Analysis of the Energy Efficiency of Diesel Oil Consumption in the Brazilian Iron Ore Mining Company

This paper aims to evaluate the diesel oil consumption between 2008 and 2015 in the production of iron ore in Brazil, creating correlations between energy intensity (production), economy and checking the impact of fuel prices on the commodity. During the analyzed period, the years 2008-2009 indicated economic crises, which interfered in the price and the commercializa-tion of iron ore products. The physical intensity was 0.2% higher than the economic intensity. In the period from 2010 to 2014, economic activity remained more stable, with a decreasing trend, mainly due to the increase of iron ore prices. The physical intensity is much higher than the economic intensity influenced by the expansion of the Chinese economy. The year of 2014 indicated the end of the high iron ore price cycle and the beginning of supply and demand stabilization with consequent reduction in prices. In 2015, the market entered the stabilization phase, with a continuous reduction in unit production costs and transportation logistics. There was an abrupt change due to the strong increase of the economic intensity due to the fall of the international prices of iron ore. The diesel oil consumption plays a vital role in the scenario of cost reduction in iron ore production and a deeper analysis must be done in order to discover some options to change the energy matrix.


Iron Mining
Mining is the search, extraction, beneficiation and processing of solid minerals from the Earth crust. Its extraction can be done mainly by open, underground and strips pits. Mining has been an essential part of human activity for thousands of years to supply raw materials responsible for both generating products that provide better safety and quality of life, and building the current industrial society. Some of the most important mining commodities in our society are iron, gold, silver, copper, tin, lead, diamond and coal. Minerals are defined as natural resource, stable at room temperature, represented by a chemical formula, biogenic that has an atomic or crystalline structure [1].
Iron is one of the most abundant elements of the Earth crust, corresponding to the percentage of 4.2%. Among all metals, iron is the most produced and most present in our lives. Numerous minerals have iron as an essential component, but only oxides have high concentrations of this metal. The iron and steel industries around the world depend on iron ore as a primary source of iron. Because of this, the method used by companies to extract metallic iron from iron ore has to be economically feasible. A large majority of iron ore from mines is used as a feedstock to produce cast iron, which is then employed as the main component in steel. The  The estimated World reserve of this mineral is about 170 billion tons of crude iron ore, and the percentage of iron ore represents 13.5% of this total in Brazil according to [3] and [4]. Figure 1 shows the World reserves of iron ore. In this figure is shown the iron ore reserve indicating the metallic content, which makes up a reserve of 85 billion tons. In this case, Brazil represents 14% in iron content.
Mining has been outstanding in the last decades due to the development and industrial expansion of some countries around the World. This expansion is based on the massive introduction of large iron ore deposits that have emerged in recent years, frequently exceeding the needed requirement by the World market. In the face of this new expansion and great opportunity scenario, comes the idea of the efficiency of engines and equipment that will support these large investments, so the equipment has to be productive, effective and economical at the same time. Within open-pit mining, a cycle occurs in which all equipment plays a key role in mining, transporting and loading iron ore in the diesel oil consumption [6].  operation cost. Included in this percentage, the fuel is in the first position in consumption to the mine equipment [7] [8] [9].

Fuel Consumption in Iron Ore Mining
A topography and deepening of the pit as well as the formation of higher waste piles has direct influence on fuel consumption [10]. The trucks must overcome the resistance generated by the friction of the tires with pavement and the inclination of the road. The performance of transport trucks depends on the design of mine transportation roads [11].
According to [12], in large iron mines, the ore overburden and transportation costs are directly related to diesel consumption. Due to the increasing demand for production, it becomes necessary to use off-road trucks with increasing capacities, leading to increased energy consumption. Several uncertainties are influenced by the fluctuating demand of the market for raw materials and metals affecting commodity prices, and production costs such as mining, processing, administration and so on. These uncertainties include mineralized materials a mineral deposit can supply over time, technical, operational, and geotechnical parameters introduce risk sources in a business [13].
According to [14], realistic distribution of the actual costs of each product to a mining company is one of the main challenges. The assessment of each product's profitability may be impaired when incorrect information is provided and affect strategic decisions. [15] developed a set of cost functions for grinding mill equipment. The cost models used two approaches, which is a regression using one variable (UVR) and a regression employing some variables (MVR). The two approaches used the principal component analysis (PCA). The authors stated that the adequate cost estimation of mill plants plays a crucial role in the success of feasibility studies of mining projects, in which grinding is one of the most important operations in mineral processing plants. 28 According to [16] and [17], the increase in indirect costs consequently the reduction of direct costs was both due to new management practices because the size of the mines and the increase in automation and outsourcing of non-end activities. Reference [8] conducted a study on the breakdown of 63 mines operating costs, dividing them into three main categories: mining, milling, and general and administrative costs. They have shown that the relative average costs of mining and milling are practically the same and the general and administrative costs account for a significant share of the overall cost. They also stated that understanding mine costs is an important tool for finding new unit operations and reducing costs.
According to [18], mining investments in Brazil reach proximally 15 US$ bil- Overall, in 2015, price reductions continued for iron ore as China steel output declined, while projects to increase iron ore production capacity continued, mostly in Australia and Brazil. In these countries, the iron ore production, by Extraction of iron ore is almost exclusively carried out in surface mines through open pit mining operations, which is characterized by high productivity and low safety risks compared to underground mining systems. However, this mining method has significant environmental impacts that need to be adequately assessed to make it a sustainable activity [21].
In this context, mining companies seek to reduce operating costs by controlling the diesel oil consumption. By applying techniques that reduce the use of supplies, the mining industry can become more economical and sustainable [22].
However, the mining sector does not have a methodology capable of selecting and measuring operational aspects that have more or less influence on fuel con- To understand the fuel consumption in mine transportation operations, one should not limit to the equipment mechanics. It is necessary to evaluate the influence of the human factor on the behavior of this variable. Operators' performance is supported by driving style. In addition, there are other associated conditions that influence the performance of the production process, such as climate and topographic conditions [12].
In recent decades, changes in demand, supply, and the exchange rate of the US dollar have induced fluctuations in the global iron ore prices [23]. The international iron ore market determines the prices through annual negotiations, which make it possible to plan the companies with the definition of the prices of these commodities before April of each year [24]. Through to the strategic nature of this resource, the price of iron ore is a significant economic parameter that deeply affects a country; the price volatility has a considerable impact on importing and exporting countries. For example, China has become the largest iron ore importer since 2003, using more than 30% of the World's total production [25].
China external dependence reached 78.5% in 2014 [26]. China growing demand for iron ore inevitably accelerates the ore price, resulting in a negative influence in China purchasing power and in economic development [27]. Meanwhile, a large demand for iron ore also influences the exporting countries. As Australia and Brazil export more iron ore to China, these countries have reduced their exports to other countries, such as USA, Germany and France [27]. In addition, some exporting countries, such as Brazil, rely heavily on the commodity exports [28].
Iron ore is the main raw material in the crude steel production and is used to manufacture steel products [29]. Iron ore prices, like many other raw materials have fluctuated in the World market [23].
In order to predicting the price of iron ore in the long term, over five years, it was made in the cost study by three approaches: marginal cost approach and two approaches based on no incentive price calculation. The study was indicated, an increase between 20 and 30% above the averages of iron ore prices predicted by analysts of the industries of the sector was predicted, an increase to values between 150 and 220 US$/tonnage of iron ore. This forecast increase is mainly influenced by two factors: the depletion of existing iron ore deposits and the targeted return of investments for new iron ore mining projects [30].
Price fluctuations have a negative impact on both sides of the demand and supply of iron ore. For example, iron ore costs represent the largest proportion of output and directly affect the profitability of iron and steel companies [23].
High iron ore prices also raise producer and consumer indices through steel Journal of Power and Energy Engineering products, which could trigger inflation and other economic problems [31].
Meanwhile, when iron ore prices decreases, many mines can get into a difficult situation and may have to close their operations [23].
Crude oil is one of the most precious commodities in the World. Its price affects the economic market at all levels, from family budgets to corporate gains to the country GDP. Crude oil prices are also incredibly sensitive, changing rapidly in response to news cycles, policy changes and fluctuations in the World markets [32].
According to the Energy Information Administration [33], global demand and supply determine crude oil prices. Global economic conditions contribute to the demand for petroleum products produced from crude oil. As diesel is a major transportation fuel, demand for diesel fuel generally follows economic trends [34].
Changes in diesel prices reflect on crude oil prices. These changes are determined in the global market by the global demand and supply of crude oil [35].
The global economic crises of 2009 led to lower demand that contributed to lower diesel and crude oil prices [34]. With the global economic recovery underway, this combination of increasing demand and reduced supply helped to raise prices in recent years [36].
However, the recent price deceleration was a result of oil stocks growth, largely in the US, outpacing global demand growth [37]. According to the [33], in mid-2014 there was an oil prices declining trend, in a four-year phase of price stability. Figure 2 illustrates the variation of crude and diesel oil prices from 1994 to 2017.
The price of iron ore is determined not only by supply but also by other factors such as excess demand and high concentration. The US dollar has a significant influence on global commodities, including iron ore. Reference [39] highlights how the shock of depreciation of the US dollar has a marked effect on the price indices of iron ore, diesel and other commodities. References [40] and [26] prove that the US dollar has the biggest negative impact on the price of iron ore. Reference [41] assumes a causal relationship between US dollars and commodity prices. Figure 3 illustrates the price variations from 1994 to 2017 for diesel fuel and iron ore.
This work consists of the qualitative evaluation based on the bibliographic investigation procedure and the case study of a Brazilian mining company. According to [42], qualitative research has attributes such as general characteristics; data collect; study object; results interpretation and generalization.
The methodology consisted of the evaluation of diesel oil consumption in eight years (from 2008 to 2015) of iron ore production in Brazil, creating correlations between physical energy intensity, economic and checking the impact of diesel oil prices during this period. The unit of physical intensity is liters/ton handled in the year, diesel oil cost and gross revenue in US dollar. The diesel oil prices in US dollar per liter and unit production cost per ton handled, considering the total tonnage of ore and waste year by year in mining operations. Journal of Power and Energy Engineering

Results and Discussion
Mine operations in the early stages consume less diesel oil because of the adequate transport profile, reducing the overall consumption. However, as the mine deepens, the consumption increases. Besides, loaded large trucks move on ascents, usually with gradients of 8 to 10 degrees, which can contribute to the in- The physical intensity of diesel oil consumption in iron ore mining operations has steadily increased over the last eight years due to two main causes: deepening of the pits and raising piles of waste material, which significantly increase the average transport distances. Figure 4 shows The economic intensity, which can be described as the impact of the acquisition cost of diesel oil to drive the thermal engines of a mining plant by the gross revenue from the sale of iron ore, is showed in Figure 5.     • PIDOC > EIDOC: there was an abrupt change in 2015 due to the strong increase of the economic intensity of diesel oil consumption due to the fall of the international prices of iron ore. The three macro scenarios determined are closely associated with the economic cycles of supply and the demand for iron ore. The largest scenario is related to Chinese super-demand cycle, where the country's growth reached 10%, with a significant increase in the raw material as a whole. The world's large mining companies increased their ore production in the period, but demand was higher and generated high iron ore prices. From China's reduced growth between 6 and 7 percent per annum, supply remained high, due to investments in the expansion of operations, and the less-demanded market was decisive in reducing product prices. The scenario has generated executive demands in companies to increase productivity and reduce costs to meet the new global reality.
Higher fuel prices from 2013-2014 onwards have had little influence on economic intensity. Figure 7 shows the average prices of diesel oil in Brazil.
As can be seen in Figure 7, between 2008 and 2012, the average price of diesel oil had an increase of 2.8%, varying from 0.72 US$/liter in 2008 to 0.74 US$/liter in 2012. In 2015 the average price of diesel oil reached 1.12 US$/liter, an increase of more than 50% considering the values practiced in 2012. The strongest change in 2015 was due to the reduction of iron ore commodities in the international market. In this year, compared to the previous years of 2013 and 2014, the economic intensity of diesel consumption increased more than 70%. According to [43], in Brazil fuel prices were deregulated by law in January 2002, but in practice the national oil company, Petrobras, has frozen ex-refinery prices until 2012, with mounting losses. The Brazilian government adjusts a tax on diesel contributing to intervention in the economic domain, called CIDE (Contribuição e Intervenção no Domínio Econômico), to further stabilize retail prices.  In the medium and long term, the entry of foreign capital into Brazil for oil exploration may benefit diesel consumers. Therefore, the average prices of petroleum-based fuels can be reduced due to increased competitiveness. This is important for mining companies because they have a high consumption of inputs, representing 35% to 45% of operating costs. On the other hand, diesel consumers need to work with suppliers in order to obtain better quality fuels, establishing technical criteria for assessing the fuel input, which can positively affect the performance of the engines and, above all, the hourly consumption of the machinery.
Another important economic assessment is the correlation between the gross revenue generated (US$) for the tonnage of iron ore production and the consumption of diesel oil (per liter). During the evaluated period, the variation was high, the average value was 79.46 ± 15.93 US$/liter. Figure 8 shows five different phases in the eight years of iron ore production in Brazil. In

Conclusions and Policy Implications
The eight-year production data, from 2008 to 2015, shows a continuous increase  The raise in unit costs of diesel oil related to the movement of iron ore and waste in the operations is associated to two essential causes: increase of the depth of the mine caves and elevation of the waste piles. Both causes increase the average distance of transport, raising the consumption of diesel oil, mainly by the increase of the slopes, with loaded trucks.
In order to reduce the unit cost of production of iron mines through the physical and economic intensity of diesel oil, it will be necessary to change the current energy matrix. Detailed research through research and development projects in search of alternative solutions with natural gas and ethanol are fundamental in the partial replacement of diesel oil.