Workers at coal storage facility

London, 26 September, 2016 - Mining companies are significantly undervaluing the potential savings from effective lubrication, according to a new study by Shell Lubricants2. While 60% of companies recognise they could reduce costs by 5% or more3, fewer than 10% realise that the impact of lubricants could be up to six times greater. For the mining industry in North America alone, this could mean potential savings in excess of $29.1 million4.

The Shell Lubricants sponsored research found that 96% of mining companies report experiencing unplanned equipment shutdowns in the last three years, with over half (56%) acknowledging this is due to their incorrect selection or management of lubricants. This is having a direct financial impact, at a time when cost competitiveness is a priority for mining companies.

The international study of mining companies across Asia, Europe and the Americas commissioned by Shell Lubricants reveals that many businesses do not realise that some of their critical operational factors can be significantly influenced by how lubricants are managed. For example, less than half realise that lubrication can influence unplanned down time, and 64% are not clear about how extended oil drain intervals can generate cost savings.

Renée Power, the Shell Global Sector Manager for Mining, said; “40% of the companies we surveyed estimated that they had incurred costs of at least $250,000 over the last 3 years from breakdowns due to ineffective lubrication. This shows potential for companies to achieve a significant boost to profits by working closely with a supplier like Shell Lubricants to improve equipment lubrication practices.”

However, with maintenance managers facing budget and time constraints, and only 34% of businesses making use of regular visits from their lubricant supplier’s technical staff, most are not well equipped to take action. The study revealed that only 41% of companies have all the recommended procedures in place to manage lubricants effectively5 and 59% recognise they don’t conduct staff training on lubricants as regularly as they should. Misconceptions about lubricants are also evident, with 44% believing that all lubricants and greases provide the same level of performance. 

Renée Power commented; “The impact of lubrication on Total Cost of Ownership is too often underestimated. Almost half of companies surveyed wouldn’t expect to see a reduction in maintenance costs resulting from lubrication, but we have helped deliver over $44 million6 in savings to mining companies over the last five years. Longstanding experience in the mining sector enables Shell Lubricants to identify potential opportunities for lubrication to deliver significant business value. We work closely with customers to help them reduce operating costs and enhance equipment productivity by looking after the lubrication needs of their machinery – not just selecting the right product, but providing guidance so that it can be properly managed.” 

“We are very aware that companies are under pressure to limit costs and often looking for immediate results. Achieving extended oil drain intervals, for example, is one way that customers can realise cost savings almost as soon as they upgrade their lubrication. As the oil or grease lasts longer, less frequent re-greasing or oil changes are required, helping reduce overall cost of lubrication.” 

Shell Lubricants has released a whitepaper to address some of these issues, and set out how profits can be gained by effective lubrication practices, firstly by selecting the right lubricant or grease for each application and, secondly, effectively managing the on-going use and application of the lubricant.

1Shell recommended procedures include: Delivery and storage of lubricants and/or greases, Oil change procedures, Oil dispensing systems, Efficient grease lubrication systems, Oil analysis, Training employees in lubricant selection and/or management

2This survey, commissioned by Shell Lubricants and conducted by research firm Edelman Intelligence, is based on 181 interviews with Mining sector staff who purchase, influence the purchase or use lubricants / greases as part of their job across 8 countries (Brazil, Canada, China, Germany, India, Russia, UK, US) from November to December 2015. For more information, please visit www.edelmanintelligence.com

3Costs include maintenance, labour, fuel

4Based on savings delivered to Shell Lubricants customers from 2011-2015

5Procedures included: Delivery and storage of lubricants and/or greases, Oil change procedures, Oil dispensing systems, Efficiency of grease lubrication systems, Oil analysis, Training employees in lubricant selection and/or management

6Documented customer savings from 2011 to October 2015. More information available upon request.

Notes to Editors

  • This study into lubrication procedures in the mining industry was commissioned by Shell Lubricants and conducted by research firm Edelman Intelligence. It polled 181 Mining sector staff who purchase, influence the purchase or use lubricants / greases as part of their job across 8 countries (Brazil, Canada, China, Germany, India, Russia, the UK, and the US) from November to December 2015
  • Shell Lubricants has also published an accompanying white paper on the topic of Lubrication and Total Cost of Ownership, which contains case studies of mining companies achieving cost savings through the selection and management of lubricants.
  • Methodology, survey results and white paper available on request

For more information

Email: Michelle Gibb-Taylor, Lubricants Global PR Manager

About Shell Lubricants    

The term “Shell Lubricants” collectively refers to Shell Group companies engaged in the lubricants business. Shell sells a wide variety of lubricants to meet customer needs across a range of applications. These include consumer motoring, heavy-duty transport, mining, power generation and general engineering. Shell’s portfolio of lubricants includes Pennzoil, Quaker State, Shell Helix, Shell Rotella, Shell Tellus and Shell Rimula. We are active across the full lubricant supply chain. We manufacture base oils in seven plants, blend them with additives to make lubricants in over 40 plants, and distribute, market and sell lubricants in over100 countries.

We also provide technical and business support to customers. We offer lubricant-related services in addition to our product range. These include: Shell LubeMatch –the market leading product on-line recommendation tool, Shell LubeAdvisor - helps customers to select the right lubricant through highly trained Shell technical staff as well as online tools, and Shell LubeAnalyst - an early warning system that enables customers to monitor the condition of their equipment and lubricant, helping to save money on maintenance and avoid potential lost business through equipment failure.

Shell’s world-class technology works to deliver value to our customers. Innovation, product application and technical collaboration are at the heart of Shell lubricants. We have lubricants research centres in China, Germany, Japan (in a joint venture with Showa Shell), and the USA. We invest significantly in technology and work closely with our customers to develop innovative lubricants. We have a patent portfolio with 150+ patent series for lubricants, base oils and greases; more than 200 scientists and lubricants engineers dedicated to lubricants research and development.

Customer benefits include lower maintenance costs, longer equipment life and reduced energy consumption. One of the ways we push the boundaries of lubricant technology is by working closely with top motor racing teams such as Scuderia Ferrari and BMW Motorsport. These technical partnerships enable us to expand our knowledge of lubrication science and transfer cutting-edge technology from the racetrack to our commercial products.

Definitions and Cautionary Note

Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves.

Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.

Organic: Our use of the term Organic includes SEC proved oil and gas reserves excluding changes resulting from acquisitions, divestments and year-average pricing impact.

Shales: Our use of the term ‘shales’ refers to tight, shale and coal bed methane oil and gas acreage.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this document “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.
‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this document refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Companies over which Shell has joint control are generally referred to as “joint ventures” and companies over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks;
(h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended 31 December, 2015 (available at www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this press release, 26 September, 2016.
Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all.

We use certain terms in this presentation, such as discovery potential, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain this form from the SEC by calling 1-800-SEC-0330.

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