3. Underground Coal Mine Production Reporting Developments at the Bethlehem Mines Corporation ? Introduction

The Bethlehem Mines Corp. is a captive mining subsidiary of Bethlehem Steel Corp. Its coal production is tied to the demands for and production of steel, a situation that has to balance between the following two extreme strategies: (1) either the mines are designed and operated for some optimum production level and the demand fluctuations within the steel corporation are met by supplementary corporate coal sales and purchases, or (2) the mines absorb all the demand fluctuations, regardless of the effects on mine costs. A rational definition of the best strategy between these extremes is, of course, needed but is very difficult to formulate in view of the complexity of the many factors that would have to be included in the analysis. Consequently, rather than setting profit targets for each given mining division and/or individual mine, the practice evolved to set production targets for producing specified tonnages of coking coal for shipments to the ovens located at the corporation's iron and steelmaking plants. This in turn leaves the mines with the dilemma of having to explain demand-related cost-per-ton fluctuations while essentially depriving them of the ability to control profit through tonnage optimization. In the early 1970's, the coal prices rose significantly, while other factors led to sagging productivity in underground coal mining. Thus, the role of Bethlehem's coal operations in the corporate profit picture gained in relative importance. This, in turn, sparked a closer attention to the coal mining cost structure and factors controlling productivity. At the same time, the drastic increase in the capital needed to open a new mine also increased the amount of planning required to minimize risks. All of this called for more well-defined, quantitative operating data. Bethlehem therefore launched, in the early 1970's, a number of innovative steps that, as the future may show, represented pioneering contributions to the growing sophistication of North American underground coal mine planning and management control practices. This case study describes the changes that led to the current implementation of a novel production reporting system at Bethlehem's coal mines. These changes took place in two distinctly different phases. The current system that resulted from the Phase II developments utilizes, of course, experience gained earlier and is expected to be amplified to incorporate more advanced concepts and technology as future experience dictates.