The mining industry as well as the oil industry and some other natural resource industries and the prices of their products do not depend on supply and demand alone, as it happens in most industries. This is due to a much more complicated process where economic, political and opportunity factors play a key role in defining these prices.
A great opportunity to increase the profit margin for a mining company is presented with the reduction of costs through the optimization of processes.
Planning is a key factor in every company. To carry it out requires clarity regarding the strategic objectives of the organization, as well as proposing viable plans and goals.
Although mining planning is similar to the planning of any other type of business, it has a distinguishing feature: the value of the mining business is limited to the known mining resource. It is an exhaustible resource but at the same time complex, whose attributes will be determined throughout the duration of the project.
With the mining planning, it is proposed to establish a business plan that allows exploiting in the best possible way the deposit with all the technical-operational complexities and restrictions of different nature. Said business plan consists mainly of a mining-metallurgical plan (which contains the program for the production and processing of the mineral) and, in addition, must define the place and conditions under which the ore will be processed.
Likewise, the mining planning contains projections of the income, investments and operating costs calculated for the entire life cycle of the mine, thereby obtaining the cash flow of the business. However, we must not fail to consider the particularity of the mining business, which is the fact that the prices of the products do not depend on the producers but on the fluctuations of the international market. As a result, financial planning comes into play with a series of mechanisms that allow the company to protect itself from drastic price changes with instruments such as future sales or others.
The objective of the strategic mining planning is to identify and measure the maximum possible value for the exploitation and processing of the resources of the operation, considering future scenarios and the strategic objectives of the operation.
The strategic variables to be considered in the mining planning are: the considered resources, the exploitation method, the metallurgical process, the productive capacity and the mining macro-sequence. You can also follow any expert like Richard Warke who is a Vancouver-based Canadian business executive with more than 25 years of experience in the international resource sector. In 2005, Mr. Richard Warke Vancouver founded the Augusta Group of Companies.
With these variables it is possible to begin to elaborate the base plan, which contains the mining-metallurgical plan associated with the present operations and the projects in which the operation could invest; as well as the future development options that may be new projects to be executed in areas near or close to the operation, modifications to the project in execution and expansions in production capacity.
In this way, strategic planning in mining allows to find the opportunities of development of the operation in terms of long term, where the use of new technologies can play a key role.