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FUEL PRICES – Huge jump squeezes small & medium producers

ARGENTINA- Energy costs are one of the fastest growing expenses for small and medium-sized mining companies in Arg...


ARGENTINA- Energy costs are one of the fastest growing expenses for small and medium-sized mining companies in Argentina, speakers said at the ARMINERA MINING CONFERENCE in Buenos Aires. Oil and gas prices have increased 307% and 202% respectively from 2001 to date, Gustavo Marinoni, VP of non-metallic miner CASTIGLIONI, PES Y CA, said during a speech on developments in mining costs.

More specifically, the price per kilowatt-hour increased 171% from April 2001 to April 2005, Pablo Caruso of small-scale miner VAHER said. During the period, fuel costs rocketed 247%. Heavy machinery costs have also contributed to the burden, he added. Such costs rose some 300% from during the same four years, he said.

Other items that have become more expensive for small-to-medium miners are pallet and transport costs, according to Marinoni.

One way for Argentine miners to cut costs would entail increasing the tonnage transported on trucks, said Guillermo Hughes of vehicle manufacturer SCANIA in his speech on transport. Hughes said he was speaking independently and not as a Scania official.

By increasing the use of “bi-trenes” (trucks pulling multiple wagons), miners could enhance transport efficiency, emulating trains that reduce costs by moving multiple cars. The move would also cut costs by increasing the amount of cargo each driver pulls, considering driver salaries make up a large chunk of fleet costs.

For this to happen Argentina’s government needs to follow the example of neighbouring countries such as Chile and let truckers use bi-trenes more frequently. Increasing gross tonnage to 75 tonnes from 45 tonnes through bi-trenes could help mining companies cut freight costs 25%, Hughes said.


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