Capital expenditures (Capex) are the money that businesses set aside to buy, improve, and maintain physical assets such as real estate, machinery, or technology. These investments are vital for increasing operational capacity and guaranteeing long-term financial gains [1].
In mining projects, Capital Expenditure (CAPEX) represents the upfront investment required to bring a project from exploration or feasibility into production. CAPEX is usually divided into direct costs, indirect costs, owner’s costs, and contingency. The main components of capital expenditures are:
Mine development costs
- Overburden removal and pre-stripping.
- Construction of access declines, shafts, and ramps (for underground mines).
- Pit preparation and initial bench development (for open-pit mines).
- Ground support, ventilation raises, pumping, and dewatering systems.
- Initial drilling and blasting equipment setup.
Mining equipment
- Primary fleet: haul trucks, shovels, loaders, drills, dozers, graders.
- Ancillary fleet: service trucks, water trucks, light vehicles, cranes.
- Underground fleet: LHDs, jumbos, trucks, scaling rigs, bolters.
- Maintenance workshops, fuel and lubrication systems.
Processing plant & related infrastructure
- Crushing, grinding, and milling equipment.
- Concentrators, flotation cells, leaching tanks, CIL/CIP circuits.
- Smelters, refineries, or tailings processing (depending on project).
- Process water circuits, reagents, and chemical storage.
Tailings & waste management facilities
- Tailings storage facility (TSF) construction.
- Waste rock dumps, drainage, and seepage control.
- Paste fill or backfill plants (for underground mines).
Infrastructure & utilities
- Power generation (diesel, LNG, or connection to grid).
- Transmission lines and substations.
- Water supply, pipelines, pumping stations, treatment plants.
- Access roads, rail lines, ports, and airstrips if remote.
- Communication systems (IT, radio, data).
Support facilities
- Mine offices, control rooms, and workshops.
- Warehouses, fuel depots, reagent storage.
- Accommodation camps, kitchens, and recreational facilities (remote sites).
- Security systems and fencing.
Indirect costs
- Engineering, procurement, and construction management (EPCM).
- Detailed design and project management.
- Camp setup for construction workers.
- Temporary facilities and mobilization/demobilization.
Owner’s costs
- Feasibility studies and permitting costs.
- Land acquisition and compensation.
- Environmental and social impact mitigation.
- Pre-production workforce recruitment and training.
- Initial working capital (spares, consumables, reagents, fuel stockpiles).
Contingency & Escalation
- A percentage of total CAPEX to cover uncertainties.
- Typically, 10–20% depending on project stage and risk profile.
In short, CAPEX in mining covers the cost of mine development, mining and processing equipment, infrastructure, tailings, and indirect/owner’s costs. The balance between these categories depends heavily on whether it’s an open-pit or underground mine, and the ore processing method (heap leach, flotation, CIL, smelting, etc.).
Reference
[1] “Understanding Capital Expenditure (CapEx): Definitions, Formulas, and Real-World Examples,” Investopedia. Accessed: Sep. 03, 2025. [Online]. Available: https://www.investopedia.com/terms/c/capitalexpenditure.asp
