Main issues which emerged:

- The importance of seeing the longwall mine as a business and treating it as such arose in several papers. Greater levels of accountability, paying bonuses for performance, good maintenance regimes, and an increased commitment to communicating with employees where some strategies discussed in many papers.

- The relationship between operators and Original Equipment Manufacturers (OEMs) is moving away from an adversarial one towards a relationship of mutual trust. Many operators called for OEMs to ensure that key staff had operational experience rather than having purely an engineering focus.

- While coal demand is growing and prices have improved, market discipline was required by producers and mine owners to ensure the market was not flooded with cheap coal. Any future greenfields mine development would probably be underpinned by extreme caution. Industry consolidation made it easier for large companies to control the flow of product into the market.

On the economic front, Clyde Henderson, director of Energy Economics, predicted two "golden years" for coal exporters in the wake of recovering prices and increasing demand.

From 1999 to 2010, Henderson expects demand for imported coal to grow by 3.1% per annum. Demand for coking coal is expected to rise by 1.8% per annum while demand for steaming coal will rise by 3.7% per annum.

This would place demand on suppliers to the international export sector to be producing an additional 169Mt by 2010, of which 138Mt will be steaming coal. Henderson said on the supply side there was a lack of new mines in both sectors and a scramble to start mine construction is expected. But industry consolidation should curb the tendency to develop too many mines during boom times with large producers in a better position to cut production during downturns than small producers.

Henderson predicts Queensland producers having a major impact on hard coking coal prices after 2002. Steam coal prices will remain in the $US32-36/t range but will fall after 2002.

Bill Simes, associate director of Barlow Jonker, asked whether longwalls presented the best investment in terms of adequate return on capital.

Analysis of investment capital per annual tonne of capacity ($/tac), showed that in the 2000-2003 period there is a lack of projects over $50-$60/tac. Simes said this was a result of low coal prices and poor returns by many mines in the late 1990s. The result has been an increased number of low capital projects, especially contractor operated open cuts.

“If the project has a pretax return on investment target of at least 15-20%, then at $50/tac this equates to $7.50 –10/t operating margin. No doubt we’ll see numerous mines achieving this over the coming year or two, but for many mines such a target proves elusive over the longer term.”

Gary Buchan, technical services manager at Twentymile mine in Colorado, described some of the developments that have occurred since major German group RAG Coal International bought the coal assets of Cyprus Amax Minerals in June 1999.

Some cultural challenges for Twentymile management have been budget timing with a large international company and limited approval of expenditure in the US to date. Buchan said the US coal industry was still in a short-term responsive operating mode, which was very different to international coal markets. This had been a learning curve for RAG operating in the US coal markets.

A long-term contract for Twentymile is typically two-to-three years long. About half the mines current annual production is committed to one-year contracts. The ability to rapidly respond to market conditions was underlined by the fact that while Buchan was at the conference, mine management at Twentymile was in the process of deciding whether to lift production to meet the growing demand in the US market. Buchan spoke about the discipline required by a mine to take coal off the market, rather than simply flooding already over-supplied markets with more coal, and driving prices down further.

Many conference participants remarked on the importance of introducing market discipline into Australian coal mines so that the production focus was on making a return on investment from their own operations.

In response to a question on the bonus system at Twentymile, Buchan said in the past roughly 8% of the annual salary of a miner was bonus, paid monthly for longwall tonnes produced, development metres driven and cost of materials. In 2001 because the market has not been buoyant the bonus will be paid annually and will be based on the mine’s profits for the year.

Several papers at the conference outlined issues related to technology and emerging technologies of the future.

In his presentation, Bob Sherack, DBT general manager – Queensland, discussed the growing trend to increase the width of longwall faces.

Sherack said the average face width in Australia is 205m, and each of the new mines opened in the past three years have faces over 250m wide. The widest Australian longwall face is currently BHP’s Crinum mine in Queensland, at 280m. The new Oaky No 1 extension longwall face will start at 305m and increase to 350m.

In the US, Consol’s Enlow Fork and Bailey mines are 330m wide and in Germany the widest longwall face is at the Frederich Heinerich mine at 435m.

Increasing the width of longwall faces required more than simply installing more shields and pans, Sherack said. Key technical considerations include bigger shields, increased demand on shield fluid, the risk environment related to seam thickness, strength of AFC chains, shearer utilisation, and CST drive technology.

The recent introduction of wider shields, such as the 2m DBT shields, have made wider faces more cost effective. But increased support capacity has placed higher stresses on steel structures which required higher grades of steel and welding techniques suitable to high strength steel.

Sherack said shearer feedback technology, in which the shearer speed is adapted to the maximum load on the conveyor, could also be used to increase face width. If all the parameters were met, Sherack said maximum face lengths of 520m are achievable with peak outputs of 4000tph.

CST technology is a key consideration. Sherack said during a chain block at the maingate the inertia with this technology is as much as 380% lower than other technologies such as fluid coupling only.

Buchan of Twentymile said the next step in improving productivity at the mine will be to widen the longwall face to around 350m-370m by 2003. The mine is currently conducting tests with a friction testing device to establish how wide the face can go in relation to issues like conveyor pull motors and chain sizes.

ILN will review the mine case studies covered at the conference over the next two weeks.