STRATEGIC AUDIT OF COAL EXPLOITATION IN RUSSIA

Transcription

1 STRATEGIC AUDIT OF COAL EXPLOITATION IN RUSSIA IMPROVEMENT OF ECONOMIC AND TECHNOLOGICAL PERFORMANCE IN AN ASSOCIATION OF UNDERGROUND MINES THROUGH THE INTRODUCTION OF WESTERN EUROPEAN TECHNOLOGY, METHODS AND EXPERIENCE Charbonnages de France International-Sofremines-CSC Ouroumoff International 4 December 2007

2 1. STATEMENT BY CHARBONNAGES DE FRANCE INTERNATIONAL 3 2. TERMS OF REFERENCE FOR THE SERVICES 4 3. BACKGROUND, ORGANIZATION AND EXPERIENCE OF CONSORTIUM MEMBERS CHARBONNAGES DE FRANCE INTERNATIONAL SOFREMINES CSC OUROUMOFF INTERNATIONAL GENERAL APPROACH BACKGROUND OBJECTIVE OF THE STUDY PRODUCTIVITY PARAMETERS METHODOLOGY OF WORK INITIAL MEETING BETWEEN RUSSIAN PARTNERS AND THE CONSULTANTS Consultants' Russian correspondents Work organization Data collection questionnaires Initiation of data collection ANALYSIS OF THE PRESENT SITUATION market research, geological conditions, Structure of activities at the Association level, structure of Pits Principle working Diagrams REFERENCE STUDY IN THE EEC COAL MINING INDUSTRY STUDY OF POSSIBLE MEASURES PROPOSED MEASURES FINAL CONFERENCE FOR THE PRESENTATION OF RESULTS Charbonnages de France International-Sofremines-CSC Ouroumoff International 2

3 1. STATEMENT BY CHARBONNAGES DE FRANCE INTERNATIONAL We hereby declare that we are ready to provide the services in conformity with the provisions and rules set forth in the invitation to tender and the draft contract???, which are initialled and signed by us, hereafter. Charbonnages de France International-Sofremines-CSC Ouroumoff International 3

4 2. TERMS OF REFERENCE FOR THE SERVICES Reproduce Terms of reference pages 1 to 13 (Annex A). Charbonnages de France International-Sofremines-CSC Ouroumoff International 4

5 3. BACKGROUND, ORGANIZATION AND EXPERIENCE OF CONSORTIUM MEMBERS. 3.1 CHARBONNAGES DE FRANCE INTERNATIONAL Charbonnages de France International-Sofremines-CSC Ouroumoff International 5

6 3.2 SOFREMINES Partie presentation et valorisation commerciale, y compris mention ISO 9001 (M Madre). COPPER, KAZAKHSTAN: Technical consultancy services to "Banque de Paris et des Pays Bas" (Paribas). Paribas is entrusted with a contract to privatise the copper complex of Balkashmed in Kazakhstan. The assignement is to provide Paribas with technical services on mine extraction, ore beneficiation and metallurgical smelting and refining facilities, with a view to establishing the best transaction price for Government of Kazakhstan, based on an information memorandum and the definition of a sales policy for the company to foreign investors. GOLD, TAJIKISTAN: Evaluation of several gold properties in Tadjikistan with a view to proposing technical collaboration and development by foreign capital. COPPER, PERU: Technical consulting services to "Banque de Paris et des Pays Bas" (Paribas). Paribas was been entrusted by the Peruvian Government Agency for Privatisation (COPRI), with a contract to promote the privatisation of an important copper mine by selling it to an international mining company. The assignment was to assist Paribas in evaluating all technical and economic data available, assess a minimum transaction price and participate in marketing the prospect to prospective buyers. NON FERROUS METALS SECTOR, ROMANIA: Expert studies for restructuring of the non ferrous metals sector in Romania (mines and metallurgy of lead and zinc, copper, aluminium and their associated precious metals content). The study was financed under programme PHARE of the EEC. STEEL INDUSTRY RUMANIA: Within a consortium of French companies led by SOFRES Conseil, Sofremines was entrusted with the organisation and co-ordination of the technical audits of all the sites of the Rumanian steel industry, a study which aimed at formulating recommendations for the restructuring of the Rumanian steel industry. This study was financed by Programme PHARE of the EEC. Charbonnages de France International-Sofremines-CSC Ouroumoff International 6

7 STEEL INDUSTRY, CZECHOSLOVAKIA: Coordination of technical studies for the restructuring of the Czechoslovakian steel industry, within a multi-disciplinary team of experts of company SEMA-Group, Roland Berger of Germany and Sofresid. This study was requested by the Federal Ministry of Economy of Czechoslovakia and was financed by program PHARE of the EEC. Its objectives were to formulate policy and strategy options for restructuring of the steel industry, taking into account all aspects ie the market, the evolution of demand inside and outside Czechoslovakia and of the quality of steel products. On the basis of an audit of the market and of the technical situation of the industry in 1990, the market at horizon year 2000 was estimated, using assumptions on global and sectorial economic growth; several scenarios for the industrial structure in year 2000 were proposed. Charbonnages de France International-Sofremines-CSC Ouroumoff International 7

8 3.3 CSC OUROUMOFF INTERNATIONAL Charbonnages de France International-Sofremines-CSC Ouroumoff International 8

9 4. GENERAL APPROACH 4.1. BACKGROUND The Kuznetzskugol association comprises of 18 pits (underground) that produce coking coal and steam coal. This coal is supplied to steel works and industries of the Kouzbass region, some of it is exported to nearby countries and some to far away countries (see schematic location map overleaf). Coal production is currently 18Mt/annum run of mine, which after preparation, becomes 10Mt of saleable coal; 85% of this is good coking coal, 40% of which is utilized in the steel works and industries of the Kouzbass region. Most of the rest of the coal produced is exported to nearby countries (Kazakhstan, Semipalatinsk region) and some to far away countries. Financial results are currently affected by escalating rail rates which are increasingly established according to true economic costs. Ninety percent of coal production is by mechanized methods of mining in horizontal or sub-horizontal seams; the openings of the working faces range from 1.3 to 10m with average 3m. Much of the face equipment currently used lacks of efficiency with regard to productivity, with the result that outputs per man shift (OMS) are low, and unit costs of coal produced are high. Coal prices are still affected by the difficulties of transition from centrally planned economy to market economy, and this, added to increasing costs of transport and of all factors of production, as well as inter-enterprise payment problems, lead to chronic cash-flow shortfalls, delays in payment of suppliers and personnel, etc. In addition to productive units (operating pits with their productive faces, underground infrastructures, preparation plants, surface installations etc.), the association also comprises of non industrial activities such as nurseries, schools, leisure centers, shops, which provide services, household equipment and consumable goods for the benefit of personnel and their families. Charbonnages de France International-Sofremines-CSC Ouroumoff International 9

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11 4.2. OBJECTIVE OF THE STUDY The objective of the study is to propose improvements of economic and technical performance, in a selected number of pits of the Association, by the introduction of West European coal mining technology, methods and experience. Such improvements will be selected with a view to enabling the increase of productivity of all factors of production, thereby lowering production costs. Also, an increase of coal quality at the coal face, by applying appropriate methods (e.g selective mining) will be considered, among other measures, for increasing overall productivity by means of increased sale prices. However, increases of sale prices must be compatible with consumer demand and preferences vis à vis competitive fuels (oil and gas) and reference prices of coal on the international market PRODUCTIVITY PARAMETERS The following parameters of productivity will be considered: 1. Output per man shift (OMS) or tonnes of run of mine coal produced per man and per shift. This is justified by the fact that labour is the major factor of production in underground coal mines; moreover, it is a factor which is likely, in the future, to increase quicker in real terms than the other factors of production. Indeed, as the economy of Russia will become more successfully market oriented, the well-being and income of the people should increase faster than the costs of other factors. Several OMS figures will be adopted, at different stages of the production process: OMS at the production face OMS at district level (including one or several coal faces, plus development and ancillary works) OMS at entire underground mine level OMS at entire mine level (underground plus surface) OMS or productivity in roadway developments (stone drifts and coal headings), will be assessed by: meters of advance per man and per shift (in coal and in stone roadways) meters of coal and stone roadways driven per 1000t of coal produced. 2. Unit cost of coal i.e. the cost of inputs plus personnel. Charbonnages de France International-Sofremines-CSC Ouroumoff International 11

12 study. 3. The degree of capitalisation i.e the amount of capital used per tonne of coal sold, or per unit sale value of coal, based on average market price of the different qualities of coal produced and sold. NB: capitalisation will be assessed using historical purchase values with escalation factors and exchange rates, as available in the Kuznetskugol official accounts. 5. METHODOLOGY OF WORK The Consultants fully agree with the organisation of work in six principal parts: 1. Initial meeting between beneficiaries and the consultant 2. Analysis of the present situation 3. Reference study in the EEC coal mining industry 4. Study of possible measures 5. Proposed measures 6. Final conference for the presentation of results (Final Report). The following block diagram depicts the overall approach and organisation of the strategic Charbonnages de France International-Sofremines-CSC Ouroumoff International 12

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14 Details on the Consultants' approach for each of these steps are given below. The Consultants' team for the study and a principle schedule of execution are shown in the two diagrams overleaf INITIAL MEETING BETWEEN RUSSIAN PARTNERS AND THE CONSULTANTS The initial meeting (one week), will enable to initiate the strategic study i.e. organize and allocate work between the Consultants, their Russian correspondents as well as the beneficiaries Rosugol and Kuznetskugol CONSULTANTS' RUSSIAN CORRESPONDENTS The Consultants' Russian correspondents will be responsible for ensuring permanent liaison and communication between the Consultants and the beneficiaries, in particular Kuznetskugol Association and the different pits belonging to the Association. In particular, they will be responsible for coordinating the collection and compilation of all data, required by the Consultants from Kuznetskugol. And they will be responsible for translating documents prepared by the Consultants for the beneficiaries from English into Russian. All documents prepared by the Consultants, will be in English for the use of TACIS as per provision of the terms of reference of the study. In addition, to facilitate communication with the Russian benefiaries, all documents will be translated into Russian WORK ORGANIZATION The objectives of the study, the organisation of work, joint meetings, venues and participants, submission of reports, and a fixed time schedule for the complete scheme, will be discussed and devised. Material problems will be listed and solutions will be arranged by the Consultants i.e. accomodation (renting of a furnished flat), office facilities (furniture, PC computer and printer, phone and fax machine DATA COLLECTION QUESTIONNAIRES At the occasion of this meeting, the Consultants will hand over their data collection questionnaires covering all the data required by them, from the Russian benefiaries: Ministries, Institutes, Association, pits etc. It will the responsibility of the Consultants' Russian correspondents to collect and compile all the data specified in the Questionnaires, for which they will require the active participation of Kuznetskugol management at the level of the Association and of individual units (coal related and non coal related i.e. Pits and non industrial units). Charbonnages de France International-Sofremines-CSC Ouroumoff International 14

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17 INITIATION OF DATA COLLECTION After the initial meeting, the Consultants' Russian correspondents will proceed with the data collection, compilation and translation into English (or French) in order to make such data available to the Consultants six weeks after end of the initial meeting. The Consultants will then review the data during two weeks, and prepare their site visits ANALYSIS OF THE PRESENT SITUATION This part of the study will start with visits (three weeks) of the Consultants' team experts to the relevant Authorities, Institutes, Kuznetskugol Association and to the different Pits and surface Plants. The purpose will be to discuss and to validate the data compiled in the Questionnaires, collected under the coordination of the Consultants' Russian correspondents. On completion of the visits, the Consultants will prepare in their home offices, their report on the Appraisal of the present situation. This report will be finalised at the end of month six after starting the assignment, in the form of Interim Report N 1: Appraisal of the present situation, in English and in Russian. The Appraisal report will cover market research, geological conditions, structure of activities at the Association level (coal and non coal), and the structure of Pits MARKET RESEARCH, GEOLOGICAL CONDITIONS, STRUCTURE OF ACTIVITIES AT THE ASSOCIATION LEVEL, STRUCTURE OF PITS Mine productivity at the level of individual pits depends on the following main parameters: I. geological conditions as resulting from sedimentology of the deposit and tectonical activity II. access to coal seams and main infrastructure layout III. individual panel layout as imposed by the order of exploitation resulting from methane drainage and water ingress constraints but also nature of faults, their location frequency and space distribution IV. method of mining and mechanisation adopted, more or less imposed by the previous parameters Charbonnages de France International-Sofremines-CSC Ouroumoff International 17

18 V. organisation of faces, accompanying development headings, and necessary ancillary equipment and services (transport of coal, supplies, personnel, ventilation, methane drainage and control, power supply, maintenance of equipment, etc.) It should be noted that parameters I, II, and III are closely linked with the multi-criteria classification of reserves, by physical and technical criteria. Parameters IV and V are linked with the concept of economic or sub-economic reserves PRINCIPLE WORKING DIAGRAMS The following four diagrams depict the Consultants' approach for the four aspects. Charbonnages de France International-Sofremines-CSC Ouroumoff International 18

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23 5.3. REFERENCE STUDY IN THE EEC COAL MINING INDUSTRY 5.4. STUDY OF POSSIBLE MEASURES 5.5. PROPOSED MEASURES 5.6. FINAL CONFERENCE FOR THE PRESENTATION OF RESULTS. Charbonnages de France International-Sofremines-CSC Ouroumoff International 23