Fresh Thinking : The 3 minutes read. Episode 105

We’ve pulled out the key insights and takeaways—perfect for when you want the value, minus the headphones.

Why Fixed Costs Matter in Strategic Mine Planning

3-minute read for busy professionals.

In this episode of Fresh Thinking by Snowden Optiro, we’re treated to the rare sight of a geologist interviewing a mining engineer. Executive Consultant Ian Glacken sits down with Pedro Ladeira, Senior Consultant in Snowden Optiro’s Mining Division, to unpack an often-overlooked but critical element of mine planning: fixed costs.

Beyond the Tonnes: Looking Past Variable Costs

Mine plans typically rely on variable costs—those tied directly to activity, like tonnes mined or waste moved. These are scalable and relatively simple to apply in early-stage planning. Whether drilling, blasting, loading, or hauling, you just multiply a rate by volume.

But that’s not the whole picture.

Introducing Conditional Fixed Costs

Pedro explains that as plans mature, we begin to identify conditional fixed costs—costs that don’t fluctuate with production. Think maintenance crews, infrastructure teams, and general overheads. Even if a site slows down production, these costs persist.

Why does this matter? Because ignoring fixed costs can skew financial projections, making operations seem more profitable—or less—than they truly are.

Strategic Leverage at the End of a Mine’s Life

Understanding fixed costs becomes especially useful in the later stages of a mine’s life. With much of the infrastructure already paid for and fixed costs reduced, low-grade stockpiles that were once marginal can suddenly turn profitable. Stockpiling these materials early and reclaiming them later is a key strategic move to extend mine life and enhance value.

Optimising the Plant: Keep It Full, Keep It Efficient

Processing plants also carry their own fixed costs. To keep per-tonne costs low, it’s crucial to maintain throughput. Segregating these fixed costs allows planners to better predict and justify operating decisions—like maintaining stockpiles to avoid plant downtime.

The Takeaway: Fixed Costs Drive Smarter Decisions

Pedro’s advice is clear: for accurate financial modelling and optimal Net Present Value (NPV), mine planners must segregate fixed from variable costs early and revisit them as strategies evolve. By doing so, planners gain the clarity needed to optimise scheduling, extend mine life, and make the most of marginal materials.

CONTACT

If you would like to contact either Ian or Pedro: contact@snowdenoptiro.com