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Surface Mining: Challenges (2)

Four of the current and most important challenges facing the global surface mining industry are the problems with geopolitical market uncertainty, license to operate, the threat of disruption, and the possible depletion of critical mineral deposits.

Market instability and geopolitical tension

  • The geopolitical and international security landscape continues to evolve rapidly. The global economy and investment patterns are constantly changing. Understanding these transformations, the driving forces behind them and the long-term implications are crucial for companies to determine where to focus and do business, and for governments considering trade, diplomacy and the security of their citizens. The mining and metals sector is at the core of the systems and value chains that shape the current geopolitical reality.
  • Due to the trade disputes with China, US companies have looked for new sources of minerals, rather than double down on domestic production. The US military has worked with Malawi’s Mkango Resources to provide rare earth minerals, while Texas-based Blue Line Mining aims to develop a rare earth production facility in the US, however, one reliant on support from Australian miner Lynas, and raw materials from Malaysia.
  • Market volatility and a downturn in commodity prices, industry-specific issues related to regulation, geopolitical risk, legal limits on natural resource use, shareholder activism and public scrutiny have created challenges for the global surface mining industry.

License to operate

  • CEO's worldwide state that license to operate is the key risk they are presently facing because the current approach is not broad enough. It has progressed beyond social and environmental issues. One mistake can affect the ability to access capital or even result in a total loss of license.
  • The surface mining industry is also grappling with the need to also have a social license to operate. Because globalism is advancing nationally, digital transformation highlights the need for a stronger license to operate. Jimena Blanco, head of Latin America research at Verisk Maplecroft says, “Mining companies are now recognising that this is a strategic concern and an operational one, too; it’s not just about having some corporate social responsibility programs and investing in the local community; there is a recognition this affects the bottom line.”


  • Miners face potential disruption from the tech sector. Apple recently moved to stop using newly mined materials in its products which will disrupt the global mining sector, according to Barrick Gold Corp chief innovation officer Michelle Ash.
  • The global mining industry, like so many other economic sectors, is battling a technological revolution. The industry is going through a wave of technology-driven disruption. So transformational are the changes that there is not even useful language to capture the scope of what is taking place.
  • In 2020, activist hackers are expected to launch at least five cyberattacks on mines around the world in Permanent Denial of Service attacks aimed at eliminating the environmental and social threats they pose. They’ll use workers’ connected devices to initiate the attacks.

Shortages and depleted resources

  • In some areas, resources have become scarce or depleted, forcing companies 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.
  • The question being asked these days is, "Do we need mining quotas?"
  • Is the world running out of critical minerals? This question was asked in an article published in 2017 by Mining Technology. The article states that China is running out of rare earth metals, but zinc, tin, copper, and iron ore seem to be available. The USGS has developed a methodology for identifying such critical minerals, tracking the change in their ‘criticality’, and forecasting potential trouble spots in the future.

Research Strategy

Your research team conducted a thorough search of sources connected to surface mining which included websites, news releases, educational publications, and third party sources. Although there were numerous challenges found, we elected to focus on the top four, which were referenced in most of our discoveries. We also confined our research to global topics and tried to focus on recent information available.

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Surface Mining: KPIs (2)

The common key performance indicators (KPIs) used by surface mining companies are employee turnover rate, community social involvement and machine cutting rate. It is recommended that qualitative indicators such as employee morale be considered as they can affect the performance of a mining company.

Employee Turnover Rate

  • Employee turnover rate is an indicator which refers to the percentage of employees who leave the mining company at a certain point in time.
  • Mining companies calculate turnover as the total number of employees who resign plus the number of employees whose jobs were terminated on performance issues. This total is then divided by the number of employees the company had at the start of the year.
  • A high employee turnover rate can disrupt the performance of the mining company as they will have to seek replacements. It takes time and funds to recruit a replacement, therefore a high employee turnover is not a precursor for good performance.

Community Social Involvement (CSI)

Machine Cutting Rate

  • A machine is cutting when it is actively producing the commodity extracted and all its capabilities are working at the highest level.
  • The cutting rate is measured by an electronic monitoring system and this can vary from 650 to 825 tonnes per cutting hour.
  • Monitoring the cutting rate helps to reduce delays and promotes maintenance. Some machines perform poorly because of incorrect settings by original equipment manufacturers (OEMs).


  • This work focused on quantifiable KPIs. However, factors such as employee morale are also important to consider. Employees who are unhappy and unmotivated can affect the company's performance adversely.

Research Strategy

To determine common KPIs, we consulted reports provided by the Global Mining Guidelines Group and the Mining Magazine. In addition, the proceedings of the following conferences were examined: International Future Mining Conference, Conference On Clean Technologies For The Mining Industry, International Conference on Control, Optimization and Automation in Mining and International Conference on Mining, Materials, and Metallurgical Engineering. A table was prepared indicating the most common quantifiable KPIs used by various companies in the world. International conferences bring people from different countries together which makes it easier to identify common quantifiable KPIs. It was found that employee turnover rate, CSI and machine cutting rate were common indicators of performance. Additionally, we found similar results in the following top academic journals: International Journal of Rock Mechanics, Energy Policy, Journal of Cleaner Production, Resources Policy and International Journal of Coal Geology.

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Subsurface Hard-Rock Mining: Challenges (2)

Some more clear challenges facing the US subsurface hard-rock mining industry include predicting commodities of the future, changing stakeholder's expectations and cash optimization.

Predicting Commodities of the Future

  • According to a Deloitte report, choosing which ''commodities to invest in and which to divest'' is a challenge facing mining decision-makers, especially when changes in industrial needs occur alongside environmental concerns. The report identifies commodities of the future as one of the key decisive point for the future in the industry.
  • For example, ''an average electric car battery pack uses 40kg of nickel currently, but some predict this percentage will increase. North America Nickel predicts the percent in car batteries could rise to as high as 80%, compared with 33% today.''
  • To be prepared for future disruptors in the industry, subsurface hard-rock miners need to be able to predict how the business is going to change and be prepared to refocus and streamline business operations towards commodities of the future.

Changing Stakeholders' Expectations

  • The mining industry receives pressure from the government when it comes to issues such as expanding employment opportunities for the locals, environmental protection and increase in tax. Therefore, mining companies face many challenges when it comes to investment, royalty taxes, uncertain tax rules and demand for local processing. These challenges are contributed by the mining companies' relationship with the stakeholders.
  • The subsurface hard-rock mining industry must adapt to the changing expectations of their stakeholders in order to create a favorable working environment for themselves.
  • Kennecott, a US based company that does subsurface hard-rock mining, incorporates practicable agency and stakeholder suggestions into their cleanup programs. The company encourages local community leaders, labor unions, professional organizations, citizen groups, the regulators and environmental groups to tour the operations and the cleanup projects to see the astounding progress.

Cash Optimization

  • A report by EY shows that many mining companies have engaged in cost-cutting exercises and have gained efficiency in recent years which means that commodity prices have rebound, higher margins reached and more cash generated. The key challenge by 2018 was cash optimization.
  • Cash optimization is the best way to allocate between projects and shareholders and the best way to use the cash for even greater returns.
  • According to US based producer of precious metals, (also deals in subsurface hard-rock mining), Coeur Mining's 2018 financial report, the company's dedicated management team and Board's focus was on creating value for stockholders by prioritizing strategic principles such as seeking a balanced, safe and unique asset base, generating attractive returns by investing more on exploration and exercising discipline in capital allocation.

Research Strategy

Several other challenges noted during the research include acquisition of a social license to operate by surface hard-rock miners and tailing management for subsurface hard-rock mining companies. The social license is allowed by the government for a short period and is renewable daily. In the US, tailings are managed in impoundments or disposal piles. Fewer publicly available information was available to support this challenges in the US mining industry. The two were reported as challenges facing the subsurface hard-rock mining industry by incredible sources.

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Subsurface Hard-Rock Mining: KPIs (2)

There is a broad range of measurements and metrics that can be used as KPIs for subsurface hard-rock mining operations. This report details three common KPIs used in this industry: Total Case Incident Rate, Greenhouse Gas Emissions, and Water Use, and provides for each a description of what is measured, why it is measured, and why it is important as an indicator of performance.

Total Case Incident Rate (TCIR)

  • Total Case Incident Rate (TCIR) is a metric that is used to measure the frequency of employee injuries and illnesses over time and is one of the safety metrics used by The Occupational Safety and Health Administration (OSHA) and the Mine Safety and Health Administration (MSHA) of the US to monitor high-risk industries and track and identify patterns in worker safety.
  • All companies in high risk industries (including mining) with more than ten employees are required to track and record employee injuries, illnesses, and fatalities in order to stay in line with OSHA and MSHA reporting regulations.
(Number of OSHA Recordable injuries and illnesses X 200,000) / Employee total hours worked = TCIR
  • Employee accident and incident rates are a commonly used KPI in subsurface hard-rock mining both because this information is required for reporting to OSHA and MSHA and because work-related injuries are a huge drain on time and resources.
  • A report on the financial impact of mining injuries estimates that the direct cost of common mining injuries ranges from an average of $2,300-$20,600 per incident. On top of this, indirect costs (which can include: work stoppage due to injury, overtime worked to compensate for the loss of an employee, training costs for a replacement employee, benefits payments not covered by worker's compensation, and more) are often more than double the direct cost, and the report estimates the total cost of an injury with the formula:
Total Injury Cost = Direct Cost + Indirect Cost = 3.12 * Direct Cost
  • Some companies report this KPI under slightly different terminology or acronyms which may include Total Recordable Injury Frequency Rate (TRIFR) or All Injury Frequency Rate (AIFR) and may calculate these metrics with slightly different formulas, but the overarching purpose and meaning of these metrics is synonymous with TCIR.

Greenhouse Gas (GHG) Emissions

  • As concerns about climate change continue to grow, tracking GHG emissions as a performance indicator has become more important in the mining industry, since mining is an energy-intensive industries, and is therefore at a relatively high risk of incurring GHG emissions regulations as part of developing climate change initiatives.
  • Additionally, in the US, most mining operations are considered large GHG emission sources, and are therefore required to participate in the Environmental Protection Agency's (EPA) GHG Reporting Program. In light of this regulation, most mining companies track GHG emissions as both a KPI and a regulatory requirement.
  • Most companies tend to use one or two metrics in using GHG Emissions as a KPI. Some companies (including but not limited to: Rio Tinto, Doe Run, and Newmont) use a metric called GHG Emissions Intensity which calculates GHG emissions per unit of commodity production. While other companies (including but not limited to Doe Run, Newmont, Glencore, and Lundin Mining) simply track total GHG or carbon dioxide emissions.
  • Both of these metrics, especially when tracked over time provide key information about energy use, efficiency, and cost, and are critical in determining a company's compliance to regulatory standards.

Water Use

Additional KPIs

  • Sources found during research indicate that there are more KPIs used by different companies in this industry than could be covered in the scope of this report. Lists such as the one found here, as well as the range of KPIs listed in the annual reports of different companies indicate that there are many KPIs that can be used in evaluating a mining company's performance.

Research Strategy

The research team identified KPIs by combing through annual reports for mining companies, reporting and environmental standards relevant to hard rock mining in the US, and studies and reports from reliable sources. The research team took two approaches for confirming that these KPI's could be considered common within this industry: 1) By confirming that these metrics are required to be tracked and reported to regulatory agencies such as OSHA, MSHA, or the EPA, we can assume that mining companies must be tracking and recording these metrics and 2) by browsing the KPIs used in the annual reports of some of the largest mining companies, we can assume that these metrics are commonly used by a large portion of the industry.
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Subsurface Hard-Rock Mining: Trends (2)

Three additional trends in the U.S. subsurface hard-rock mining industry include exploitation by multinational corporations, where overseas firms tend to benefit immensely, exempting the U.S. economy from such proceeds. Others are new frontiers via deep-sea mining and a transition to a low-carbon economy.

Exploitation by Multinational Corporations

  • The industry has benefited immensely from the passage of the act since it was written by the mining industry itself. Hence, the onset of it was marred in corruption. Under the 1872 law, it is practically legal for foreign interests (multinational firms) to extract economic resources and even lay claims on U.S. public land. This has given such firms the room to amass billions of dollars in earnings without royalty payments to the U.S. government.
  • Also, virtually absent in the mining act, is a lack of safeguards to protect air quality, water and wildlife. The Environmental Protection Agency (EPA) has claimed that 40% of the headwaters of western waterways have already been polluted so far, that has created 161,000 abandoned mining sites, and leaving behind an estimated reclamation and cleanup costs that is over $50 billion.
  • Due to the scale and scope of metals mining, it is regarded as the top toxic polluter in the U.S. and over 500,000 mines across the country that have been abandoned, threatening the waterways. Hard-rock mineral mining today, can either be done conventionally or via in-situ recovery since all minerals aren't extracted in the smae way.
  • Taxpayers in the U.S. are not compensated for the extraction of minerals from public lands and corporations also enjoy a low cost of doing business in America. The laws of extracting coal, oil, and gas, on the other hand, are way ahead in terms of policies and laws guiding them, than that of the hard-rock mining (though they possess inadequacies of their own).
  • A CAP analysis surveyed companies mining uranium in the U.S. and found that 83% of companies exploring for uranium are owned by foreign firms. Furthermore, 100% of firms that produced uranium from the U.S. in 2018, do not have their headquarters located in the U.S.

New frontiers via Deep Sea Mining

  • A front runner for future opportunities in the mining industry is in the deep sea. This is as a result of new frontiers that are critically being observed. In Jules Verne's book titled Twenty Thousand Leagues Under the Sea, he predicts mining operations on the ocean floor. That vision is gradually beginning to take shape as the concept itself is relatively a new one in the mining industry.
  • According to a U.S. Geological Survey, the deep sea which spans across half the world's surface consists of more cobalt, nickel, vanadium, molybdenum, and other possible rare-earth metals than all combined land-based reserves. Though mining is legal in a country's coastal waters, it isn't the same in international jurisdictions.
  • Increased difficulty in discovering new land-based deposits and rising demand for niche metals has propelled an exploitation quest for potentially rich resources on the seafloor. The International Seabed Authority, which is a U.N. body founded in 1982, could finally make this a reality by the end of the decade under the new rules being formulated by it. The body comprises 168 countries and oversees licenses for deep-sea mining.
  • These deep-sea formations currently present huge possibilities and also equally awe-inspiring challenges. Tremendous capital investments in specific equipment designed for such harsh, deep waters would certainly be required. Already, some deep-sea mining firms are at the forefront of this new frontier, but the technology has yet to be established on a large scale.

Low-Carbon Economy Transition

  • The growing demand for most minerals is projected to be high to attain energy transition. Though fossil fuel has assisted in improving the living standards world over since the 18th century, the risks associated with the gas emissions have led to global warming. To avoid stretching the temperatures that will cause ruinous consequences for the earth, countries must decarbonize before the middle of the century.
  • Companies in the mining industry that has operations in renewable energy such as integrated recycling in their value chain and hydrogen-powered truck fleets, and operate electric will be best-situated sell low-carbon premium minerals.
  • Energy demands are approximated to increase by 36% before 2035 as rising demands for minerals and falling ore grades come to the fore. Affordable and reliable energy access will be key to the mining sector.
  • Considering that the low-emission energy and transportation systems already at play appear to be more mineral-intensive than their fossil fuel-based counterparts, the transition will provide immense possibilities for the mining industry.
  • A change will be required if the sector is to contribute to the decarbonization of the world economy for countries to meet the target adopted at the Paris Agreement of preventing the global temperature from increasing over 1.5 to 2 degrees Celsius.


To find three additional trends in the U.S. subsurface hard-rock mining industry, we approached various industry reports and related studies to obtain the highlighted information within the findings. We uncovered a list of seven trends in the mining industry, most of which had appeared in a previous request. The team had to separate results from the source and stick to those which had previously not been mentioned. We corroborated our findings with other sources such as the Los Angeles Times to confirm that these were indeed the available trends within the industry.