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    Mining Cost

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    Ankush kumar
    There are several types of costs involved in mining operations, including capital costs, operating costs, and general & administrative (G&A) costs. Capital costs refer to the initial investment needed for the mine and mill plant. Operating costs reflect ongoing expenses like drilling, blasting, and transportation. G&A costs cover annual overhead like supervision, taxes, and insurance. Costs can be reported on a per ton basis or broken down by category and activity to aid cost analysis and planning. Accurate cost estimation requires understanding all cost elements and factors that influence them.

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    Mining Cost

    Uploaded by

    Ankush kumar
    190 views23 pages
    There are several types of costs involved in mining operations, including capital costs, operating costs, and general & administrative (G&A) costs. Capital costs refer to the initial investment needed for the mine and mill plant. Operating costs reflect ongoing expenses like drilling, blasting, and transportation. G&A costs cover annual overhead like supervision, taxes, and insurance. Costs can be reported on a per ton basis or broken down by category and activity to aid cost analysis and planning. Accurate cost estimation requires understanding all cost elements and factors that influence them.

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    9. Mining Cost

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    There are several types of costs involved in mining operations, including capital costs, operating costs, and general & administrative (G&A) costs. Capital costs refer to the initial investment needed for the mine and mill plant. Operating costs reflect ongoing expenses like drilling, blasting, and transportation. G&A costs cover annual overhead like supervision, taxes, and insurance. Costs can be reported on a per ton basis or broken down by category and activity to aid cost analysis and planning. Accurate cost estimation requires understanding all cost elements and factors that influence them.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    190 views23 pages

    Mining Cost

    Uploaded by

    Ankush kumar
    There are several types of costs involved in mining operations, including capital costs, operating costs, and general & administrative (G&A) costs. Capital costs refer to the initial investment needed for the mine and mill plant. Operating costs reflect ongoing expenses like drilling, blasting, and transportation. G&A costs cover annual overhead like supervision, taxes, and insurance. Costs can be reported on a per ton basis or broken down by category and activity to aid cost analysis and planning. Accurate cost estimation requires understanding all cost elements and factors that influence them.

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    © All Rights Reserved
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    of 23

    Mining Cost

    Dr. B S Choudhary
    Department of Mining Engineering
    IIT(ISM) Dhanbad
    There are a number of different types of costs which are incurred in a mining
    operation. There are also many ways in which they can be reported. Three cost
    categories might be:
    - Capital cost;
    - Operating cost;
    - General and administrative cost (G&A).
    Capital and operating costs
     Mining capital cost (MCC) is one of the essential criteria for assessing the feasibility of an open-
    pit mine (or underground mine). The MCC heavily influences the net present value (NPV) of the
    projects over the lifetime of the mine.
     Cost of capital represents a hurdle rate that a company must overcome before it can generate
    value, and it is used extensively in the capital budgeting process to determine whether a
    company should proceed with a project.
     The estimate includes all the necessary costs associated with engineering, drafting,
    procurement, construction, construction management, commissioning of the processing facility
    and associated infrastructure, mining infrastructure, first fills of plant reagents, consumables
    and spare parts.
     The estimate is based upon preliminary engineering, material take-offs and budget price
    quotations for major equipment and bulk commodities.
     Unit rates for installation were based on market enquiries specific to the MRP and
    benchmarked to those achieved recently on similar projects undertaken in the Australian
    minerals processing industry.
     The overall capital estimate is considered to be with an estimate accuracy of ±10 to 15%. The
    basis of estimate is summarised in Table.
    The capital cost in this case might refer to the investment required for the mine and mill plant. The operating
    costs would reflect drilling, blasting, etc. costs incurred on a per ton basis. The general and administrative
    cost might be a yearly charge.

    The G&A cost could include one or more of the following:


    - Area supervision; - Mine supervision; - Employee benefits; - Overtime premium;
    - Mine office expense; - Head office expense; - Mine surveying; - Pumping;
    - Development drilling; - Payroll taxes; - State and local taxes; - Insurance;
    - Assaying; - Mine plant depreciation.

    The capital and G&A costs could be translated into a cost per ton basis just as the operating
    costs. The cost categories might then become:
    - Ownership cost;
    - Production cost;
    - General and administrative costs.
    The operating cost can be reported by the different unit operations:
    - Drilling; - Blasting; - Loading; - Hauling; - Other.

    The 'other category' could be broken down to include dozing, grading, road
    maintenance, dump maintenance, pumping, etc. Some mines include
    maintenance costs together with the operating costs. Others might include it
    under G&A. Material cost can be further broken down into components.

    For blasting this might mean: - Explosive; - Caps; - Primers; - Downlines.

    There are certain costs which are regarded as 'fixed', or independent of the
    production level. Other costs are 'variable', depending directly on production level.
    Still other costs are somewhere in between.

    Costs can be charged against the ore, against the waste, or against both.
    For equipment the ownership cost is often broken down into depreciation and an
    average annual investment cost. The average annual investment cost may include
    for example taxes, insurance and interest (the cost of money).
    General and Administration Operating Cost
    Capital cost mining equipment
    Underground
    Capital Cost

    Underground capital costs are divided


    into the following two categories:
    Capital Development – includes all
    preproduction and production build-up
    development and infrastructure
    required to initiate production and
    undercut the cave

    Sustaining Capital – includes work


    required for long-term development,
    facilities, or systems to sustain full
    production operations, but not direct
    production cost
    Operating Cost
    Underground Operating Costs

    The main operating cost driver is


    haulage, followed by loading and
    loading
    Factors affecting operating cost
    Mine
    Cost in
    details
    Methods of estimating future costs
    Qualitative approaches are based on estimator’s
    knowledge of the project, the scope of work, and
    influencing factors and are divided into two
    classes: expert judgment and heuristic rules.
    Expert judgment depends on the good or bad
    results of the past estimations based on
    judgment

    Quantitative approaches can be defined as methods


    relying on the process of collecting and analysing
    historical data and applying quantitative models,
    techniques, and tools to estimate the project’s cost.
    Quantitative cost estimating approaches are classified
    into three main categories: statistical, analogous,
    analytical ones.
    Statistical methods in cost estimation
     Statistical methods, are based on formulas or other alternative approaches to establish a causal
    correlation between final costs and its corresponding characteristics.
     Parametric cost estimating methods evaluate the cost through regarding characterizing
    parameters like mass, volume, and cost without considering little details.
     There are three types of parametric cost estimation methods as follows:
     The method of scales / assuming that the cost and considered parameters are interrelated
    through a linear function. This method is applicable in prevailing technologies, which simple
    products of different sizes are produced. Evaluating the most influencing technical parameters is
    the prerequisite of this method. Thereafter, this evaluation is compared with those of finished
    projects, which makes this method a combination of analogous and parametric approaches.
     Statistical models In this method, the activities are divided into major different scopes through,
    which the final mathematical formulae is constructed. This model is composed of three main data
    types: Technical specifications, Relationships between the data and final variables, Constants
     Cost estimation formulae (CEF) CEF is a mathematical relationship between the final
    cost and a limited set of technical parameters. The major parameter categories are
    as follows:
     • Physical values According to functional description
     • Dimensioning values According to solution description
    The most probably prevailing parametric methods are regression analysis and
    optimization techniques.
     Parametric cost estimation methods are faced with different drawbacks, which some
    of them are described as follows; through application of these methods, different
    results are the sole issue without giving a vision about the origin of them.
     On the other hand, lack of necessary parameters during early stages will result in
    uncertainty of the results. In addition, the designer should be aware of the influence
    of each parameter on the final cost. CEFs in particular, are incapable of solving
    specific cases. Sometimes also, there is a need to obtain results of regression
    analysis in four or five similar cases to reach to the most reliable cost. Despite all
    these disadvantages, they are considered as useful cost estimation methods due to
    their rapidity of execution
    various methods (ANN, Fuzzy NN, SVM, ----, Decision
    Tree, Monte Carlo, fuzzy logic, etc)
    Analogous models
     Analogous models are based on similar past cases, which are reused and adjusted in
    different cases.
     This similarity is due to functional or geometrical homogeny between cost structures,
    which are alike.
     Analogous methods are known to be the simplest method of estimating through. The
    cost of projects is estimated in compared to their similar completed projects that are
    available as a historical database.
     Thus, project managers have to consider the most available parameters to include in
    their process of estimating to reach better results; however, this method is a kind of
    rough estimate, which is easy to use, but with lower levels of complexity and accuracy
    as well.

    Analytical models
    Analytical models instead, are the process of estimating costs by accurately defining
    the cost corresponding to each processing phase attribute in details, and afterwards
    using a bottom-up approach for aggregating the project total cost, thus this approach
    is leading to a more accurate result
    Standard cost

     A standard cost is described as a predetermined cost, an estimated future


    cost, an expected cost, a budgeted unit cost, a forecast cost, or as the
    "should be" cost.

    Cost: Cost estimator.pdf


    Thanks

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