| Written by Mark Buzinkay

Looking at cost-effective methods in mining, you have to differentiate the three main areas of mining to extract products from the ground: Open-pit, underwater, and underground mining.
Mine Productivity

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Surface mining is best suited to extracting minerals near the earth's surface. It is also usually a more cost-effective mining method compared to underground mining. Common minerals extracted using surface mining are some of the most mined, including coal, iron and bauxite.

Advantages of an open-pit mine include:

  • Operations can use powerful trucks and shovels to move large volumes of rock.
  • The size of the opening you are working in does not restrict equipment.
  • It allows faster production.
  • It is economical to mine even lower ore grades due to the lower cost.

The open-pit mining cycle follows a simple schema: Drill, blast, load, haul and dump.

Open-pit mines present advantages and disadvantages when compared to underground mining. Amongst the benefits are that it is cheaper, can regain more of the resource (usually up to 100% within the mining excavation), is safer and can use larger-scale mining equipment leading to higher production rates.



Underground mining is more costly because it's more capital-intensive. Coal companies, for example, have to drill more and use more expensive and complicated machines.

As subsurface mining extracts ore from below the surface of the earth, it has to be safe, economical and with as little waste as possible. The entry from the surface to an underground mine may be through a horizontal or vertical tunnel, known as an adit, shaft or decline.

Typical underground mining methods include room and pillar, narrow vein stoping and large-scale mechanised mining.

Room and pillar mining is a mining style where tunnels are driven in a chessboard pattern with tremendous square pillars between them, gradually cutting away as the work proceeds. Mining coal uses this mining style.

Narrow vein stoping is conducted in an underground excavation along geological 'veins': these distinct sheet-like bodies of crystallised minerals within a rock are mined and removed. To support underground mine stoping, miners must also make excavations for engine rooms and pump chambers or for access purposes such as shafts. Platinum mining uses this style.

Large-scale mechanised mining methods miners use include:

  • Longwall mining is where a long wall of coal is mined in a single piece, usually by a big machine.
  • Sub-level caving, where explosives blast levels of the ore, and
  • block caving, where large areas of the ore body are blasted and extracted with gravity assistance.

Subsurface mining advantages exist when:

  • The ore body is too deep to mine profitably by open pit.
  • The grades or quality of the orebody are high enough to cover costs.
  • Underground mining has a lower ground footprint than open pit mining.


Underwater mining is necessary when the mineral you've identified lies within an aquatic environment like the sea floor. This situation requires a responsible method that thoughtfully considers the local ecosystem.

Miners conduct underwater mining with purpose-designed ships operating either a remotely run underwater vehicle or drilling technology at depths of 100-140 metres below sea level. The vessel is refuelled at sea, and freshwater is produced onboard for continuous production.

The Primacy of the Ore Deposit

Ore deposits are frequently referred to as valuable resources. While this is true to some extent, it's important to clarify that their value isn't directly comparable to cash in a bank or crops in a field. Their immediate worth is limited to what a mining company might offer for mining rights. Any value attributed to the mineralization becomes evident only as part of the mining operation's overall proceeds. Only a mining operation generates revenue and incurs costs, making it the economic entity that can have an estimated value. This value depends on how ore is defined, with some definitions yielding higher values than others. The definition that maximizes value is optimal and establishes the economic definition of ore. Thus, material from the mineralized body should only be classified as ore if mining it increases the overall economic value of the operation. This is the crucial criterion.

Craig Hutton points out that when miners consider scaling up operations, two measures require attention: the cost of production per tonne of processed ore and the cost per tonne of metal produced. It's essential to recognize that production costs are driven by the volume of ore processed, not the amount of metal produced. As a result, the unit cost of ore production can decrease while the unit cost per metal unit rises due to a reduction in head grade at higher levels of ore throughput, negating any potential economies of scale (1).



Significant factors affecting the exploitation of minerals are as follows: Richness or grade of the ore, size of the deposit, method of mining, accessibility, transportation facilities, stage of industrial development and technology.

(1) Richness of the ore
The quantity of minerals defines in large measure their commercial exploitation. Ores differ in their metal content. Generally, the higher-grade ores are more economical to operate, not only because they deliver a large amount of metal but also because their higher metal content makes them more manageable and cheaper to smelt. Minerals of high value, such as gold, diamonds, copper, and uranium, can often be excavated at a very high cost because they are in great need and fetch high prices.

(2) Mining method
The process of mining depends on the mode of occur­rence of the ores. The open-pit mining is the cheapest, while shaft mines are costly. The cost of mining also relies on the scale of operations. If the mining has been done on a large scale, the capital and running costs can be offset.

(3) Accessibility
The accessibility of a region where the respective mineral deposit occurs is significant. The terrain and climate determine accessibility which helps or hampers the mining operations.

(4) Size of deposit
The deposit size is vital because mining requires a large quantity of pricey equipment. Providing such equipment to work a deposit that will run out in some months will not be worthwhile. Small-scale working is only prosperous for precious minerals. Sometimes, small deposits may be worked out profitably when low transport costs.

(5) Stage of industrial development
A country's industrialisation stage is the general index of the exploitation of its mineral wealth. Mineral exploitation is cumulative in the industrial cycle. China, India and Brazil's vast mineral resources almost remained neglected until they marched on the path of industrial development.

(6) Transportation facilities
For thriving mining, transportation facilities are essential. Not only for the mining, but it is also necessary for mined minerals to be transported to the sites of their use. Ores are relatively bulky and heavy. They are thus costly to transport, and the shorter the distance to be covered, the better. The deposits having a coastal location or located near industrial sites have an advantage over that far inland.

(7) Technology
Technological shifts in mining methods and manufac­turing processes may change once worthless deposits into esteemed commercial ores. The technique of geological survey has now been changed.

With the help of remote sensing techniques, one can estimate a region's mineral resource reserves. However, other technological changes have altered the pattern of exploitation of mineral resources.

Among other factors, cheap labour supply, competition from different sources, and economic system and tariff policies are notable.


(1) Bolster mine planning
To improve productivity, companies can:

  • Refocus on high-quality production by raising cut-off grades.
  • Decrease capital expenses in properties with lower production potential and shorter mine lives.
  • Evaluate the benefits (and potential risks) of reducing reserves.
  • Optimise mine sites through enhanced sequencing.
  • Ramp up production from lower-cost mines and prioritise lower-cost projects.
  • Attract and keep experienced mine planners skilled in improving operational performance and tracking day-to-day adherence to production volumes, mining areas and mineral content.

(2) Improve efficiencies through technology

Productivity is about maximising throughput per unit of time, quality, and cost (learn more about RFID in mining). Mining companies may wish to use better technology to achieve these goals:

  • Seek out ingenious technologies capable of opening deposits and improving productivity on the mine site.
  • Use system transformation to manage core business drivers, such as operating time and rate.
  • Substitute disjointed reporting systems with streamlined management dashboards that report operational performance.

(3) Get serious about workforce planning

To maximise crew productivity, corporations must adequately define their workforce assumptions and improve management across the talent lifecycle.

  • Strengthen the team by defining the business model governing mines, plants, infrastructure and sustainability.
  • Foster a culture that deters rampant spending.
  • Keep employees committed through programs such as flexible rosters, training and long-term career development.
  • Have a procedure for identifying global resource requirements.
  • Adopt less cost-intensive work methods, such as work clusters, cross-training and automation.
  • Train local populations in crucial job functions.

(4) Invest in analytics

It is impossible to lower the costs of safety, maintenance and other cost-intensive programs on a sustainable basis simply by studying component costs. However, using analytics, companies can:

  • Estimate the costs of entire processes to uncover the underlying cost base and identify anomalies and outliers.
  • Improve decision-making and asset performance by measuring financial and non-financial indicators that impact overall profitability.
  • Transport data from a wide range of different sources to deliver on-demand reports, allowing miners to improve asset utilisation and reliability, minimise downtime, facilitate mine planning and optimise fleet resources.
  • Use emerging metrics to manage operational costs, such as measuring each shovel load's mineral content to determine whether it is below cut-off grades.

(5) Improve budget and risk management

Independent project analysis shows that the majority of mega-projects fail to deliver targeted value. To improve project results, mining organisations can:

  • Set a clear line of sight on actual expenditures, including costs per unit of production.
  • Communicate key metrics with engineering, procurement and construction management operators, mine operators and manufacturers.
  • Bolster working capital management.

(6) Pursue operational excellence

To reduce costs in a sustainable way, mining organisations can:

  • Embrace Lean/Six Sigma methodologies and techniques such as shareholder value analysis to specify and close operational efficiency gaps.
  • Re-evaluate their operating standards to ensure they have the management and reporting systems necessary to build a cost management culture.
  • Look to lessons from other industries, e.g. process manufacturing.
  • Seed a culture of sustainable operational improvement.

(7) Rationalise the supply chain

To diminish costs, businesses frequently ask suppliers for steep—and often unsustainable—cost concessions. However, companies can do the following:

  • Designate global sourcing contracts.
  • Build partnerships with those suppliers who have delivered verifiable value.
  • Renegotiate with significant suppliers to win price concessions.
  • Streamline supply chains by integrating processes with key input producers.



Mining operations demand long-term and substantial investments, and turning a mine into a profitable business is a challenging, ongoing project. Strategic and operational answers will decide if success is feasible. Industry experts often claim that mining safety and productivity correlate and influence each other. For further reading, learn about underground safety and lone worker's safety.

So, how can we achieve mining targets in a safe, timely and cost-effectively? If we want to exploit the full potential of our mining investment, we should investigate the idea of mine risk management.



One of the key factors affecting mine productivity is the ore grade. The higher the ore grade, the more valuable it is and the easier it is to extract. However, high-grade ore deposits are often small in size, making them difficult to mine profitably. Another critical factor affecting mine productivity is the method of mining. Some methods, such as open-pit mining, are more efficient than others and can extract more ore from a given deposit. However, they may also be more expensive to implement. Accessibility is another important factor affecting productivity. If a deposit is located in a remote area, it may be difficult or impossible to mine it profitably. Finally, technology can also affect mine productivity. Newer, more efficient mining methods and equipment can significantly increase the amount of ore extracted from a given deposit.

Other factors that can affect mine productivity include the stage of industrial development, transportation facilities, and other infrastructure. In developed countries with good infrastructure, mines can usually operate more efficiently and profitably than in developing countries (see also: Mining digital transformation). In addition, developed countries have better access to technology, finance, and skilled labour. Therefore, when considering mine productivity, it is essential to view all of these factors.

Mine Risk Management - Safety equals Productivity Whitepaper

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(1) C. Hutton (2022): Mining Economics Explained. Wandsbeck: Reach Publishers.

Note: This article was updated on the 10th of May 2024



Mark Buzinkay, Head of Marketing

Mark Buzinkay holds a PhD in Virtual Anthropology, a Master in Business Administration (Telecommunications Mgmt), a Master of Science in Information Management and a Master of Arts in History, Sociology and Philosophy. Mark