Mining Explosive Costs Detonate
Source: Mineweb.com (6/22/08)
These are boom times for mining companies but the big profits are being eaten into not only by spiraling energy costs but suddenly rising prices for the explosives used to blast into the rocks.
It's all because of the high price of natural gas, which when converted into ammonia is used to produce ammonium nitrate, a key ingredient in fertilizers and explosives. Natural gas prices are up 75 percent so far this year and ammonia prices have doubled since last summer.
The price rises have added to explosives companies' profits but for miners it is an added cost, along with higher diesel, energy and labor expenses, narrowing their margins at a time when metals and coal are in big demand...
"Many of the factors driving the strong demand for copper are also impacting the materials and commodities we use in our mining and processing operations," spokesman William Collier said. "Among these, the cost of explosives has risen significantly."...
"Mining companies are definitely putting pressure on us to keep costs down," said Kenneth Larsen, marketing director for Maxam North America, a commercial explosives manufacturer. "Our customers have to break rock and there's only one way to do it. Fortunately for us, it's a necessary evil."