The Hazelwood power station and open-cut mine is one of the nation’s most prominent and largest ongoing extractive and energy projects. The operation is majority owned by GDF SUEZ Australian Energy (with a 72 per cent stake, the other 28 per cent belongs to Mitsui & Co Ltd). The company is an affiliate of the global GDF SUEZ Group which conducts energy activities in 31 countries, with a combined gross 78 gigawatts capacity in its markets. The Group is a specialist in electricity production and infrastructure, exploration, production and supply of natural gas (including liquid natural gas), and
renewable energy.
In Australia, GDF SUEZ Australian Energy supplies 12 per cent of the national electricity market and has an installed generating capacity of 3500 megawatts (MW). Aside from Hazelwood, its other assets include renewable, gas-fired and brown coal-fired generating plants in Victoria, South Australia and Western Australia.
Located in Victoria’s Latrobe Valley, 150km east of Melbourne, the 1542 MW nominal output power station at Hazelwood is supplied with brown coal from the adjacent mine which sits within a land mass of 3554 hectares (ha) with a perimeter of 39km. At grass level, the open-cut mine covers more than 1165ha within a 16km perimeter.
‘JUST-IN-TIME’ OPERATION
{{image2-A:R-w:250}}Up to 18 million of tonnes of coal is extracted from the Hazelwood Mine per year to fuel the Hazelwood power station. Almost three million cubic metres of overburden – predominantly clay, gravel and top soil – is removed and shipped annually to ensure access to the coal reserves. The average depth of the overburden is 18 metres while the coal seam is 100m deep.
The mine utilises four bucket wheel excavators and around 40km of conveyors to extract and transport the brown coal from the pit to the bunker to the boiler (the conveyor system on average carries in excess of 2000 tonnes of coal per hour and the slot bunkers each provide reserve coal storage of
18,000 tonnes).
Coal is effectively used continuously, 24 hours a day, seven days a week, to maintain the eight-unit power station at Hazelwood. As Rob Dugan, who is the mine production manager for GDF SUEZ Australian Energy’s Hazelwood Mine, explained, “Coal is fed directly into the boilers to provide heat which provides the steam to create electricity generation. So, we do not have a stockpile. We have a bunker that holds approximately 18,000 tonnes of coal and that will only suffice for about six hours of generation.
“We are known in this industry for being a ‘just-in-time’ mining operation,” Dugan elaborated. “We don’t have any flexibility as far as the stockpile goes and we have to dig as much as the power station is generating. To achieve that, we need considerable earthworks done around the mine, that is, to construct and maintain about 142km of roads within the mine, dig drains and move the face conveyors with mobile plant. In addition, there’s mobile plant attached to every bucket wheel excavator and it cleans up around the back of the excavator. We also supplement the overburden removal sometimes with a truck and shovel operation where we use fleets of 50-tonne trucks along with 100-tonne excavators.”
Therefore, with the continual focus on maintaining the smooth running of the mine operation and keeping the power station running 24/7, GDF SUEZ Australian Energy decided many years ago to delegate other auxiliary operations in the mine such as the administration and maintenance of its civil earthworks fleet to external parties. The only plant and equipment at Hazelwood Mine today that belongs to GDF SUEZ Australian Energy are two D8 dozers and a 16G grader.
The rest of the earthmoving and transport fleet belongs to Delta Rent Pty Ltd, which for the last two years has been the “preferred supplier” and repairer of all of Hazelwood’s mobile plant and assets. Delta Rent’s contract is for five years, with three more to run.
At the Hazelwood Mine today, there are 29 pieces of plant and equipment on loan from Delta Rent that include 30-tonne dump trucks, graders, wheel loaders, excavators and dozers. There is also the capacity for Hazelwood to commission more plant on the ground as needed. Dugan estimated that earlier this year Delta Rent had 90 pieces of plant available for a large overburden removal program. “The beauty of it is that we can ebb and flow the size of fleet as our needs arise,” Dugan added. “If we owned it, we would have to try to operate it full-time. Our projects are not full-time, they’re seasonal, so it’s easier for us to ebb and flow the rental fleet.”
REDUCING COSTS, DOWNTIME
Delta Rent provides heavy equipment hire on dry hire arrangements, where its customers can hire equipment directly without any operators and/or project managers. The Delta Rent business complements the operations of the rest of the Delta Group whose focus and knowledge is on civil and demolition works.
“The major advantages for operators/companies hiring plant and equipment from Delta Rent is that they have direct access to the Delta Rent team which consists of over 150 years of combined experience in heavy earthmoving equipment,” Warren Colbert, Delta Rent’s general manager, explained. “Our customers can hire a machine and know that they are only one phone call away for any queries on any of the major brands. We pride our turnaround time for breakdowns and replacements as second to none.
{{image3-A:L-w:300}}{{image4-A:L-w:300}}“Quarry operations often hire plant and equipment when they require additional equipment for projects and also to assist should they have a breakdown in their own fleet,” Colbert added. “By hiring the plant from Delta Rent, quarry operations can reduce their resource and management costs as well as reduce the capital outlay for pieces of gear they may only need for specific projects.”
In turn, Colbert said, operators/hirers can potentially claim rental hire as a direct tax deduction rather than depreciating a piece of plant over the life of the asset. “They get the benefit of the plant,” he said, “without the overhead costs and maintenance charges.”
Certainly, a key reason, according to Dugan, that GDF SUEZ Australian Energy engaged Delta Rent for its heavy equipment hire was so GDF SUEZ could be more assured of where its money was being spent on the actual costs of its mobile plant.
“We wanted a more transparent way of determining what our civil earthworks costs were,” Dugan explained. “We divided the actual contract into two parts – labour and plant. We went out into the market for the provision of labour to operate the mobile plant and we went to the market separately for the provision of hiring the mobile plant itself. One of the main reasons was to gain a transparency of the actual rates that we were paying and we could drill down into those rates and find out what, for example, Delta Rent were charging us for overheads and indeed the cost of operating a machine in
this mine.”
BRINGING IN MORE EQUIPMENT
In what is also considered a first in the plant and equipment hire industry – and is certainly a first for the Latrobe Valley region – Hazelwood and Delta Rent agreed to an arrangement whereby Hazelwood would pay a set monthly rate for each
piece of plant and equipment, regardless of how much or little it was used.
“Delta Rent actually came up with the initiative of having a monthly hire, of whether we use a piece of equipment for one hour or 160 hours,” Dugan said. “They could see that some of the plant is not utilised that often but we need it here for certain aspects of our operation. So, as opposed to other types of dozers that we use 24 hours a day, there’s quite a difference in the number of hours that each plant works. So Delta Rent proposed a rate that would suit us because we could try to utilise the plant more but we knew what the cost would be if we didn’t.”
This monthly rate per each piece of equipment also included the time of a Delta Rent-employed mechanic or fitter and the workshop requirements for service. An hourly rate applied for the cost of each additional rent above the 29 Delta Rent-owned machines that were operating in the pit.
{{image5-A:R-w:250}}Dugan said Delta Rent’s rental fleet over time has comprised plant from 25 tonnes to 70 tonnes and bigger still for more complex jobs but Hazelwood has never been too fussy about the types of equipment Delta Rent provided. “The plant that they give us is fit for purpose, reliable and relatively new to prevent downtime,” he said. “It’s the application that we’re going to use it for that determines what sorts of machines are going to be out there.”
He added that Delta Rent can also bring in larger machines as required and if it can’t obtain a specific piece of plant and equipment, the company will “cross-hire” from elsewhere.
“We had a large fire here in February 2014,” Dugan recalled. “Delta Rent brought in 60 pieces of plant which was a combination of dozers, graders and long-reach excavators. They went all over the country to get them for us in a short time. Delta Rent is very good at working with us if something comes up unexpectedly like that disaster, and they also work with us when we’re engaged in major earthmoving projects. Last year, they sourced four 100-tonne diggers to assist us with an earthworks job and they specifically bought a Komatsu PC1250-7 excavator, knowing that we could use it on and off here at the mine. They can plan ahead with us and have the equipment here in time for us to start work.”
{{image6-A:R-w:250}}According to Colbert, Delta Rent’s rental machines either come new from the top industry suppliers, such as Caterpillar, Komatsu and Hitachi, or at low hour usage (eg up to 3000 hours). All parts of its fleet, depending on the specific type of machine and application, have an average service life of 12,000 hours. Machines can also be repurposed for less impact work, eg a dump truck can be converted to a water truck. Colbert said the most popular vehicles with quarry operators have been 5.5m wheel loaders, articulated dump trucks in the 40- to 50-tonne range and larger excavators from 47 tonnes up to 87 tonnes.
The Delta Rent mobile fleet at Hazelwood Mine is operated by labour supplied by RTL and O&M Operations & Maintenance Australia Pty Ltd. From a security standpoint, none of the 29 Delta Rent machines will start without the operator running an authorised swipe card through a reader in front of the keypad on the vehicle’s dashboard. Thanks to the swipe card system, Delta Rent can also deduce who specifically is operating the machine at any one time and identify who is in charge of a particular piece of plant if it incurs damage.
‘ONE STOP SHOP’
{{image7-A:R-w:250}}Delta Rent has set up a large undercover maintenance workshop and storage area called the “Igloo” at Hazelwood Mine to undertake the maintenance and refuelling of its vehicles. Colbert said all Delta Rent equipment is “serviced and maintained on-site by fully qualified specialised earthmoving mechanical fitters nationwide” and that there are eight maintenance service personnel stationed in Victoria. For other states and site-specific projects, Delta Rent engages 14 fitters nationwide to ensure “all work performed is in line with manufacturer’s specifications and site safety requirements. Delta Rent always works in with the customer’s critical path to ensure there is no interruption to production on-site,” Colbert added.
Dugan said that Hazelwood was more than happy to relinquish the demands of maintenance and servicing to Delta Rent as part of the rental contract.
“We have no interest in maintenance,” Dugan said. “It’s better for us to have a ‘one stop shop’ like Delta Rent maintaining and curing the machines. We purchase our own fuel which is held in a 100,000-litre trans-tanker and Delta Rent has a purpose-built fuel truck to fuel the machines on-site from that trans-tank. They also keep a log of how much fuel goes into a specific machine so we can ascertain the cost of that machine as well. Delta Rent also provides the oil and grease for the machines in the rate we’ve agreed upon, we only pay for the fuel that goes in.”
Colbert said that his customers often expressed to the team “that they are extremely happy and satisfied with the quality and upkeep of our machines, along with our quick turnaround time to diagnose problems, and ensure the machine is back up and running so as to not affect productivity”.
PRODUCTIVE COLLABORATION
{{image8-A:R-w:250}}Dugan’s assessment was that after the first two years of a five-year contract, GDF SUEZ Australian Energy’s collaboration with Delta Rent has been highly productive and cost-effective for both parties. “I can’t emphasise more how collaborative it’s been. Warren Colbert and I have worked closely on this contract from the beginning and Philip Agius, who’s been an intermediary supervisor between Warren and myself, has been very instrumental in sourcing other plant when we needed it for different jobs. The way that Delta Rent goes about its business impresses me. It’s a company that prides itself on the face-to-face nature and the ability to provide support to the client. We embarked on a new type of venture and we’ve received a lot of support from them to the point now where we’ve evolved over the first two years. We have a pretty good outfit running at the moment.”
Colbert said Delta Rent’s involvement at the Hazelwood Mine had considerably broadened the company’s scope of work.
“Whilst we’ve provided larger scale machines to the Delta Group in the past for a variety of infrastructure projects [eg Melbourne-based infrastructure projects such as the new Royal Children’s Hospital, AAMI Park and the Westpac Centre], the long-term contract at Hazelwood Mine has allowed us to develop our knowledge of the operations of a mine and the equipment requirements needed to ensure operations are at their peak.
“Managing the equipment contract at Hazelwood Mine has enabled Delta Rent to develop its site management knowledge in regards to the day to day operations,” Colbert continued. “We understand the importance of productivity and ensuring that the right piece of gear is available for a given job. This understanding translates to quarry and other smaller contracts and can be in most cases more important given the size of those operations and the project at hand. We make service and maintenance our priority to reduce breakdowns and downtime accordingly.”
Dugan’s advice to quarry operators that are considering plant and equipment hire as an alternative to capital expenditure is to make sure they appoint supervisors who can negotiate a hire plant contract that is of benefit to the operation and will undertake the tasks that are required. “We chose to take control of the actual jobs within our mine site and we just used the plant and the labour as a tool to accomplish it,” Dugan said.
Dugan had no hesitation in recommending Delta Rent as a prospective supplier of plant and equipment hire. “I would recommend Delta Rent because they have the access to multiple types of machinery and good machines,” Dugan added.
“We have a great relationship with them and they’ve really performed for us in the cash-strapped industry that we’re in.”
Colbert cautioned quarry operators from jumping too quickly into a plant and equipment hire arrangement and to do some homework first. “We would advise quarry managers that the relationship you have with your plant and equipment supplier is an extremely important one and often, is more important than the cheaper rates on offer. That said, Delta Rent provides extremely competitive rates in conjunction with being only one phone call away from getting a problem sorted. All our equipment is maintained to Australian national safety standards where applicable. Our fleet has low fuel burn engine technology with high production and most of all, low operator fatigue.”