It is noted that the complexities of costs are a big driver in coal consumption. Currently many coal produces are not operating at a profit or their costs are requiring pricing which reduces demand as energy users switch to lesser costs fuels like natural gas. This situation, of course, results in cost cutting by coal produces to recover profits and become more competitive with natural gas. Rising natural gas prices over time (especially in the US) are likely and this will cause coal to become more competitive again. So how do the coal companies cut costs on the other side of the equation? Well here is one way.
Note this information is about an iron ore mine. But my point is that eliminating high paid jobs via automation is a sure way to lower costs. It is after all one of the prime ways the US is increasing productivity.
Train drivers working for Australian miner Rio Tinto make as much as A$240K (US$224K) per year to haul ore. According to BLS data, that is as much as surgeons in the US, and more than the $151K average of New York State lawyers.
$224K per year!!! Full disclosure. I worked on the Burlington Northern railroad for a time when I was younger and I can assure you that this is very simple work and could easily be automated and am surprised a bit that it has taken so long. Though when I worked the typical train had 4 workers on it and the norm is now 2. But zero makes perfect sense with modern technology.
Rio, which last year approved spending of $7.2 billion to expand the iron ore operations, is aiming to have the world’s first, fully automated, long-distance and heavy-haul rail system operating in 2015. Its automated rail will have 1,500 kilometers (930 miles) of track, 10,000 wagons and individual train sets 2.3 kilometers long, according to Credit Suisse Group AG. The company is spending $518 million on the program that was announced last year.
Rio also plans to automate about 40 percent of its Pilbara truck fleet by 2016. The goal is to reduce costs to $15.60 a ton by 2020, from $23.10 a ton in the first half of this year, Paul Young, a Sydney-based analyst with Deutsche Bank said in a report after touring operations last month, citing Rio data. Automation is set to help shave $1.90 a ton off costs and boost output by 20 million tons, or 5 percent, he said.
There is nothing about hauling coal that is functionally different than iron ore. This type of technology will proliferate. We have large farm tractors today which need no human driver and setting up a system for very large mine trucks and trains is even simpler to do due to the controlled environments.
I expect this type of technology to have an impact over the next 10 years or so.
There is nothing about hauling coal that is functionally different than iron ore.
That is true in the sense of mass transportation of bulk materials for railroads, but coal with the right (or wrong) sulfur content can spontaneously ignite. Remember the Battleship Maine and the Spanish-American War? We (meaning the US) declared war on Spain, because we thought we were attacked, but later examination showed the munitions magazine next to the coal storage exploded from inside the ship. It's now widely believed that spontaneous combustion of coal sank the Maine.
As a young man, I had years of experience using liquid nitrogen. Before the end of Centralia, PA, back in the early '80s, when the fires reignited, I had this idea I could stop the underground fire with liquid nitrogen, so my wife and I went there. I was directed to the house of the Priest trying to save the town. The Priest informed me the mineral rights in that area were collectively owned by the town and the coal under the town was top grade anthracite. I questioned him about entrances to mines and why he thought the fire started. He pointed to hills all around the town and told me they were all man made. He told me about similar above ground fires in strip mine areas, such as West Virginia. Many thought the fires were intentional to remove the residents, but the Priest reported the information as he knew it.
That's when I first discovered how sulfur can spontaneously ignite coal or related strata, because conditions can remove the sulfur from top grade anthracite putting it in what is commonly called overburden. Once such material is fragmented by digging it up, it is mixed with air and can spontaneously ignite. Those man made hills in Centralia, PA were created by dumping such materials. Later, I remember ships spontaneously igniting in Baltimore harbor, when they were trying to export coal and railroads get the coal there.
Charcoal is the first thing a Chemist would think of to collect harmful substances. Since coal has existed in the ground for such a long period of time, it's picked up every nasty thing available to it. Even without a carbon dioxide problem, coal is a poor choice for a fuel. I've been in precipitators and scrubbers and they aren't efficient at removing pollution. Things like sulfur, mercury and cadmium are commonly talked about, but coal can contain radium, uranium, basically any bad thing millions of years can put there.
The Earth does a great job containing those nasty substances, but once man digs into it, those nasty substances get released. That is true with all mining, but coal has it's unique chemistry of collecting things. Mining is necessary to get resources, but the laws should require returning the area to equal or better conditions and management of all pollutants. The areas should be monitored to prevent harm to mankind or the environment. It isn't like any of this is something new, so we should have already learned and implemented such practices.
One of my big issues involves corporations getting public resources and paying pennies on the dollar by resource leases. I don't see anything a corporation can do that can't be contracted out, so let the government hire the corporations with contracts. That way, public resources are sold at market prices. I've been called many a bad name for advocating this, but I'm actually a capitalist, not a thief or a politician seeking graft. If the people own something, they should be paid market value for what they own, minus the contract price. The concept may be radical to America, but it isn't that radical. We have enough natural gas to put coal out of business and profit while doing it. We don't have to live like this, there is a better way.