Project mining industry

Introduction to the Mining Industry

The mining industry is involved in the extraction of precious minerals and other
geological materials. The extracted materials are transformed into a mineralized form
that serves an economic benefit to the prospector or miner. Typical activities in the
mining industry include metals production, metals investing, and metals trading.
 TYPES OF MININIG INDUSTRY

Mining assets can be divided into two main categories: projects and operating mines

1. Projects
Projects in the mining industry can be broken down into the exploration
and feasibility stage, and the planning and construction phase.
Exploration and Feasibility
The purpose of exploration is to find ores that are economically viable to
mine.  It begins with locating mineral anomalies, after which discovering
and sampling confirms or denies that there is a find.  It can be further
proven through drilling programs and resource definition.
Planning and Construction
Once a potential mine is proven to be viable, the planning and
construction phase begins with applying for and obtaining permits,
continuing economic studies, and refining mine plans.  Infrastructure
development also takes place at this stage as mines are often located in
remote areas that require construction of roads and electricity.
 2. Operating Mines
Once the operation is ready to begin, the asset officially becomes an operating mine.  During this phase, the
ore is extracted, processed, and refined to produce metal.  This section forms the bulk of the focus of the
financial model for an operating mine.  Once all the ore has been extracted, the mine closure process
begins, which can last for several years.  The process includes clean-up, reclamation, and environmental
monitoring.
Mining Industry Reserves and Resources
A mining company’s main assets are its reserves and resources, which are the ores that contain economic
materials that are viable to mine.  It is important to be able to read a reserve and resource statement and
understand what information needs to be pulled from it to make the financial model.  The table below
contains information used to produce the annual cash flow that we build up in the financial model. If you
look at the table from right to left, you are moving in increasing geologic certainty, meaning that geologists
are becoming more confident about the amount of material that is contained in the ground.  Moving from
the bottom to top, you are increasing the economic viability, meaning that the ore at the top is more
economically attractive to mine than the ore at the bottom.
In conclusion, the inferred resource is the least geologically certain and the least economically viable to
mine, while the proven resource is the most geologically certain and the most economically viable to mine.
As we build a financial model, it is important to think about which part of the table we are pulling
information from.  We should risk-adjust the different components of the table to reflect the risks
associated with them.  Typically, an inferred resource will be excluded from the economic model due to the
high degree of uncertainty associated with it.
The summation of the entire table is referred to as the company’s total resources.
 Here are some key terms andKey Terms to
definitions youKnow
should know before building a
mining financial model:
Ore: Rock containing metal that is economic to mine (measured in metric
tons)
Grade: The amount of metal contained per unit of ore (grams/ton or %)
Recovery: The percentage of metal that is recoverable from ore after the
extraction process (%)
Production: The amount of metal produced (oz/year)
Payability: Based on smelter terms, refers to the amount of money that is paid
or the percentage of the metal that is paid full price for
Cash costs: Mine site operating costs include mining, milling, labor, energy,
and consumables (measured in cost per ton of material)
All-in sustaining costs: Mine site costs + corporate G&A + sustaining capital to
maintain the mine + capitalized exploration to continue to explore for reserves
and resources (exclude interest or taxes)
 Key Financial Concepts in the Mining Industry

 
Revenue: Ore (tons) x Grade (g/t) x Recovery x Payability x Metal Price
Royalties: Properties often have royalties on them (e.g., 2% Net Smelter
Return)
Operating costs: Per ton basis (e.g., $2.50/ton for mining)
Capital costs: Includes initial capital (construction of mine) and sustaining
capital (ongoing equipment, etc.)
Reclamation costs: Takes place at the end of a mine’s life; accrued for
accounting purposes but not accrued in a cash flow model
Depreciation: A percentage of production bases over the entire life of the mine
Taxes: Can often be complicated with mining companies operating in several
countries; mining specific taxes and royalty agreements need to be considered
Changes in working capital: Changes in accounts receivable, inventory, and
accounts payable should be factored into a cash flow model.
 Mining industry procurement cycle

subcontracting cycle,import purchase,scrap disposal•

•issue of tools and explosives to subcontract/internal production
 Production planning
Pre- crushing processes mapped to mining plant,crushing
plants,screening plant and loading plant.
•batcch production
•Usage of batch management with batch characteristics
•Make-to-order, make-to-stock
•Planning with final assembly
•Mrp generate the PR or production orders or subcontract requests
 Shipping and transportation planning
•high transportation cost
•road transport could be EHS(environment healt and safety)risk
sap TM (Transport management)
•plan transportation,track order,calculate transportation charges
•subcontracting and tendering transportation service
master data
•material master and BOM(multiple levels)
quality management
•qualitative an quantitative inspections
plant maintenance
•health chekup of off highway equipment like hydraulic
shovels,dumpers,excavators etc
 IndustrialEnvironment
hygiene and
and health safety component
safety

Creating risk assessments,recording and processing accidents,injuries

 
•Handling standard operating procedures and accident reports
•Commodity supply chain management
•Long term business planning
•Commodity planning
Mine operations
•Project and portfolio management
•Mine operations and downstream processing
•Asset operations and maintenance
Asset network
Operational risk and compliance management
•Environment,health,and safety
Corporate sustainability
 Top companies of india mining
1.TATA GROUP

2.ADITYA BIRLA GROUP

3.coal india limited

4.hindustan copper

5.hindustan zinc

6. National Mineral Development Corporation

7. FCI Aravali Gypsum and Minerals (India) Limited 

 TATA GROUP SUBSIDERIES COMPANY
Company product
1.TATA STEEL STEEL PLANT
2.TCS IT
3.TITAN WATCH
TATA GROUP HIRECHY
 ADITYA BIRLA GROUP SUBSIDERIES
COMPANY

COMPANY PRODUCT
1.HINDALCO INDUSTRIES ALUMINIUM EXTRUSION
2. Essel Mining Industries Ltd NOBLE FERO ALLOYS
3. Hindalco-Almex Aerospace AEROSPACE
HIRECHY