Closure cost estimate—an approach to estimate productivities of main closure activities

Authors: Espezúa, JM; Vasquez, EL Download Paper Open access courtesy of:

DOI https://doi.org/10.36487/ACG_repo/2315_081

Cite As:
Espezúa, JM & Vasquez, EL 2023, 'Closure cost estimate—an approach to estimate productivities of main closure activities', in B Abbasi, J Parshley, A Fourie & M Tibbett (eds), Mine Closure 2023: Proceedings of the 16th International Conference on Mine Closure, Australian Centre for Geomechanics, Perth, https://doi.org/10.36487/ACG_repo/2315_081



Abstract:
Peru’s mining tradition dates back centuries. In recent decades, the presence of leading international companies has made Peru the world’s second largest producer of silver, copper and zinc and the first producer of gold, zinc, tin, lead and molybdenum in Latin America. Currently, mining legislation and mining companies contemplate standards to ensure sustainable mine closure and adequate treatments of mining environmental liabilities. To date, experience with mine closure has been limited. Cost estimates for these operations focus on meeting two objectives: estimating the amount of the guarantee that will be granted to the regulatory body and estimating the costs that the mine operator expects to incur based on the current mine plan and until the end of the mine’s life. Mine title holders report significant differences in the cost estimates made by consultants for project engineering and the real costs incurred during closure. Even when the input information for estimation purposes is the same, this difference exceeds expected accuracy ranges for the level of engineering developed. Our working hypothesis is that this difference is attributable to the method used to calculate closure cost estimates. In Peru, as is the case throughout South America, the unit price analysis method (UPA) has rendered good results when estimating the costs of construction projects in general. In these cases, calculations are developed in greenfield environments with multiple and varied work fronts and activities can be carried out simultaneously and independently of each other, which gives the contractor sufficient flexibility to easily reassign the workforce and redeploy construction equipment. In the aforementioned scenarios, UPAs treat activities as separate event when calculating productivities, as befits a greenfield environment. Due to their nature, mine closure works will be carried out in a brownfield environment, particularly in progressive closure phase, where aspects of mining production activities run alongside closure activities that entail work on specific components (Pit, Pad, waste dump, tailings dam, haul road, etc.). In this scenario, unlike the greenfield environment described above, dissimilarity in activities on different work fronts means that little flexibility exists to reassign labor and construction equipment. As such, it is important to evaluate the interaction between activities in the construction process and their impact on the productivity of construction teams and labor crews. Mine closure activities can be grouped into three broad groups for direct costs:

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