Measuring labor productivity in the gold mining industry – by Adam Webb S & P Market Intelligence – March 31, 2017)

http://marketintelligence.spglobal.com/

Labor productivity in the mining industry is often expressed as tonnes of ore mined per man hour and, as a consequence, open pit mines are often described as being more productive than underground mines. However, looking at productivity in terms of revenue generated per man hour accounts for both primary grade and valuable byproduct metals in the ore and shows a different regional picture compared to that suggested by the more simplistic measure of ore mined per man hour.

This metric shows that underground mining is more competitive in terms of labor productivity when compared with open pit mining than is sometimes suggested by the more conventional metric of ore mined per man hour.

For this study, S&P Global Market Intelligence looked at 137 primary gold open pit and underground mines across 30 countries in 2016. Figure 1 shows the average ore mined per man hour for all 30 countries. Employees in the United States are apparently the most productive, while in some more developed nations, such as New Zealand and Chile, the workforce seems surprisingly unproductive.

Generally, it is expected that employees in more developed countries are more productive, as they require higher wage rates, compared with less developed countries, where wage rates are lower. Looking at these figures on a country level does not take into account the distribution of open pit and underground mining, and this leads to some skewed results.

Figure 2 shows the same data but further split into open pit and underground mining operations. This would appear to support the idea that employees at open pit mines are able to be more productive than their counterparts at underground operations, due to the large equipment and bulk-mining techniques that can be utilized at open pit operations.

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