Rising Costs
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Global inflation is not expected to rise as rapidly as it has in previous cycles , but there will be a steady increase from around 2.7 % in 2016 to 3.5 % in 2019 . However , during periods of higher commodity prices , mining input costs , such as wages , consumables , diesel and energy , often increase at a higher rate than general inflation . Mining complexities increase as low-cost mines reach the end of their life . Miners need to go deeper for lower quality ore and manage increased distances to processing plants , water removal and other physical constraints , at an increased cost . EY suggest the following approaches for organisations to respond to the risk : focus on sustainable cost-reduction programs ; carefully manage general expenses ; source from low-cost countries ; review capital tied up in high levels of pre-stripping , advance development and stockpiles ; consider contract mining versus sale or leaseback ; implement front and back-office automation ; review supplier contracts , offshoring or outsourcing and divest non-core assets .
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