Fluctuating fuel and electricity prices have a multifaceted and profound impact on mining profitability. an increase in price of these commodities leads undoubtedly to an increase in operational costs. Knowing that mining operations rely heavily on transportation (excavation etc.), an increase in fuel directly squeeze profit margines especially when dealing with open pit mining which requires an extensive transportation system. On the other hand, a decrease opens the profit margin. Electricity is a non-deniable aspect in the mining business. Communition, ventilation, dewatering and other electric dependent actions costs are directly proportional to electricity price. hence, an increase in electricity price leads inevitably to a high increase in the cost of these operations and vice-versa (Empirical Analysis of Mining Costs Amid Energy Price Volatility for Secondary Deposits in Quarrying, n.d.).
In essence, fluctuating fuel and electric prices introduce significant financial risks to the mining industry. It impacts operational costs, project viability and overall profitability.
Reference:
Empirical Analysis of Mining Costs Amid Energy Price Volatility for Secondary Deposits in Quarrying. (n.d.). ResearchGate. Retrieved March 21, 2025, from https://www.researchgate.net/publication/377926002_Empirical_Analysis_of_Mining_Costs_Amid_Energy_Price_Volatility_for_Secondary_Deposits_in_Quarrying
