial revolution involving cyber-physical systems, IoT, cloud computing, etc to leverage ‘Smart Mining’ systems.

 

Despite being endowed with rich natural resources India’s mining sector has failed to realise its full potential. While part of the reason is an absence of geophysical and geochemical data to facilitate exploration, the other major reason for underperformance of the sector is use of obsolete mining equipment and technology, a general lack of modernization in the Indian mining sector. While the organized sector – dominated mostly by state run PSUs and a few mining majors in the private sector – have adopted modernization, the small and medium sized mines which constitute the unorganized sector are far away from modernization. Early this year, former DRDO Chairman and Member Niti Aayog VK Saraswat, strongly advocated modernization of Indian mines to enhance their productivity. Also, while recently addressing the International Conference on NexGen Technologies for Mining and Fuel Industries - NxGnMiFu – 2017, Piyush Goyal, Minister of State (IC) for Mines, said that “All stakeholders including those working in the R&D in coal and mining sector, have to work with newer technologies for safer mining, smarter mining, and efficient mining with sustainability.” He lauded the work of Central Institute of Mining and Fuel Research (CIMFR) for its efforts to modernise India’s mining sector.

 

“The development of the sector will be critical to India’s economic growth. Major policy changes over the past couple of years have given the necessary impetus to the sector. The government will have to lead the growth of the sector by creating favourable conditions in terms of infrastructure, funding, technology upgradation and skill development,” assess Kameswara Rao, Energy, Utilities and Mining Leader, PwC India.

 

 

UNEXPLORED TERRITORY

India is endowed with vast reserves of key metallic and non-metallic minerals including iron ore, bauxite, coal, limestone and manganese, and is among the top 10 countries globally for these ores. The reserves-to-production (r/p ratio) of various minerals in India remains low, reflecting significant unexplored opportunities in India. Consequently, there is an urgent need to expedite the exploration process. Lack of investment in exploration and inadequate information on resources are among the key issues facing the mining industry. India has explored only around 5%–20% of its mineral resources to date, compared with almost 100% geophysical and geochemical surveys in Australia (according to data from NSW Mining and Indian Bureau of Mines).

Last month Trading Economics.com projected India’s production as below;

Forecast

Mining Production

Actual

9.7

Q2/17

3.5

Q3/17

4.1

Q4/17

2.3

Q1/18

1.9

2020

2.1

Unit

percent

Source: Ministry of Statistics and Programme Implementation (MoSPI)

 

 

The mining production forecasts was projected using an autoregressive integrated moving average (ARIMA) model calibrated using analysts expectations based on past behavior of India Mining Production, using vast amounts of historical data and adjusted coefficients of the econometric model by taking into account analysts assessments and future expectations.

 

 

DEMAND DYNAMICS

Coal sector is the major driver for mining equipment demand in the country and the increased focus of the new government to increase local production and reduce imports, resulted in sales growth of 12 per cent in 2015. However, equipment demand again declined by 16 per cent in 2016 as distribution companies did not have money to buy power, which resulted in stock piling of coal at mines and also at power generation plants. This also adversely impacted the government’s plans for increasing the coal production to 1.0 billion tonnes by 2019.

 

However, future demand projection is optimistic as 22 states have already subscribed to the ‘UDAY’ scheme, under which states would take over the debt of the distribution companies and issue bonds for financing the same. This would help in increasing the power purchase and subsequently the demand for coal and mining equipment in the country. Further, the government is also exploring options to now start exporting coal from the country and keep pace with its production targets. Further, the renewed vigour in the industrial, construction and economic activity would support growth in demand for all minerals including coal, iron ore, lime stone and bauxite, which bodes well for the growth in demand for mining equipment.

“With a strong but volatile outlook for mining sector, industry is focused on future growth through expanded production, without losing sight of operational efficiency and cost optimisation. Equipment reliability, TCO, and use of environmental sustainable solutions will be key drivers of the mining industry,” cautions Jayanta Ray, GM (Industrial & OEM), GS Caltex India Pvt Ltd.

 

 


Aftermarket Services will also emerge a strategic differentiator in the mining equipment market. “Aftermarket services complement the product offering in an increasingly important way. In mining industry typically, since the sites are located at the remotest locations customers associate great importance with the service network, site supports services, availability of trained technicians, parts availability etc., in order to maximize the uptime of their fleet. Also, value added services like telematics, driver trainings, and operational consulting are gaining importance as the customers are becoming more and more professional and process oriented with increased focus on operational efficiency and profitability,” advises G V Rao, Director – Product, Brand & Marketing, Volvo Trucks.

 

While India’s natural wealth largely remains unexplored and untapped due to extraneous reasons, at the operational end India’s mining sector needs to urgently expedite its modernisation drive and adopt mechanization for all stake holders across the value chain, ranging from the actual mining operations to logistics and material processing of the final product.

 

SMART MECHANISED MINING

To shore up their production output, Indian miners need to adopt the German strategic initiative Industrie 4.0, which refers to a fourth industrial revolution and introduces the concept of "cyber-physical systems" to differentiate this new evolutionary phase from the electronic automation that has gone before. German major Bosch Group is at the forefront of developing India specific solutions for its mining sector. Bosch India is developing a solution that connects miners and mining equipment. “The solution from Bosch can increase the levels of automation in the mining industry. Smart mining improves operational efficiency as it enhances productivity through improved asset utilisation,” pitches Sreenivasan, Head, Engineering, Off-Highway Solutions, Bosch India. Adding further, “The solution also helps mining OEMs to focus on accountability by reducing costs, thus improving profitability. In the future Bosch India will look to acquire large mining automation projects in India as well as abroad.” Bosch’s solution enables the mining OEM to track the movement of associates using the Group’s access control system. Additionally, to gauge the entry of heavy commercial vehicles Bosch provides an RFID based boom barrier control solution. Bosch holistic approach over multiple phases addresses region specific problems. While the current solution is targeted to meet the requirements specific to the Indian scenario, Bosch is keen to offer other innovations to the mining industry. Its existing competence in mobility and industrial sector with knowhow of engine control and hydraulics, are the clear differentiators. “Bosch is able to offer core technologies, such as connectivity, video surveillance and access control systems providing an indisputable value proposition to mining companies,” says Sreenivasan. India’s challenges are unique and to keep pace with the rapid economic developments the country’s mining industry would play a key role. Key mining companies aim to double their output in the coming 4-5 years. Such a forecast would require increased spending on mine automation and up-gradation for improved productivity. According to Sreenivasan, “The overall solution harnesses the different competencies available within Bosch to derive meaningful insights during surface mining operations.”

 

In terms of smart mining machines, control systems are all important. In this context collaborating with mining OEMs becomes critical.

“We work closely with OEM’s to incorporate control systems customised to their equipment. This ensures that the solution they offer to their customer has their branding, their touch, and most importantly the Intelligence they want added. This ensures they are creating a product differentiation in the marketplace,” underlines Harpreet Singh Wahan, General Manager, Sales & Marketing, Murphy by Enovation Controls, (India).

Another useful tool for Smart mining is Schneider Electric’s ‘Integrated Planning to Optimize Mining’ to optimize supply chain efficiency for mining companies. It claims to boost productivity by up to 20 per cent through optimizing the resource-to-market chain. Also companies like Geovia, a vertical of Dessault Sytemes’ produces 3D software for the mining industry which enhances operational efficiencies, it has set up an R&D Center in Pune where 2000 engineers are working on developing 3D models of mines.

 

 

FUTURE OUTLOOK

India’s mining sector is yet to recover from its stagnant negative growth rate in last few years. While reforms in the mining sector – especially with PSUs like SAIL, CIL, etc, and the Mining Ordinance of 2015 which made bidding for mining blocks more transparent and competitive – have opened up the sector, most miners still face critical problems on the ground. The biggest challenge faced today is to raise adequate capital to fund mechanization on a fast track basis to shore up their productivity. Mining equipment is costly and after surviving a prolonged recession few miners have the financial muscle for capital investment in costly machinery.

 

 

Yet only machines and mechanization will being a turnaround sinking fortunes of the sector. While the rental route is available, the mining equipment rentals market in India is still very nascent. “Leasing as a concept is now picking up in Indian mining industry. Of late couple of financial institutions have come up with lease financing models in mining equipment industry. In mining industry customer is evolved and he looks for ‘Life cycle costs’ more judiciously then initial capital cost,” comments R C Mangal, Sr. VP – Sales & Marketing, Truck and Bus Division, Mahindra & Mahindra Ltd.

 

 

 

“While cost remains one of the most important factors for buyers in India, the purchase price is only part of what constitutes a machine’s overall lifetime cost. Equipment owners and contractors here in India have developed models for calculating “cost per tonne” or “cost per km” for equipment which takes into account the purchasing price, operating costs, productivity levels, anticipated maintenance, depreciation, resale value and other factors,” explains Dimitrov Krishnan, Vice President and Head, Volvo CE India.

 

 

“While currently the rental and leasing solutions are not that popular in the CV space, we believe with implementation of GST and streamlining of logistics sector, this space with leap frog in the coming years. We have the necessary financial infrastructure in the country to support such solutions,” agrees Siddharth Kirtane, Head Sales & Marketing, Value Trucks, Mining Business, VE Commercial Vehicles Ltd. Under these circumstances it remains to be seen how fast Indian miners adopt modernisation and mechanize their operations.

 

 

 

PLAYING IN THE PITS

India has a decent population of mining equipment OEMs ranging across the spectrum and variety of mining equipment. These range from drilling machines, shredders, drill rigs, blasting equipment, , hammers, mining locomotives, industrial crushers, loaders, etc. trucks, forklifts, cranes, and many other useful mining machines. According to Sameer Bansal, GM, Off-Highway Research, India, “The renewed vigor in the industrial, construction, and economic activity, would support growth in demand for all minerals including coal, iron ore, lime stone and bauxite, which bodes well for the growth in demand for mining equipment.” He adds, “Off-Highway Research is optimistic about the future growth of the rigid dump truck and crawler dozer market in India and forecasts it to grow 40 per cent in 2017 and a further 18 per cent in 2018.”

 

According to VDMA, 56 percent of the market by value, is constituted by dumpers, other types of mining equipment account for the rest of the market.

 

We bring you exclusive interviews of mining OEMs in India, especially the Tipper segment.




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