Indirect cost estimation and deviations from different closure plans

Authors: Aguirre, L; Godoy, I; Osses, B Download Paper Open access courtesy of:

DOI https://doi.org/10.36487/ACG_repo/2615_39

Cite As:
Aguirre, L, Godoy, I & Osses, B 2026, 'Indirect cost estimation and deviations from different closure plans', in AB Fourie, G Boggs, J Heyes & M Tibbett (eds), Mine Closure 2026: Proceedings of the 19th International Conference on Mine Closure, Australian Centre for Geomechanics, Perth, pp. 1-9, https://doi.org/10.36487/ACG_repo/2615_39



Abstract:
In accordance with the International Council on Mining and Metals (ICMM) guidelines, closure cost estimates are classified into 3 principal components: direct costs, indirect and additional costs, and contingencies. Direct costs correspond to activities explicitly associated with the implementation of the closure plan (ICMM 2025), and their estimation can be carried out using parametric, historical, probabilistic or deterministic methods, depending on the level of engineering development (Association for the Advancement of Cost Engineering International [AACEI] 2012). Meanwhile, indirect costs are costs that cannot be assigned directly to a specific activity. These include, among others, human resources, support services, social programs, engineering and construction management, safety, quality, supervision, and temporary maintenance (ICMM 2025). Indirect costs may be estimated as a percentage of direct costs or using a deterministic approach (AACEI 2012), itemising each cost category. The choice of method depends on the engineering (class) level achieved in the project. Through the review of closure plans from different countries, this study evaluates the consistency between percentage-based and deterministic approaches for estimating indirect costs. The analysis is based on the ratio between indirect and direct costs (IC/DC), which was compared against reference ranges defined in the Alaska Mine Closure Cost Estimation Guidelines (Alaska Department of Natural Resources [ADNR] & Alaska Department of Environmental Conservation [ADEC] 2015). Results show that, although several sites fall within the commonly referenced range (approximately 25–47%), significant deviations occur above and below this interval. These deviations are not explained by a single variable, but rather by the interaction between cost definition, timeline distribution of closure and postclosure activities, and site-specific operational conditions. In particular, extended closure and postclosure activities can significantly increase indirect cost ratios. The analysis indicates that approximately 70% of the data lie between the 10th percentile (P10 = 15%) and 80th percentile (P80 = 69%).

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