During the mining boom years, the focus was on producing as much as possible from the resource to take advantage of higher prices. OEMs did very well selling the addition machinery required to achieve the extra production. So now that commodity prices are low and capacity is already installed, the main game of late has been to drive economies of scale by pushing production even higher. This approach carries a penalty that might not immediately be obvious.
The sheer volume of equipment now operating creates clutter. Managing the clutter requires a high supervisory and planning effort which increases unit costs. The supervisory effort needs managing which adds a layer upon a layer of additional cost. The rapidly changing operational environment presents risks to the safety of the workforce requiring even more intensive management.
Direct costs go up as trucks take longer haul routes to avoid interaction with other equipment and truck delays are incurred waiting for the additional graders watercarts, light and medium vehicles on the roads. Pit traffic increases so rules are required restricting access or requiring machines to stop for light vehicles. Access restrictions result in less effective planning and supervision, resulting in more clutter and more delays.
While some mine owners have blazed away and been successful at decreasing product unit costs through increasing volume, others have made large reductions in product unit costs by reducing clutter, albeit at a lesser production rate than their high producing peers. The main differentiator is that a simple mining operation is going to be safer and easier to manage than a high intensity operation.
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