03 Jun 2018

Five common challenges facing the mining industry

Five common challenges facing the mining industry

Five common challenges facing the mining industry

The mining industry comes with its fair share of challenges; from scarce resources to uncertainty around commodity prices, miners are always looking at ways to overcome barriers to stay competitive. Below we explore 5 challenges currently facing the industry.

1. Access to Energy

As resources in some areas become scarce or depleted, companies are forced to push new frontiers of exploration. Depending on what is being mined, this has the potential to be more expensive than traditional mining and could leave companies more reliant on rental power solutions.

To reach those resources which remain, mines are increasingly being established in off-grid locations and their lifecycle is decreasing, meaning it is no longer financially viable to build permanent power infrastructure to service the mine. Instead, remote mines are now utilising scalable microgrids that can evolve with the lifecycle, improving flexibility and efficiency.

2. Health and Safety

Mining is a dangerous profession. The traditional occupational hazards such as coal dust inhalation, damage to hearing due to the noise in a mine and chemical hazards still stand but the changing nature of mining has led to a raft of new issues.

As mines are getting deeper, the risk of collapse has greatly increased.  With a rise in surface temperatures and an increasingly unpredictable climate, the temperature of a mine is more likely to fluctuate and as a result, consistent temperature control is even more important than it had previously been.

Additionally, a change in mining practices has led to a renewed emphasis on the importance of consistent ventilation systems – to ensure that workers are kept safe from dangerous fumes.

3. Access to Capital

Access and allocation of capital is often cited as one of the biggest issues facing the mining industry, especially for its juniors.

Rocketing exploration and production costs have impacted profit margins and left investors reticent to engage with new projects, especially with smaller companies. Juniors, who lack the war chests of the major companies, face the challenge of raising the necessary capital to invest in increasingly expensive mining practices or in large-scale equipment.

Flexible finance has become an increasingly popular solution and it enables mining juniors to continue to push the barriers of exploration.  Nervous investors and a lack of access to capital has meant numerous high-profile projects being scrapped, shelved or sent back to the drawing board.

4. Volatility of commodity prices

Volatile commodity prices make it extremely difficult for companies to plan income and therefore expenditure. Recent disruption in commodity prices has led to many companies having to close down operations or make serious cuts in the size of their workforce. As a result, mining companies are focussed on improving efficiency and reducing cost more than ever.

5. Environmental footprint

Traditionally a carbon intensive industry, miners are now looking at ways to reduce their environmental impact more than ever.

One of the major ways it can do so, is by evaluating their energy usage. Remote locations and limited access to local grid infrastructure means that the mining industry places significant demand on diesel generation for electricity. However, with recent enhancements in renewable energy, the industry is now seeing the rise of hybrid power solutions for mine site operations. By combining renewables with thermal generation and battery storage, mine sites can now increase efficiency while reducing their carbon footprint and overall costs.

Aggreko can reduce the cost of power, boost production and respond to mine site emergencies throughout every stage of a mine’s life. Contact us to find out more.