SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?


To: TheBusDriver who wrote (15217)8/1/2003 1:00:52 AM
From: E. Charters  Respond to of 39344
 
The fuel cost is the major cost in a large steam power plant. With nuclear it's maintenance and capex. Coal is the cheapest power in the world, and coal is about 38 dollars a ton in quantity to buy anywhere in the world. But they have to transport it to site or to power plant. Add an average of 20 dollars per ton. A ton of coal produces 10,000 BTU's per pound or 2.93 kw-hrs. One ton of anthracite-bituminous produces 5860 KW-hrs, (divided into the cost 3800 US cents) divided by the efficiency. The most efficient steam generation in the world is about 38% overall. So it cannot cost less than 2.60 cents per kw-hr to produce, and that does not take into account line cost, capex for plant, maintenance and labour. HT lines are 1 million per mile. Cost per megawatt for a coal plant is 150K per MW. It is cheap. But they need a few MW's. Like about 200 for a simple mill. Capex will get you close to 3.2 cents and labour and maintenance will get you close to 4 cents on any planet if you build your own. At world beating prices his electricity will cost him 70 million per year for a 100,000 ton/D plant.

That is 21 cents per pound copper. Cost of energy. And if he pays ONTARIO prices for energy, the cheapest in North America just about.. of perhaps 8 cents per industrial KW.. that is 42 cents per pound copper at his grades. And that is IF he does not go over once in any month and If he can maintain 365 days production, and IF the contract does not have riders in it. Imagine if he were in Alberta where they pay up to 18 cents per KWH, or he had to pay the Ontario rates of last summer where price spike of 25 cents per peak KWH where charged to industrial customers.

India produces coal-steam power for about 3.3 cents US per kilowatt hour all-up, but it does not sell it for that. An industrial user pays a "premium" price, not a lower-than-retail price for power. That is because he has to have a "guaranteed" power contract, because he cannot suffer brownouts. If he does, his voltage goes down, and current rises, burning out millions of dollars of electric motors. Since he must get volts, he pays extra for power. If the average retail customer paysy 6 cents let's say, in the cheapest power country in the world, an industrial user will pay maybe 8 to 12. And to top it off, they measure his motor start load at peak times with a formula. If he goes over peak load once in a month, he will pay 30% more on his bill in total that month. You don't pay less than the fuel-transport cost for power, you pay more, much more. Perhaps 3 times or 4 times more if you are an industrial customer.

Falconbridge in Timmins is Ontario's single largest power customer consuming 10's of millions of dollars in electricity per year with its smelter-refinery-mine complex.

Anyway you cut it, capex and power are a big chunk of change over metal produced. Capex cannot be less than 16 cents per pound. Power is not less than 21. And copper is only 79 cents per pound. Consumables, maintenance, labour and transportation had better be some cheap. Mining copper is a job of shaving pennies and there are all sorts of stray pennies about and the hatchet is some blunt in that part of the world.

EC<:-}