World Energy Outlook 2011.pdf - Thomas Piketty

Underground mining methods (longwall, room and pillar) are comparatively more labourintensive
than opencast methods (dragline, truck and shovel), where larger mining
equipment can be utilised (Figure 11.7). Underground mining also depends more on steel,
machinery and electricity. Unsurprisingly, explosives, tyres and diesel costs are significant
in truck and shovel operations, while draglines are less diesel intensive, but electricity is a
more important cost factor (Trüby and Paulus, 2011). Globally, prices for diesel, explosives,
tyres, steel and machinery parts have increased dramatically since 2005. Consequently cash
costs for opencast mining operations have increased sharply, due to their very high exposure
to these input factors, notably in Indonesia, where mining is exclusively carried out using
the truck and shovel method. The production of explosives and chemicals requires oil and
natural gas as feedstock, so the future prices of these commodities will have an indirect, as
well as direct impact on coal mining costs.
Figure 11.7 Share of key input factors in coal mining costs by technique,
2009
50% Room and pillar
40%
30%
Longwall
Dragline
Truck and shovel
20%
10%
0%
Labour
Steel
products/
machinery
parts
Electricity
Chemicals
Diesel/
lubricants
Explosives
Tyres
Other
materials
and
services
Source: IEA analysis based on data from the Institute of Energy Economics at the University of Cologne.
11
© OECD/IEA, 2011
Coal mining productivity, measured as average production per employee per hour, has
declined substantially over the past five years in major producing countries, such as
Australia and the United States (Figure 11.8). While various factors (such as changes in
international coal prices or the size of the workforce) contribute to changes in productivity,
significant productivity deterioration can occur as existing coal deposits are exhausted,
seams become thinner and mining operations move deeper. As more overburden has to be
removed or trucks have to move coal over longer distances from the mine mouth, the cost
of mining increases. For example, productivity in opencast mines in the major Australian
mining state of Queensland fell, on average, by around 6% per year from 2003 to 2009,
as existing deposits became depleted; nonetheless, Australian mines are still among the
most productive in the world. During the same time period, productivity, on average, fell
by around 4% per year in the United States, with notable falls in Appalachian underground
mines – a region that has seen extensive coal mining since the 19 th century.
Chapter 11 - Coal supply and investment prospects 409