The formation of UK Coal out of RJB Mining some seven years ago heralded the start of a significant period of upheaval and change for English coal mining. The loss of subsidies and growing competition from other coal producing countries caused UK Coal to lose its once dominant market share of the domestic utility sector. By last year UK Coal supplied only roughly half of the coal required by UK power producers.
Said P105 project leader Kevin Irving: “In 2001 we recognised we had to change or fail.”
In answer to the threat of cheaper imports, the company introduced the Project 105 campaign earlier this year. It is aimed at reducing average unit costs to 105 pence per gigajoule.
Speaking at UK Coal’s AGM chairman John Robinson indicated that positive effects had begun to flow out of P105 such as improved output from deep mines. The company currently has 17 operational longwall faces that produced 5.9 million tonnes to the end of April 2002, compared with 4.7Mt for the same period last year. In the next three years some of these operations will close including Prince of Wales, scheduled to close in August. The future of the three mine Selby complex is expected to become clearer within weeks.
To reduce costs, the company has targeted reducing expenditure on goods and services as critical. UK Coal currently spends around 300 million pounds on goods and services, representing nearly 50% of total company expenditure.
The P105 initiatives will include a much closer look at any major project spend, as well as improving the purchasing process. But the most important attack on costs will be to redefine the relationships with suppliers.
Company newsletter, NewScene quoted group procurement director John Adams as saying: “In some product categories, where our suppliers have too dominant a position, we are opening up the market once again to alternative suppliers, while in other areas where we have too many suppliers, we will be cutting back.”
This will include some standardisation of products between mines and a move towards whole-of-life thinking around key plant and equipment. One example has been the development of standardised conveyor structure with Continental Conveyors, expected to save 350,000 pounds this year alone.
“We see partnerships with our company as the way forward,” Irving said. “If they perform, OEMs should benefit and we want them to be more performance-based.”
Other changes include how the mining operations are run. Recently the company has been discussing changing shift patterns at the Kellingley colliery. UK Coal currently measures machine available time (MAT), more or less equivalent to the Australian measure of utilisation. MAT measures how much time the shearer system is available for cutting at the coal face. Irving said the company’s MAT average is currently around 95 hours per week, based on a five-day week. Top achieving mines are achieving utilisation of roughly 70% of those 95 hours.
By changing working patterns, in consultation with unions, UK Coal hope to lift MAT to 140 hours per week, which will increase utilisation. Various options are being investigated such as five crews working 36 hours 15 minutes a week or four crews working 44 hours a week.
Irving, who has visited several Australian longwall operations, commented on the focus on hitting short-term targets in Australia. UK Coal is now in the process of developing daily and weekly production targets, he said.
“In confronting what our company was we found we have to be more target oriented in the short-term,” Irving said.
