IM 2020 April 20 | Page 10

ADVERTISEMENT FEATURE COMPANY PROFILE How mining companies can reduce the cost of purchasing equipment and improve the quality at the same time Theo Brechmann Chief Operating Officer of Technical Audit company January 2018–today 35 years of management experience Experience as Design Engineer, Service Manager, Sales Director and CEO Twenty years as a Sales Director for CIS countries at Eickhoff Bergbautechnik GmbH, Germany (until January 2018) Expert in longwall mining technologies aving been a long time Sales Director of the German company Eickhoff Bergbautechnik, I have worked in Russia, Belarus, Kazakhstan, and constantly communicated with the top management of coal companies in these countries. I have often encountered a problem they described in making decisions on key longwall equipment for underground coal mining. It can be stated as follows: "How does one make the best choice of equipment, so that it is not expensive, but at the same time high-quality?” The most expensive of all longwall equipment for underground coal mining is the powered roof supports and the armoured face conveyors – they account for up to 90% of the cost of the entire longwall system. Conducting a tender (procurement bidding process) for the purchase of this equipment is aimed at solving the problem stated above. Let's look at the picture below to understand the actions most equipment buyers take to try to solve this problem. H 8 International Mining | APRIL 2020 One way or another, buyers are trying to draw a line of acceptable quality. After that, the prices of those bidders who meet this quality are considered. All that the buyers are trying to accomplish is move this line of acceptable quality, narrowing or expanding the list of bidders under consideration. The finance or supply departments try to move this line to the left, and the technical or production departments try to move it to the right. Usually, the more the line goes to the right, the higher the price. Of course, a quality product for a long-term project is very good, but: 4 You do not really evaluate the quality of the equipment you purchase, but instead the quality of previous deliveries/references 4 As a rule, you pay the highest price during the tender, effectively excluding cheaper offers Buyers have developed lots of tools to allow bidders with cheaper offers to participate, but unfortunately bigger doubts about quality arise in the tender process. To resolve these doubts, buyers have introduced: 4 Extended warranty obligations 4 Financial responsibility for the warranty period 4 Bank guarantees for the warranty period, etc. It is interesting that all these tools were invented by buyers in order to stimulate suppliers to ensure high quality, despite the fact that these tools were not directly related to quality. A better solution here, in my opinion, is the following: the buyers must increase their level of knowledge about quality and learn how to control it. Let's take a closer look at what the quality of the equipment consists of. The quality of the equipment depends on the following factors: 4 Quality of design 4 Quality of materials 4 Quality of manufacturing How can the buyer control all these aspects? One solution is the buyer can start purchasing this quality control service from a company that specialises in providing it. Guided by this, I came to the idea of creating a company that provides technical audit services for longwall equipment from design to manufacture for mining companies around the world. Knowing the experts in the market, I selected the leading specialists and at the beginning of 2018, the Technical Audit company was formed. This included former Chief Designer of DBT, Detlef Lettau, DBT Designer, Wilfred Weigel, former Production Director of Eickhoff Bergbautechnik, Heinz Tenberge, as well as a group of certified specialists who perform non- destructive testing in accordance with international standards used for the manufacture of powered roof supports and armoured face conveyors. The subject of our first order in 2018 was an audit of the production of a longwall system for the Denisovskaya mine, owned by Russian coal company KOLMAR. The results were very impressive – the audit revealed many bottlenecks and areas for improving the quality of equipment during its manufacture. But, most important, the results of the audit clearly convinced the buyer of the highly added value: for 1-2% of the cost of equipment (the approximate cost of the audit), the buyer received high-quality equipment. The second positive was the increase in the quality of production from the manufacturers, which the manufacturers greatly appreciated and benefitted from. After such a clear positive result, we received our next orders: for the audit of the longwall system at Russian coal company Sibirskaya’s Uvalnaya mine, the audit of powered roof supports for Polish coal company LW Bogdanka, and a second longwall system audit for KOLMAR at its Inaglinskaya mine. After the successful execution of our first projects, in early 2019, we were approached by the Raspadskaya coal company – Russia's largest coking coal producer with more than 20 Mt/y of output. Raspadskaya is a part of the large mining and metallurgical holding company EVRAZ (www.evraz.com/en/company/assets/ novokuznetsk-site/#novokuznetsk). Raspadskaya shared its thoughts with us concerning the purchase of the most expensive longwall equipment - powered roof supports. The company had launched a tender process to select a supplier of the powered roof supports for its Uskovskaya mine. And, at this point, it had two rather unattractive options: either buy powered roof supports from top global manufacturers at a fairly high price, or save