Expenditure policy of a mining company in changing geopolitical settings

Abstract

In the context of the sanctions pressure, the main objective of the expenditure policy of the mining industry is to increase the efficiency of its operations while optimising its value. The study analyses the main factors affecting the expenditure policy of a mining company. It describes the value-based management methodology that applies the Activity-Based Costing (ABC) and the Deming Cycle tools from PDCA to develop a value-based management system to continually improve the operational efficiency and to reduce costs. Application of these tools jointly to manage mining operations is a powerful instrument that is both efficient and easy to use. The featured example of using these methods showed the model's ability to generate a bottomup baseline cost budget, identify and understand sources of cost variation and suggest possible solutions within a continuous improvement cycle. The model is not only applicable to underground mining, but can easily be adapted to any other mine or plant operation. An innovative methodology of value-based mining management is presented that is effective and easy to apply in a dramatically changing geopolitical environment.