Cost reductions at Walter Energy
During their presentation at the Coal and Energy Forum, Walter Energy touched briefly on the areas in which they have started to reduce costs.
John Moberg, Mine Manager at the Wolverine Mine discussed what is being done at the operation to reduce their costs. He said, “We need to remain competitive in all market conditions. The recent turn down in world economies, is tying back into all of our coal, meaning, we can’t sell it.” Since the forum, Walter Energy has again begun to produce some coal and it is being sold.
Walter Energy is trying to reduce costs to their loading operations and their vendors (those who sell parts fluids, tires and other consumables) through reducing money spent on tires, and through different measures to increase hours of productivity. Walter is putting systems in place to reduce costs in all departments. Tires are one of the biggest expenses at the mine. The intentions of these measures are to increase tire life and decrease the amount spent on tires. An example of this is better ramps for the equipment.
The company has also made improvements to how they monitor safety incidences. The new system in place is a scorecard system to monitor safety interactions. A safety interaction is when manager and supervisor groups go out and meet with individuals who are doing a particular task. It could be a haul truck driver, a mechanic or anybody else who is doing a task on site. The objective is to monitor how they assess risk. For example, is there something overhead they haven’t seen? Is there something out there they banged their knee on? Is it slippery where they’re going to walk next?
Moberg said, “We’ve introduced scorecards by department, which indicate the number of safety incidences we have in one day, drill availability and digger availabilities. We put up production rates for the shovels and for the drills. We compare them on a daily basis, every 24 hours,” he continues, “We also compare shift to shift. With that, every shift knows how they are doing with safety interactions, safety performances, and how their production compares to their peers.”
With maintenance, Walter Energy is using the same type of system for the availability of all the primary diggers, there are five big diggers. They look at the haul truck fleet and the drill fleet. The primary diggers are monitored independently. Moberg said, “For the most part, in the last 30 day trend, anything that is a zero we have a look at what the target is. Anything that is up in the 87 range we look at how we can raise those rates a bit.”
The zero and the 87 represent availability. This number represents the amount of time a machine can do work. This takes into account daily occurrences such as lunch breaks, shift changes and maintenance. When a machine is scored a zero it means it wasn’t used during the shift, because there was potentially no operator available, it needed maintenance, or sometimes it just wasn’t required during that particular shift.
For their GET (ground engaging tool) costs, they have suppliers involved, looking at different bucket configurations, different wear types and different wear patterns. In relation to equipment, the hardness of the metal used for parts such as buckets and shovels is important because it can inflict unnecessary costs and hinder productivity. Moberg said, “For our fuel costs, there are different things we can do here. We are looking to upgrade some of the compressors on our drills. That will reduce the fuel cost in the drills by about 25 percent.”
Walter Energy is also reducing labour costs. Moberg said, “We have had a big reduction of overtime. Certainly we ran quite a bit last year, because we were under staffed. We’ve been a little better this year and are very close to our operating rate. This means we’ve been able to reduce overtime.”
The company is also addressing cost reductions when it comes to transporting their coal from the mines to the ports for exportation. Moberg says, “We’ve involved all of our supplying chain, including CN, into discussions about what we can do together to reduce our costs. At the end of the day, that’s what it’s all about.”