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BHP Billiton is moving to mimic Rio Tinto's capital-heavy and long-delayed effort to introduce driverless locomotives to its Pilbara rail network. But the Big Thinking Australian is going to do it in reverse.
BHP has designed a three-track path to rail automation that has started with a new 4G communications system that links train drivers to leading edge scheduling technology that will enable them to reduce gaps between individual long-haul train runs.
The second step in the process could see automation of logistics across BHP's Port Hedland rail yards, where the trains meet the boats. And the final move would be Rio's first – that is, running driverless long-haul trains.
But that may or may not happen with BHP's supply chain people still working out whether the pay day in efficiencies of running robot trains would justify its investment and risk.
BHP CEO Andrew Mackenzie said BHP has no one to follow when it came to innovation and it is time to take leadership in R&D. AAP
The word is that the starting point for BHP's Pilbara automation was a whole lot of analysis that defined what changes would generate the most return on investment of time, capital and risk. That process defined time as the biggest single cost on managing a bulk commodity railway set. In other words, the highest value returns were generated by things that increased the frequency of train trips.
So, after drawing on US communications and scheduling experts, BHP assessed that best progress would come from improving the capacity of locomotive drivers to drive their 35,000-tonne train consists more efficiently.
By installing 4G communications technology and automating track signalling among other support technologies, BHP has been able to reduce the minimum gap between trains from 20 kilometres to about seven kilometres. Given this system works as designed then it has the potential to double the capability of the network and that will result in space rail capacity.
The logistics of bulk mining are best designed when the capacity bottleneck is at the port rather than at either mines or on the railway. BHP's rail reform project is aimed at embedding Port Hedland as its capacity constraint.
Rio Tinto's autonomous train plan has been under development in the Pilbara for several years. Bloomberg
It is claimed, perhaps ambitiously, that in the rail scheduling project sits the single biggest generator of the upgraded Pilbara production guidance that BHP offered in June.
Having exported 268 million tonnes of iron ore last year, BHP has guided the market to 280 million tonnes in the present 2018 financial year, an up-tick of 12 million tonnes.
Given those numbers are achieved and that rail scheduling really does sit central to the progress, then BHP's automation project sits pretty competitive with the bolder strategy embraced by its legacy Pilbara competitor.
Rio has, with fame and infamy in equal measure, spent the past five years working on the manufacture and deployment of its AutoHaul (trade mark registered) technology to its mission-critical Pilbara long-haul rail system.
The project began in 2012 with a budget of $US516 million ($653.6 million) and expectations that driverless trains would be sprinting ever more efficiently across Rio's two rail networks by the end of 2015.
But the task has proven more complicated than the sponsoring godfather of the project, former Rio chief executive, and its then technology team leader (now Fortescue executive) Greg Lilleyman, could have imagined. The project is at least three years behind schedule and our estimate that it will eventually cost the best part of $US1 billion has, so far, not been contested by the company. That could mean we are correct but it could also be just another expression of Rio's new small target approach to management of its local public affairs.
At most recent count, Rio was running 53 long-haul consists, each made up of three 4400 horsepower GE locomotives that generally either haul or push 236 ore wagons. Each of those consists can stretch 2.25kms and, fully laden, they weigh 32,300 tonnes and can travel at speeds of up to 80 kilometres an hour.
As a result of all the forces that those tonnes and speeds create, it can take upwards of one kilometre to actually stop one of these trains. It takes 30 minutes to come to a full stop and another 20 minutes to get them up to working speed again. And that is why, in the pre-digital era, running iron ore rail networks safely has demanded conservative spacing between trains.
Rio has long-since finished the retrofitting of its 174 GE locos and that means it has pretty much finished creating the world's biggest moving robots. But for the better part of 18 months those robots have retained the human touch to steer them safely around Rio's vast network.
Earlier this month, Rio reported that the first driverless loco had pulled an empty train consist for more than 100km from Wombat Junction, which is where the Tom Price rail spur meets the main Hamersley line, back up to the Paraburdoo mine.
In celebrating that milestone, Rio iron ore boss, Chris Salisbury, confirmed an end-2018 target for the completion of the AutoHaul project, whose aim was to ensure Rio could fill its 360 million tonnes a year of port capacity while lifting rail productivity by at least 10 per cent.
That step-change in productivity and cost arrives courtesy of more aggressive scheduling and removing drivers. Manned trains require two shift changes a day. Where those shifts start and end is surprisingly uncertain. As a result Rio staff drive 70,000km a week delivering new crews to trains. The rise of Rio's robots means that will not happen anymore.
Pretty much from the moment that Rio revealed logistics automation as a target of the Mine of the Future project announced by the chief executive in 2010, BHP has talked about the risk and capital advantages of being a "fast follower" when it comes to the technology piece of the great innovation matrix.
The Pilbara was the most obvious theatre of contest where this approach played out. Just a couple of years back the then president of BHP's iron ore business, Jimmy Wilson, responded to questions on Rio's Pilbara innovations by noting that BHP was happy to be second in the automation race.
As much as the potentially three-step reformation of BHP's Pilbara rail network sits as a classic example of the Wilson approach, it also sits as a topical expression of the company's recent decision to formally abandon the "fast follower" strategy.
Time to take leadership
At a recent gathering of BHP's global technology people, chief executive Andrew Mackenzie declared that BHP had no one to follow when it came to innovation and asserted it was time to take leadership in every field of commercial endeavour, including research and development.
Outside of automation and the contribution its focused embraced can make to productivity, which was the original clarion of the Mackenzie era, the most likely beneficiary of the decision to lead is carbon capture and storage.
The scientist in Mackenzie has consistently defined innovation as the pathway sustaining coal's place in the global energy food chain. The answer is simply expressed but challenging to deliver. Mackenzie says miners need to get the carbon out of fossil fuels. And the most likely way of doing just that is capturing carbon emitted by burning coal, most particularly, and reusing what you can and depositing the rest into storage in impervious underground traps.
Last week BHP added an exposition on the progress in carbon capture and storage (CCS) to its blog. The company's vice-president, sustainability & climate change, Fiona Wild, wondered whether China's growing interest and investment in CCS might deliver the same sea change in investment economics that was inspired by the Middle Kingdom's embrace of solar power technologies.
BHP has recently got publicly active on the CCS front. In June BHP announced $US7 million of funding for CCS research at Peking University and just last week it announced $US3 million of funding for a "global collaboration" with the universities of Melbourne, Cambridge and Standford to "improve the understanding" of CCS. And, sandwiched between those statements of intent, BHP's Wild accepted an invitation to add her name to the seven-person board of the Melbourne-based Global CCS Institute.
This article first appeared on www.afr.com
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