Cost Reduction

Creating sustainable and long-term value

During the mining boom, miners saw costs escalate in some cases by over 200% (such as fuel, energy and people). Initially higher commodity prices masked these costs, but as prices have fallen, these embedded higher costs have been impacting bottom lines. Miners started eliminating costs from all areas of the business, including reducing capital expenditure and labor. However, there are still a lot of opportunities to remove costs from the business.

Miners need to maintain a focus on building a long-term sustainable cost base while making certain that cost reduction activities do not contribute to value erosion.