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pmccarthy

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Posts posted by pmccarthy

  1. Consider Broome. They run on gas delivered by trucks. Solar will not work for four months of the year. Windmills will not survive a cyclone. Tidal, with the biggest tides in the world, is not environmentally possible. A package nuclear plant would be perfect. They have existed for nearly 70 years in submarines, with no disaster.

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  2. The following may be useful in making comparisons when machines have different expected lives. I used to teach equipment selection for mines and wrote this.

     

    The Average Annual Cost is the sum of Depreciation, Interest and Operating Cost. Consider a truck that has an initial cost of $1.0M and a salvage value of $0.2M after an estimated four-year service life. The depreciation is thus $0.8M over four years or $0.2M per year. 

     

    The interest expense arises, because owning an asset ties up capital. This is true whether you borrow all or part of the purchase price, or whether you use your own money. In the latter case there is an opportunity, cost because that money could have been invested elsewhere. The average investment is:

     

    ($1.0M + $0.2M) / 2 = $0.6M

     

    If your company has a cost of capital (or cost of borrowing) of 10% per annum then the annual interest expense is 0.1 x $0.6M or $60,000 for each of the four years.

     

    The annual operating cost may be calculated from the estimated hourly operating cost of $200 per hour (which includes operator, fuel, tyres, maintenance etc. and the cost of a major rebuild at 12,000 hours) and the expected utilisation of 5,500 hours per year, which is a total of $1.1M per year.

     

    From the above, the Average Annual Cost is:

     

    $0.2M + $0.06M + $1.1M = $1.36M

     

    A similar calculation can be made for each of the trucks under consideration. The equipment selection decision can then be based on these results, together with all of the other important considerations about manufacturer's support and spares availability.

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  3. Thirty years ago when the Golden Grove mine kicked off, they hired people with no mining experience. They were paid less, because they were less productive, but put through a multi stage training programme. Even the girls from Perth office signed up as underground miners. But as soon as each person got some experience they went elsewhere for much higher pay. The mine had a constant problem of inexperienced workers and shortage of people. So the experiment ended.

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