Business Logistics Export of coal from Australia - Essay Example

? Business Logistics Export of coal from Australia Coal is one the natural resources of fuel besides oil and gas. The coal is extracted fromunderground mines, transported to the processing plants, and the processed coal is sold to the main consumers like steel mills, power producing units and other consumers. This study is aimed at reporting the reserves of coal in Australia, the ways it is processed and the places it is exported in the world and who are the largest importers of coal from Australia. The cost of exporting coal from Australia, the logistics involved and the transportation modes are studied in length. The challenges and issues faced in optimal transportation of coal from Australia, the type of equipments used in the journey path, the cost involved, the risks and hazards faced, the lead time required for logistics and the financial implications, all such aspects whether positive or negative are discussed in this report. TABLE OF CONTENTS Page No. 1. Introduction to Coal 5 2. Reserves in Australia 9 3. Mining and Processing 12 4. Transportation Modes 15 5. Safety and Prevention 19 6. Export of Coal 20 7. Conclusions 21 8. Recommendations 22 9. References 23 LIST OF FIGURES Fig. 1 Type of coals 5 Fig. 2 Moisture and carbon energy level of coal types. 6 Fig. 3 Power Station using coal to produce electricity 7 Fig. 4 Percentage of electricity generation by coal 7 Fig. 5 Shows the top ten steel producers of the world 8 Fig. 6 Use of coal in the production of steel 8 Fig. 7 Countries having largest coal reserves 10 Fig. 8 Coal Resources of Australia 10 Fig. 9 Coal fields of New South Wales 11 Fig.10 Area of Queensland where coal is mined 11 Fig.11 Production of Coal in Australia 12 Fig.12 Mechanical cutters/shearers extracting coal from surface of seam 13 Fig.13 The operation of underground coal mining. 14 Fig.14 Operations and rehabilitations of surface coal mining 15 Fig.15 Capacity of each port terminal and quantity handled 16 Fig.16 Aluminium wagons for carrying coal in Queensland 17 Fig.17 PacificNational rail system 18 Fig.18 Overland conveyor belt system 18 Fig.19 Road Transport by Truck 19 Fig.20 Comparison of export of goods and services from Australia 20 Fig.21 Comparison of world coal exports 21 Fig.22 Major importing countries of coal from Australia 21 Introduction to Coal Substances that burn to release heat energy are called fuels. Fuels that are formed naturally in the similar way to fossils are called fossil fuels. Fossils are the remains of animals or plants preserved through natural process for millions of years below the earth. Fossils fuels are formed from these remains of plants and animals through squashing by rocks built over it through natural wearing process. Coal, Crude Oil and Gas are fossil fuels. Usually the fossil fuels are found underground and therefore very difficult to get out. (Ian Bradley, Peter Gale, and Mark Winterbottom, 2001) Types of Coal The organic maturity of coal determines its quality. It refers to the temperature, pressure and time of formation of any coal deposit. There are four types or stages of coal known as coalification as shown in Figure 1; Peat, Brown Coal, Sub-bituminous and Bituminous. (World Coal Institute, 2005) Figure 1: Types of coal Coals are ranked according to its coalification which is the amount of changes occurred during its maturity from peat to anthracite. Sub-bituminous and lignite are ranked as low coals because they have low carbon content and high moisture levels. Their material is very soft and appearance dull earthy. Anthracite is the highest ranked coal as it has high carbon content and low moisture level, having hard and strong black material with more energy. Figure 2 shows the different levels of moisture content and carbon and energy content for coalification of coal. (World Coal Institute, 2005) Figure 2: Moisture and Carbon energy levels of different coal types Uses of Coal The most significant uses of coal as shown in Figure 2 above are in generating electricity, producing steel, manufacturing cement and as a liquid fuel. (World Coal Institute, 2005) Power stations (Figure 3) use thermal coal also known as steam coal which is turned into fine powder by milling increasing their surface area. The higher surface area allows powdered coal to be burnt quickly. The powdered coal is used in the Pulverized Coal Combustion (PCC) System through its blowing into the boiler’s chamber and burning it into a very high temperature. (World Coal Institute, 2005) Figure 3: Power station using coal to produce electricity The water lining around the boiler converts water into steam which turns the turbines for generating power. Figure 4 shows the number of countries which produces electricity by using coal as fuel. (World Coal Institute, 2005) Figure 4: Percentage of electricity generation by coal Another important use of coal is in the product of steel. The coal is one of the most fundamental fuel used in steel mills for producing pig iron and from it the steel. Coking coals are used in the furnaces of steel mills. (World Coal Institute, 2005) Figure 5 shows the top ten steel producers of the world. The use of coal in steel production is shown in Figure 6. Iron ore, sized coke and lime stone are fed from top into a blast furnace and then processed further to produce steel. (World Coal Institute, 2005) Figure 6: Use of coal in the production of steel Coal is also used in the manufacturing of cement as it requires large amount of energy. To produce 900g of cement, around 450g of coal is consumed when coal is burnt in Kilns. Coal-fired plants generate by-products like boiler slag, fly ash, and bottom ash. These by products are also used in the building of concretes. (World Coal Institute, 2005) Coal is also used as liquefied fuel. Transport fuels, plastics and solvents are produced by refining the coal liquid fuel. The coal liquefaction technology is led by South Africa world wide. (World Coal Institute, 2005) The consumption of coal worldwide is over 4050 Mt in various fields as discussed above. Seventy Seven percentage of the global production of coal is used by five countries; China, USA, India, Russia and Japan. (World Coal Institute, 2005) Reserves in Australia Reserves of coal are found through the process of exploration which studies the geology of the area, carry out geochemical and geophysical surveys and eventually drilling the region identified by experts. If the coal found is of economic cost and its quality acceptable and quantity large enough only then the mining operations start. The worldwide reserves of coal are estimated at about 984 billion tonnes which would last about one hundred and ninty years. Figure 7 shows the countries with the largest coal reserves in 2003. (World Coal Institute, 2005) Figure 7: Countries having largest coal reserves Most Australian States have economic resources of black coal but it is found in huge quantities in the states of New South Wales (38%) and Queensland (58%). Figure 8 shows the coal producing areas of Australia. (Australian Coal Association, 2008) Figure 8: Coal Resources of Australia Figure 9 illustrates areas of New South Wales where coal is mined. Mining of black coal is done on Gunnedah, Hunter, Western, Newcastle, and Southern coalfields. (Australian Coal Association, 2008) Figure 10 Area of Queensland where coal is mined. (Australian Coal Association, 2008) Figure 11 gives the total figures of coal production of Australia. 97% of the black coal produced for sale and 100% of export was from the states of New South Wales and Queensland. (Australian Coal Association, 2008) Figure 11: Production of Coal in Australia (Australian Coal Association, 2008) Mining and Processing There are two methods of mining coal. One is surface mining also called opencast mining and another is underground mining also called deep mining. The geological status of coal deposit determines which method of mining needs to be used. Sixty percent of world coal production is done through underground mining. In Australia however, eighty percent of coal mining is done by using the method of surface mining. (World Coal Institute, 2005) In underground or deep mining, there are two ways used; one way of mining is called room-and-pillar whereas the second way of mining is called long wall mining. Figure 12 shows mechanical cutters used for extracting coal. The cost of machinery for room-and-pillar mining costs about $5 million as compared to $ 50 million for long wall mining machinery. The technique chosen for mining is considered on the basis of cost involved. (World Coal Institute, 2005) Figure 12: Mechanical cutters/shearers extracting coal from surface of seam Figure 13 shows the operation of underground coal mining Surface mining or opencast mining is economically feasible only when the coal seam is found on the earth surface or near it. Coal recovered through this method is higher in proportion than any other method; mostly 90% is recovered. Areas covered by surface mining are very large and require equipments such as bucket wheel excavators, conveyors, large trucks, power shovels, etc. for mining and carrying of the coal. Mostly the soil and rock covering the coal are broken through explosives and as the coal seam becomes visible, systematical mining begins with drilling and fracturing of coal seam. Figure 14 illustrates operations and rehabilitations of surface coal mining. (World Coal Institute, 2005) Coal when extracted has several impurities such as dirt and rocks that are not required. Similarly the sizes are different and therefore it is mandatory to send coal for washing. (World Coal Institute, 2005) Figure 14: Operations and rehabilitations of surface coal mining Preparation of coal is fundamental and refers to the treatment of raw coal to suit the usability of customers. Methods applicable are crushing of coal, or complex treatment for reduction of inorganic mineral impurities. Australia washes 80% of its mined coal to upgrade its quality and improve transportation economics by separating the non-combustible substances from the coal. The preparation of coal reduces cost of transportation, improves its homogeneity, efficiency of utilization, produces less ash and reduces releases of oxides of sulphur, etc (Australian Coal Association, 2008) Transportation Modes Transportation infrastructure of coal in Australia consists of rail, conveyors and road for domestic transports and ships for international transport. (World Coal Institute, 2005) Transportation by Ships Transportation for international destinations is commonly made through ships of different sizes. Ships most commonly used for transportation of coal are Handymax which are of size 40,000 to 60,000 DWT, Panamax which are of size 60,000 to 80,000 DWT and Capesize vessels having size of about 80,000+ DWT. In 2003, international trading of coal was around 700 million tonnes out of which 90% was by sea. The cost of transportation of coal is very expensive. Seventy percent of the delivered cost of coal is transportation cost in some cases. (World Coal Institute, 2005) There are nine coal loading terminals that provide service to the export coal industry of Australia. These ports are located in Queensland and New South Wales. Figure 15 shows capacity of each port and their export loading in the year 2007 and 2008. (Australian Coal Association, 2008) Figure 15: Capacity of each port terminal and quantity handled Transportation by Rail Majority of coal is transported to its destination by rail in all the coal producing states. Rail freight is the most expensive item. In Australia, trains transporting coal are the longest in the world; six locomotives with 148 wagons having length of two kilometers carrying about 8,500 tonnes of coal. In 1980 in Queensland aluminium wagons, as shown in Figure 16, were constructed which were equipped with rotating couplings that enabled emptying of wagons by turning it upside down reducing unloading time and cost. (Australian Coal Association, 2008) Figure 16: Aluminium wagons for carrying coal in Queensland QRNational and Pacific National are two main rail companies that are operating in Australia for transportation of coal. QRNational Freight is one of the leading bulk freight specialists that provide integrated rail and road solutions by providing delivery of coal in Western Australia to the ports of Geraldton, Fremantle, Kwinana, Bunbury, Albany and Experance. (QR National., 2011) Pacific National (Figure 17) delivers approximately 83 million tons of coal per year by rail to both domestic and export markets. It is the second largest coal haulage operator in Australia. Coals from the coal fields of Hunter Valley, Southern and Western coalfields are hauled to the Newcastle and Port Kembla ports. It also delivers domestic coal to power producing units and manufacturers of steels in New South Wales. . 93% of New South Wales export coal is carried out by Pacific National exceeding three billion dollars. (Pacific National Pty. Ltd., 2011) Figure 17: PacificNational rail system Transportation by Conveyors Overland conveyor systems as shown in Figure 18 are used in Australia to transport coal direct from coal mines to various power producing stations that are built nearby. Stockpiles of coals are also carried on conveyor belts to the loading berths of offshore ship. (Australian Coal Association, 2008) Figure 18: Overland conveyor belt system Transportation by Roads In Australia, coal mines that are located away from the rail or port uses road transport like truck as shown in Figure 19 only for the shorter hauls to the port or rail loading facilities. (Australian Coal Association, 2008) Figure 19: Road Transport by Truck Australian coal industry selects routes that are least inhabited to seek the reduction in impact of road transport and the environment pollution. (Australian Coal Association, 2008) Safety and Prevention The mining of coal creates several risks and hazards and therefore it is essential to take safety and prevention measures. While mining coal, risk and hazards that are created include land disturbance, mine subsidence, water pollution, dust and noise pollution, rehabilitation of land used for mining, emissions of methane from coal mines, pollution of environment due to release of pollutants on coal usage such as oxides of sulphur and nitrogen. (World Coal Institute, 2005) Technologies have responded safety and prevention measures for these risks and hazards which include clean coal technologies (CCTs), reduction in particulate emission such as ash, coal cleaning, electrostatic precipitators and fabric filters. (World Coal Institute, 2005) Export of Coal In 2008-2009, black coal exports of Australia were more than double from the previous year’s value amounting to $A55 billion. The largest amount of export that was made from a single commodity was Black coal. Figure 20 shows comparison of commodity export of Australia. Figure 20: Comparison of export of goods and services from Australia (Australian Coal Association, 2008) Total world trade in 2008-09 comprised 941 million tonnes of hard coal, out of which 730 Mt was thermal (steaming) coal and 211 Mt was metallurgical (coking) coal. Australia’s share in export was 261 Mt in 2008-09, or 28% of the world total trade as shown in Figure 21. Australia continued its position as the world’s largest exporter of coal. (Australian Coal Association, 2008) Figure 21: Comparison of world coal exports The share of Australia in 2008-09 was 19% and 59% respectively of thermal and metallurgical coals in the total world trade. As shown in Figure 22, Japan was the largest importer of coal from Australia (Australian Coal Association, 2008) Figure 22: Major importing countries of coal from Australia Conclusion The needs of energy will double by the year 2030 according to one estimate. The role of coal as the source of energy will become increasingly important and fundamental as it is used as fuel in electricity generation, steel manufacturing and cement production. Demand for coal is constantly rising every year. There is a tremendous future for Australia as it has substantial coal reserves and technologies to mine the coal economically for the demands of future. (Australian Coal Association, 2008) Recommendations It is recommended that sincere efforts are continued in the field of quality development of technologies of coal finding, coal mining, coal preparation and transportation and coal marketing. Initiatives such as Clean Coal Technology (CCT) is continued and persuaded aggressively to produce coals of low emission quality. The projects worth about one billion dollars in the field of carbon capture and storage are completed as early as possible. Full concentration and appropriate provisions in budgets are kept to achieve the aim of bringing emissions near zero by 2020. (Sabine Leroy, 2011) References Australian Coal Association, . (2008). The Australian Coal Industry - Coal Resources. Retrieved from http://www.australiancoal.com.au/the-australian-coal-industry_coal-resources.aspx Australian Coal Association, . (2008). The Australian Coal Industry – Queensland Map. Retrieved from http://www.australiancoal.com.au/the-australian-coal-industry_queensland-map.aspx Australian Coal Association, . (2008). The Australian Coal Industry – New South Wales Map. Retrieved from http://www.australiancoal.com.au/the-australian-coal-industry_resources_new-south-wales-map.aspx Australian Coal Association, . (2008). The Australian Coal Industry - Coal Exports. Retrieved from http://www.australiancoal.com.au/the-australian-coal-industry_coal-exports.aspx Australian Coal Association, . (2008). The Australian Coal Industry - CoalProduction. Retrieved from http://www.australiancoal.com.au/the-australian-coal-industry_coal-production.aspx Australian Coal Association, . (2008). The Australian Coal Industry - CoalPreparation. Retrieved from http://www.australiancoal.com.au/the-australian-coal-industry_coal-preparation.aspx Australian Coal Association, . (2008). The Australian Coal Industry – Coal Loading Ports. Retrieved from http://www.australiancoal.com.au/the-australian-coal-industry_coal-loading-ports.aspx Australian Coal Association, . (2008). The Australian Coal Industry – Coal Transport. Retrieved from http://www.australiancoal.com.au/the-australian-coal-industry_coal-transport.aspx Ian Bradley, , Peter Gale, , & Mark Winterbottom, (2001). The heinemann science scheme. Essex: Pearson Education Limited Pacific National Pty. Ltd. . (2011). Pacific National Internet – Coal. Retrieved from http://www.pacificnational.com.au/serices/coal.asp QR National. (2011). QR NATIONAL –Bulk Freight. Retrieved from http://www.qrnational.com.au/Feight/Bulk/Pages/BulkFreight.aspx Sabine Leroy, . (2011). Mining Technology Australia - Coal: The export king. Retrieved from http://www.miningtechnologyaustralia.com.au/coal-the-export-king World Coal Institute, (2005). Section one to six. In World Coal Institute (Ed.), THE COAL RESOURCE A comprehensive overview of coal (pp. 001-044). London: World Coal Institute. DOI:www.worldcoal.org Read More