Rumors of coal’s “Mminent death” were greatly exaggerated
The cost of coal in Europe passed the mark of $120 per ton, and in Asia - $130. Such high prices have not been recorded on the stock exchanges for about ten years, and experts warn: this is not the limit. The demand for the resource will continue to grow, and if the specialized companies do not increase the level of production, then the quotes will be doomed to further growth. Forpost decided to find out how the current situation correlates with the struggle for environmental protection and whether it will raise the head of the industry, which only recently was predicted to die soon.
The reasons for the surge in demand for black gold are obvious. First of all, many regions of the world are experiencing a heatwave, which leads to increased electricity consumption due to the constant operation of air conditioners. Secondly, LNG quotations, if I may say so, “sky-rocketed“ and natural gas has simply become unaffordable for many people. Thirdly, stocks of fossil fuels, which still remain the backbone of the global fuel and energy complex, dropped significantly last winter, and the recovery rate is still insufficient. Fourth, the energy systems of almost all Asian countries, including China and India, are largely powered by coal-fired power plants. It is simply impossible to change the situation either now or in the foreseeable future, given the constant growth of energy consumption in these countries.
The exporters, who had to slow down production during the pandemic because their output turned out to be much less in demand than before, are beginning to gradually increase production levels. However, they have not been able to keep up with the market’s demands so far. For example, in the first four months, 142 million tons of coal have been lifted from the Russian subsoil, which is 10 million tons more than a year ago. Nevertheless, the records are still far from being broken. During the same period in 2019, for example, our country produced 144 million tons, so the growth opportunities have not yet been exhausted.
Russian Deputy Energy Minister Anatoly Yanovsky has no doubts about the bright future of the industry. He believes that the coronavirus only slowed down its progressive development, but now, despite the postulates of the Paris Agreement on Climate Change, consumption of raw materials will start growing again. If not in percentage terms, then in quantitative terms. This is inevitable, because the population of the Earth is constantly growing, and most of the growth is localized in those regions where residents and owners of industrial enterprises are not willing to pay too much for electricity. In this case, coal is an ideal option to ensure socio-economic growth in the face of energy poverty.
“Russia is rightfully considered one of the largest mining nations in the world, ranking third among coal exporters. Our country's share in the global trade in this resource has quadrupled since 1997, from 4% to 16%. And that is not the limit. We are sure that coal will be in demand on the world market in the long run,” says Anatoly Yanovsky.
But what about the compliance with the postulates of the Paris Climate Agreement? According to the rector of St. Petersburg Mining University Vladimir Litvinenko, this is the most important document, which speaks of the desire of the entire mankind “to significantly reduce the negative impact on nature”. At the same time, the choice of tools to make it possible must be much more diverse than it is considered in the West. After all, it is already clear that reducing investment in fossil fuels does not lead to an increase in the construction of solar power plants or wind farms, but only to a shortage of hydrocarbons and an increase in their prices.
“In the current circumstances, many energy-importing developing countries are forced to refuse to buy LNG because its quotations on exchanges have become excessively high. This situation is causing inflation and poverty in these countries, as well as an increase in pollutant emissions. After all, they do not use renewable energy sources to replace natural gas, but much dirtier but cheaper coal. It is impossible to reduce the anthropogenic impact on nature through the development of renewable energy sources alone. We also need to create and improve technologies that minimize pollutant emissions into the environment and introduce them at traditional energy facilities, including coal-fired thermal power plants,” says the Rector of the Mining University.
It was the scientists of Russia's oldest technical university who were tasked to conduct "a study of promising chains of external interaction necessary for the successful digital transformation of the coal industry. It sounds complicated, so we should explain: we are talking about the analysis of IT platforms that exist in related industries. For example, in geological exploration, railroads, labor exchanges, and other market segments, on the activities of which the efficiency of mining companies directly depends.
It is not a secret that today many of them are quite actively engaged in the introduction of modern technologies into production. For example, SUEK has been successfully operating unmanned dump trucks for several years. And Eastern Mining Company has recently been using Tsifra’s ZIIoT analytical platform. It collects and transmits data from all production facilities, builds predictive scenarios based on this data, and develops recommendations, allowing, for example, to increase the efficiency of logistics or optimize the time between repairs of mining machines.
These, of course, are far from being the only examples of digitalization, but they are all, in fact, disparate stories. At the same time, the Ministry of Energy of the Russian Federation is sure that for the domestic coal industry to remain competitive and be able to meet the needs of the domestic market and export revenues to the budget in the future, such solutions must be implemented on a single IT platform. In addition, databases of allied companies must be integrated into it. This will increase the speed and accuracy of decision-making, productivity, and safety, and reduce the negative impact on ecosystems.
That is, ideally, the operator of the single computer center at the ministry with one click should receive information on how much raw material is produced at any enterprise, how many cars are delivered for loading, and what the consumers expect at any given moment. Such a system will make it possible to balance supply and demand and minimize the risks of energy shortages, as well as excessive increases or, on the contrary, decreases in prices for energy resources.
“Our research has shown that the integration of digital platforms will create 5-6 new markets in the future. For example, a market for technology data on serial equipment. It will enable users to better understand when equipment may fail, who can provide quality and inexpensive repairs or deliver similar models in the shortest possible time and at the best price. Another example: integration with labor exchanges. Let’s say you've built a processing plant and need labor. The app automatically selects the right level of skills for you, including those who work at other similar facilities. And then you decide what to do: either negotiate with their management, or improve the skills of your employees, or enter the market, if there is an appropriate offer,” explained Yuri Zhukovsky, Director of the Center for Digital Technologies at St. Petersburg Mining University, who is a member of the working group on digitalization of the coal industry under the RF Ministry of Energy.
It is headed by Deputy Minister Anatoly Yanovsky, who praised the level of research of scientists at Mining University. He also noted that this work will be the basis for creating a global IT platform, which will increase the efficiency of coal enterprises and the industry as a whole.
In the photo: meeting of the working group on digitalization of the coal industry. Second from left is Yury Zhukovsky, Director of the Center of Digital Technologies at St. Petersburg Mining University, and third from left is Anatoly Yanovsky, Deputy Minister of Energy of the Russian Federation
“The domestic mineral sector of the economy is actively developing, and the demand for new technologies, production, and management solutions is growing. Russian coal companies today are successfully increasing their efficiency through the use of advanced technologies and high-performance equipment. They have come a long way in recent years, but, of course, we still have a lot to do in the direction of technological development and improvement of the efficiency of the industry,” Anatoly Yanovsky stressed.
He also assured that the cooperation between the Ministry of Energy and the Mining University will continue. Experts from the working group on digitalization of the industry of the Russian-German raw materials forum, GC “Tsifra”, SUEK, and some other companies will be involved in it.
It is worth mentioning that during the analysis of the current level of digitalization of the coal industry the scientists of St. Petersburg Mining University found out that the advanced information technologies are mainly used in the electronic document turnover (73% of the respondents), energy-saving (48%) and automation of some business processes (38%). But elements of artificial intelligence were implemented only by 14% of respondents. The situation is worse only with the use of augmented or virtual reality in real production (10%).