Infrastructure spend
Power, water, roads, ports and camps can cost as much as the mine itself. Location decides how much infrastructure a project has to build.
2 min read
Infrastructure spend is the cost of everything a mine needs around it, such as power, water, roads and housing, and it depends mostly on location.
What it is
A mine cannot operate without power, water, access and somewhere for its workforce to live. If these do not exist, the project has to build them. This spending is part of , but it is worth looking at separately because it varies so much between projects.
The main items
- Power: a connection to the grid, or an on-site power station (diesel, gas, solar or wind).
- Water: bores, pipelines, dams or desalination plants. Processing uses large volumes.
- Access: roads to the site and, for bulk products, rail lines and port facilities.
- Accommodation: a camp for workers, or housing in a nearby town.
- Other: airstrip, communications, workshops, offices, fuel storage.
Location decides the bill
| Setting | Typical infrastructure need |
|---|---|
| Near an existing mining district | Low: grid power, roads and services nearby |
| Regional, some infrastructure | Moderate: power line and road upgrades |
| Remote (desert, mountains, Arctic) | High: own power, water, roads, airstrip, camp |
For remote projects, infrastructure can make up a large share of total capex, sometimes as much as the mine and plant combined.
Ways to reduce it
- Shared infrastructure with nearby mines or communities.
- Government-funded roads, rail or power lines in some regions.
- Third-party contracts: a power company builds and owns the power station and sells electricity to the mine, turning a capital cost into an operating cost.
Why it matters
Two deposits with the same grade and tonnes can have very different economics because one sits next to a highway and a power line and the other is 300 km from either. Bulk commodities and base-metal concentrates are also heavy to transport, so distance to a port affects cost of sale for the whole life of the mine.
Ranges are indicative and vary widely by deposit. This is educational material, not investment advice.
Key terms
Next in this track
Life of mineHow long a mine produces, and how long the whole project lasts once the build years before and the closure years after are counted.Related articles
- TollingInstead of building a processing plant, a mine can pay to process its ore at someone else's plant. Tolling suits small or early projects, with trade-offs.Mining economics2 min read
- CAPEXCapital expenditure is the money spent to build a mine before it earns anything, plus the money spent later to keep it running and expand it.Mining economics2 min read
- Life of mineHow long a mine produces, and how long the whole project lasts once the build years before and the closure years after are counted.Mining economics2 min read
Educational material only. Nothing here is investment advice or an offer to buy or sell any security or mineral interest.