Estimating Average Total Cost of Open Pit Coal Mines in Australia

In preliminary feasibility studies mining project evaluators seek to estimate capital and operating costs of a proposed mining venture before mine layout design and general plant design. Mine planners often need to provide guidance on probable mine feasibility with insufficient cost information. There are two main methods for preliminary cost estimation. The first one relates to a few available sources that calculate the required cost information. The Mine and Mill Equipment Cost Calculator is an online exhaustive software tool which compiles capital and operating cost data for mining and milling purposes. Mine Cost is another online source which provides mine cost spreadsheets and operating cost information based on verifiable engineering and production data. The main shortcoming of these online sources is that they do not provide any detail about the methods for estimating mining cost and simply calculate total cost for a specific mine. The second one, which is more recognisable in industry, derives preliminary cost estimates by computing average total costs (ATC) of existing mining projects and operations. Since each mine has unique specifications, cost information should be estimated individually. This study focuses on establishing a range of ATCs according to previous mining projects and indices. This study endeavours to estimate an index and econometrics model for Australian coal mines to guide mining project evaluation to find the ATC in open pit coal mines. In other words, this paper reviews about 20 Australian open pit existing coal mines operated by different companies and categorises them by size of mine and deposit, coal quality parameters and production rate. It then, computers the ATC according to these existing open pit coal mines. After that, the ATC is expanded for the next 30 years by specific mining and milling indices. The study introduces an econometrics model to estimate mining and milling cost index via the Marshal and Swift equipment cost index for the future. Finally, this research provides an appropriate ATC for mine life which could be useful for preliminary feasibility studies of mining projects to find out general site conditions, mining methods, and milling processes.