Australian miners' mining costs skyrocket

Australia has invested heavily in the development of the mining industry, but last year it was decided to cut the industry's costs by a third. The combination of skyrocketing costs and declining raw material prices over the past five years has led to a dramatic turn in the fortunes of 42 of the world's largest miners, according to a global study by the Boston Consulting Group (BCG).

The study found that opencast mining costs in Australian copper mines quadrupled between 2002 and 2012. And as expenses rose, shareholder earnings began to decline. Annual average total shareholder returns fell 20 percent for 42 companies last year. Only the top 10 miners cut costs on average last year.

Dr Alexander Koch, leader of mining and smelting research at BCG, said that the growth in value added for miners has been monotonous over the past three years of the decade, and went in the opposite direction at the end of last year. Basic commodity prices generally fell 8 to 10 percent last year.

He said expenses were increasing by 11 percent annually. Australia is currently at the top of the cost table and must cut its baseline costs by a third in the near term or else mining costs in Australia will lead to a disruptive trend. ”Copper mines in the US, Canada and Chile have also increased mining costs, but cost increases were 149 to 256 percent, compared with 312 percent in Australia.