IN recent years cost cutting has become the clarion call of coal producers looking to bolster profit margins out of everything from cutting costs, to improve technologies and mining systems, to higher productivity levels.

The answer once was simply to produce more coal but times have changed, as any producer will attest, and old solutions no longer provide the answers to new challenges.

BHP Coal is one company that has been doing a lot of thinking about the basic philosophy of its coal operations. The company is now in the process of setting the stage to affect a shift in emphasis from mature open-cut operations to underground longwall operations. It is a paradigm shift which has been given impetus by the successful start-up of longwall operations at the Crinum mine.

With excellent first year production figures, development rates well above industry average, and a raft of other record-breaking achievements, Crinum has unequivocally shown that underground coal mining is a very feasible proposition. Crinum is BHPC’s blueprint for its high-capacity, low cost mining operations of the future.

In the long term BHPC does not plan to increase output, based on the assumption that the coking coal market is not going to grow substantially. What it wants is to replace high-cost, low-margin tonnage with low-cost, high-margin tonnage. The longwall, as evidenced by Crinum, might just hold the key to realising this goal.

Crinum is a source of pride for BHPC managers such as Guy Mitchell, who left the mine two years ago for the corporate role of manager - underground strategy and development. Mitchell heads up a team which has been looking at various options to reshape the future of BHPC’s operations. While Mitchell acknowledges that cost cutting can be achieved in open-cut operations by re-engineering, overhead value analysis, or by using a range of innovative tools, these approaches require significant capital expenditure. And investors are more than a little skittish about investing big bucks into businesses with declining revenue streams.

Mitchell believes the answer lies in introducing the concept of punch longwall mining into a number of BHP managed open-cut mines in the Bowen Basin which are approaching the end of their economic mine life. The mines are owned by the CQCA and BHP Mitsui joint ventures. Punch longwall mining, where longwalls are developed directly off existing highwalls, has been introduced successfully in Australia by Thiess and others.

What makes it particularly attractive to BHPC is its 100-odd kilometres of highwalls in central Queensland which could provide easy access underground with relatively low establishment costs. Seeing if the plan will hold water is the next step.

Goonyella is one of the highest-ranked BHPC underground prospects. When opencut mining ended last year in part of the Eureka pit, it had exposed the Goonyella Middle Seam, which is the focus of longwall mining at Moranbah North and North Goonyella.

In the next two months, pending joint venture partner approval, BHPC will begin construction of the Goonyella Exploration Adit at Goonyella’s Ramp 4. This will be the final phase of exploration and feasibility before a decision on a longwall is reached.

During the 12-15 month operation three headings will be driven into the coal seam over a linear distance of 3500m to allow assessment of coal quality, mining conditions and underground costs. Mitchell cites several advantages to using this method of exploration. As only minimal infrastructure is required, at a cost of under $5 million, the process is low-risk and cost-effective. BHPC will also use the opportunity to assess the comparative economics of using a contractor to develop longwall gateroad panels. Mitchell said using a contractor offered greater flexibility and potentially lower costs.

“Therefore our commercial risk and our technical risk are lowered from the outset,” he said.

As envisaged by Mitchell the method will encompass a three-phased approach. Completion of initial underground drivage would reach a “go, no-go” point at which time a decision would be made to proceed with additional development. The final phase would see the installation of a longwall, at an estimated cost of about $110 million per operation — a significant capital reduction on conventional longwall installations.

The same approach will be used at BHPC’s other highly ranked underground prospects and by the second half of 2000 an exploration adit phase could be underway at Saraji. Other highly ranked prospects include Riverside, Peak Downs and Gregory.

If a longwall is installed at Goonyella, mining will be fairly simple as no transport, conveyor drifts, shafts or main headings are required. Gateroads roughly 280m apart will go straight into the seam off the highwall, sloping east at about 3 degrees. Coal from the longwall panel would go direct to the surface from where it would be conveyed to a wash-plant. The process will significantly improve the longwall/development ratio and future panel development could be carried out separately from mining activities.

Mitchell has excellent credentials to help redefine BHPC’s future coal operations. He was first exposed to underground coal operations in 1971, during his second year of engineering at the University of New South Wales, and took a trainee position as a mining engineer in Wollongong working at four collieries for BHP subsidiary, Australian Iron & Steel Pty Ltd.

“My goal when I started off was to work in the three supervisory roles as a prelude to becoming colliery manager. What I did was very much part of my personal development plan,” Mitchell said.

His career plan has taken him into mines in NSW and Queensland as foreman, underground manager, relieving manager, and mine manager over a 20-year period. He has been exposed to a range of management functions including maintenance, roadway development, longwall installation and relocations, safety, planning and marketing. Throughout his working life

Mitchell’s dominant theme has always been people management.

During the early 1980s he worked in old established mines such as Bulli and Stockton Borehole which where characterised by militant workforces and entrenched and rigid workplace relations. Even though making a difference was very difficult in a climate of no change, Mitchell believes he was able to effect positive change.

“The lines were drawn in the sand and everyone was very much entrenched in their positions. You were not encouraged to encroach on either side of the line because you’d expect to have a fight. Initiating change was an extremely difficult task, however, it could be achieved by building relationships and perseverance.