Investments in improvements can help keep African mining costs down
As mining costs continue to rise across areas of Africa, executives warn that productivity could be declining in a negative correlation. But to counter the threat of lower productivity, some operations are turning toward improvements in mining efficiency to stave off the upward-creeping costs.
Money Web reports that in South Africa, the high cost of mining is slamming some companies from all sides, threatening the sector's lucrativeness and creating a less competitive slot in the global market place, resulting in less expansion.
In order to keep mining production from becoming stagnant, or even from declining, mining executives may need to address several factors that contribute to lower efficiency and high costs.
Electricity and transport rank as two of the biggest woes for mining companies, as the price of power in South Africa has been compounding yearly by around 25 percent, a rate that is expected to continue for at least two years. The region's rail infrastructure system, Transnet, has done little to improve mining processes and has had a "detrimental" impact on the mining sector, according to the news provider.
However, there may be a silver lining found among the fears of soaring mining costs, as some companies have decided that to make more money, spending money on improvements leads to expansion, and even profitability.
Gold miner Barrick Gold, operating in nearby Zambia, has announced it plans to spend roughly $50 million on exploration and improvements this year as the first stage of a feasibility study for the enlargement of its Lumwana copper mine, Mining Weekly reports.
Spokesman Andy Lloyd stated that the company plans to invest heavily in improving existing mining equipment as well as add 16 new drills that will explore the Chimiwungo copper deposit.
The improvements will focus on bettering the conversion process of mineralized inventory and will also continue extensive drilling that may hold the potential for a third starter pit, according to the media outlet.
"We feel confident we can materially increase resources, throughput and production at Lumwana. There has been no significant drilling on targets outside the identified Lumwana resource areas for 15 years," Lloyd stated.
Dr. David Davis, a mining analyst at Standard Bank Group securities, stated that, "in a general sense, miners are faced significantly with rising costs," but as seen by Barrick Gold's move to improve its processes, executives can overcome adversities and strive not just to stay above water, but to turn a profit amidst harsh times.