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Aurecon 360 Issue 8 - Thinking in action

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should be a regulatory requirement for major projects which exploit a nation's resources and significantly impact the environment. operations take such comprehensive quantitative measures to ensure that a proposed new supply chain or upgrade is economically optimised. More than economics Minimisation of breakeven transport cost From a supply chain economics perspective, the best outcome is a supply chain that achieves the lowest breakeven transport and handling cost. This implies a minimum combination of initial capital expenditure and operating expenses over a particular investment horizon and with an assumed discount rate. By breaking potential supply chain alternatives into capital and operating expenses (fixed and variable), each option can be compared on a like for like present value (PV) or breakeven transport cost basis. Further, by parameterising the variables that make up a transport solution, such as spacing of rail passing loops, conveyor rates, rolling stock characteristics and train consist size, it is possible to evaluate and compare a full spectrum of supply chain alternatives. The results can be interesting and often suggest different configurations to intuitive solutions and sometimes with significantly better outcomes. For a given set of cost parameters, it is possible to demonstrate that a supply chain is an optimised design. Surprisingly, very few resource Supply chains are typically complicated configurations of legacy infrastructure, multiple users and unique attributes. At first inspection, $12.00 Single track — diesel $11.00 Double track — diesel Single track — electric Breakeven haulage cost $10.00 Double track — electric $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 30 Mtpa 60 Mtpa 90 Mtpa 120 Mtpa 150 Mtpa 210 Mtpa 240 Mtpa 270 Mtpa 300 Mtpa Throughput Figure 1 Theoretical breakeven haulage cost with increasing system throughput for different rail configurations (figures show in Australia Dollars) 1000 km 800 km 600 km Electrification 400 km Haulage cost ($/tonne) The best sustainable development outcome considers more than just the economics of the operation. Environmental and societal outcomes, as well as capacity, reliability and time–to–market all play an important part. These objectives can all be quantified and considered in numerical optimisation. The discussion uses the term numerical optimisation to differentiate the science of mathematical optimisation from a structured process of intuitive scenario development, comparison and ranking, and concentrates on optimisation of the economics of the supply chain. With appropriate legislative safeguards in place, good economic project outcomes generally lead to good environmental and societal outcomes by increasing the availability of funding for environmental and social programmes, and increasing government tax revenue. such an operation may not seem an appropriate candidate for numerical optimisation at a whole of supply chain level. Nevertheless, concept level optimisation is generally effective in establishing the right supply chain operation for further refinement through to detailed design and construction. This is best demonstrated using an example of a proof of concept greenfield bulk 300 km 200 km 100 km Duplication + Electrification Throughput (Mtpa) Figure 2 Breakeven haulage cost for the bulk resource supply chain spectrum

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