Australia has comparatively high conversion costs relative to other top copper producing countries. But CRU cash costs at Australian mines are in line with the global average, due to Australian mines typically benefitting from high by-product credits.

CRU says Australian mines in aggregate will remain less competitive on a conversion costs basis than operations in most other regions. However, while they will increase, Australian CRU cash costs including by-product credits are expected to be lower than the global average.

Keeping mine operating costs in check is a challenge for the Australian mining industry. Australian copper mine conversion costs are in the upper cost quartile, at $4,616/t in 2018 on an annualised basis. This compares to a global average of $3,761/t. There are several causes of this, but average power costs (which will average 114.64/MWh this year) and average labour rates (which will be close to $91,000/man-year during 2018) are particularly high, relative to many other top copper producers. The majority of Australian mines are underground, which also can have cost implications, and although copper grades are comparatively high, many Australian mines are small, implying that they do not benefit from the economies of scale seen at larger operations.

Australia’s average CRU cash costs (including byproduct credits) are in line with the global average, due to Australian mines typically benefitting from high byproduct credits. This offsets the higher cash conversion costs. Average Australian CRU cash costs (including byproduct credits) stand at $2,482/t across all mining operations for 2018, compared to:

•$3,228/t for Chile
•$3,271/t for the USA
•$2,264/t for Peru
•-$901/t, for the DRC
•$2,514/t global average

Australian mines are distributed in a broad range throughout the cost curve on a CRU cash cost basis, with a number of operations located in both the first and fourth quartiles of the cost curve.