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Mine Cost, Operating &
Capital Cost Curves
by Dr Victor Rudenno
wwww.interfinancial.com.au
Contact: victor@interfinancial.com.au
Introduction
 The
following US$ cost
curves are based on some
95 mining development
projects located in 33
countries around the
world. Costs curves for
mining projects do
exhibit economies of
scale or “power” curves,
which when plotted on
log-log charts present
themselves as straight
lines as shown in the
charts below. There is
considerable noise or
scatter as all mining
projects are different
even within one type of
commodity, using the
same mining method and
metallurgical process.
Readers should therefore
be mindful when using
these charts, as they
provide only a rough
guide for new mining
projects. The line of
best fit can be
considered the “average”
value for a given
production rate,
although there can be
quite a large variation
around the mean. The
projects include base
metal, precious metals,
coal, uranium and iron
ore.
Total Capital Costs
Capital costs are shown
in two charts, one for
open cut operations and
the other for
underground. The open
cut chart is based on
total tonnes (millions)
mined per annum (mtpa),
that is total ore plus
waste. As the
production volumes
increase the capital
costs increase but at a
declining rate. A
project cost can vary
for a given throughput
due to factors such as
the amount of metal
refining on site; this
has been limited to
primarily gold and SXEW
for copper. For major
base metal projects no
smelting and refinery
costs are included.
Other factors that can
influence the cost
include local
infrastructure such as
labour costs,
transportation,
availability of power,
and complexity and
hardness of the ore.
For underground mines
costs are also affected
by the mining method
employed and the general
ground conditions.
US$(million) = 23.50 xT
0.688
Where T = mtpa
US$(million) = 86.76 xT
0.851
Where T = mtpa
Treatment Plant Capital
Costs
Nearly all of the mines
in this study have some
level of onsite
processing. As
mentioned above most of
the mills produce a
concentrate for base
metals or gold bullion
onsite. Plant costs for
a given throughput will
also vary depending on
the process involved,
hardness of ore and
energy costs. The plant
costs can be subtracted
from the total capital
costs to get an estimate
of other capital costs.
US$(million) = 37.61 xT
0.543
Where T = mtpa
Total Operating Costs
Total operating costs
are again shown in two
charts one for open cut
and another for
underground operations.
As with total capital
costs the open cut chart
is based on total tonnes
mined per annum, that is
total ore plus waste.
Operating costs for a
given size of operation
will also vary for the
same reasons as capital
costs as outlined
above. Additionally,
consider an open cut
mine with combined ore
and waste production of
10 million tonnes per
annum (mtpa). This
could be made up of
either the processing of
1 mtpa of ore and 9 mtpa
of waste or 4 mtpa of
ore and 6 mtpa of
waste. As the cost to
mine waste is less than
the mining and treatment
costs for the ore, the
cost per tonne are
likely to be higher for
the latter case, if all
other factors are equal.
Variation in
underground operating
costs will also be
influenced by the type
of mining method
employed and the factors
such as shaft haulage
versus declines.
Mill
Treatment Cost
Treatment costs will
vary depending on the
type of ore and the
complexity of the onsite
process. Low costs are
generally associated
with heap leach
operations while the
high cost operations,
for a given tonnage, are
those cases where metal
is produced on site,
particularly SXEW.
Again mill treatment
costs can be subtracted
from the total operating
costs to get an estimate
of other mining costs.
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