If your site includes a processing plant, you have probably seen your energy costs rising steadily, with no relief in sight. It is easy to view these costs as unaddressable – after all, when the market sets the price, what can you do?
As it turns out, there may be quite a lot. There are a few places to go looking for cost improvements, even if you cannot change pricing.
Take a recent project at an Australian smelting company: Coke was one of its largest consumable spend items and the company was locked into a four-year contract with its current supplier.
A four-step process delivered significant savings.
The first step was to build a good tool to track consumption across all processes. Next was to analyse where coke was consumed in the smelting process, based on a mass balance. The analysis started at the coke supplier and ended at the furnace. This meant the company had to set up measurement points and trace “missing” coke throughout the system. The mass balance then became an ongoing information and control tool.
Prioritise the biggest sources of losses first. One of the insights the tracking tool delivered was that the supplier of coke was weighing haul vehicles very shortly after a standard quench process and the company was being invoiced based on gross weight which included residual quench water. In other words, the company was paying for water at the same rate as coke.
In addition, contracted delivery drivers were paid based on tonnages delivered, so often re-quenched their loads just prior to arrival at the smelter.
Moisture content sampling onsite highlighted that moisture levels prior to furnace injection were also high. This meant that a proportion of the coke consumed was being wasted to burn off its own excess moisture.
The analysis also revealed that coke losses were occurring onsite due to double-handling of stocks, leading to excess generation of coke fines which are not suitable for furnace injection.
Addressing supply chain leakage
The company initiated moisture sampling on arrival to determine a dry weight for each coke load and used existing moisture specification clauses in the supply contracts to ensure they paid only for energy – not water. Once the supplier and drivers “got the message”, sampling was cut back to random occurrences and used to ensure quenching did not creep back into the system.
Addressing storage and handling leakage
The company also made significant reductions to excess coke moisture levels by identifying its onsite moisture sources and implementing simple solutions to remove them. For example, they installed rain covers and a simple drainage system in the storage bays, redirected drains and reduced quenching of stockpiles to a minimum.
To eliminate double-handling the company modified storage bay layouts and developed new handling standards and procedures. This stemmed mass losses, and further reduced both transport and coke costs.
In all, the company was able to reduce coke spend by more than 10% – a reduction that was considered impossible before the project.
Do not assume that a fixed price equals a fixed cost. Any class of expenditure may yield significant cost savings with rigorous analysis and controls of its components.