Experienced mining professionals know that variable expenses follow production levels. Explosives, cable bolting supplies and electricity consumption are some of the costs directly proportional to the amount of resources extracted and processed.
Key industry players, such as Fortescue, MinRes, Rio Tinto and BHP, are demonstrating how to boost output while cutting costs. Discover how these operators have accomplished the impossible through forward-looking mining productivity prioritisation, sound mining fleet management and other strategies.
In 2024, Fortescue inked a deal with Chinese manufacturer XCMG to purchase over 100 pieces of zero-emission heavy mobile equipment, such as electric excavators, wheel loaders and haul trucks. Valued at hundreds of millions, this agreement speaks volumes about the major operator’s long-term strategy to boost mining production in Australia and cut equipment-related costs.
Fortescue is no longer a pure-play iron ore producer. It’s pouring resources into future-facing commodity investments to become an influential supplier of critical minerals for sustainable technologies in the long term. In 2024, the company bought a 19.9 per cent stake in Magmatic Resources to bolster its search for additional copper reserves and replicate Newmont’s mining success in New South Wales.
This horizontal integration strategy is similar to that of MinRes, when it acquired Poseidon Nickel’s assets in Western Australia’s Goldfields region in 2024. The deal included mining rights and a nickel concentrator plant, which MinRes had planned to convert into a central lithium processing facility. The operator wants to process lithium ore extracted by miners it already has a stake in and efficiently produce spodumene concentrate through a hub-and-spoke model, solidifying its position as a premier source of the raw battery mineral.
Awarding the contract to XCMG reinforces Fortescue’s sustainability-focused business, as the organisation aims to eliminate its Pilbara iron ore operation’s terrestrial Scope 1 and Scope 2 emissions by 2030. This is a feasible objective with all-electric and zero-emission machines, especially compact ones. Controlling this notoriously variable operating cost should keep its expenses in check while expanding and diversifying mining production.
Additionally, operating a zero-emission mining fleet should drive down maintenance costs. Fortescue is one of the few in Australia that can procure large quantities of mining equipment with advanced capabilities, such as automation and GPS tracking, to achieve higher levels of operational efficiency. Electric heavy equipment has fewer moving parts, reducing the frequency of routine checkups. Bulldozers, graders, mining haulage trucks and compactors with no diesel engines have lower servicing needs. They are less prone to fuel price fluctuations caused by supply chain disruptions in the Middle East.
Artificial Intelligence (AI) adoption
BHP has invested heavily in AI to supercharge various aspects of its operations, from mineral prospecting to preventive mining equipment maintenance in Australia and overseas projects.
In 2024, the operator’s commitment to the tech bore fruit with the discovery of a 1.3-billion-tonne copper and gold deposit in South Australia. Found in Oak Dam, the prospect isn’t as large and mineral-rich as Olympic Dam. Nevertheless, with a grade of 0.66 per cent copper and 0.33 per cent gold, the deposit will cement BHP further as the world’s largest producer of the reddish-brown metal.
Furthermore, BHP reported another find within Oak Dam, a higher-grade area with 1.96 per cent copper and 0.68 per cent gold. The deposit contains 220 million tonnes of minerals and is a good candidate for an initial mining operation.
These newly discovered reserves should augment the company’s future copper mining operations. They should give BHP greater flexibility to meet rising demand and capitalise on higher prices. With continued use of machine learning and human ingenuity, BHP may find more deposits at a fraction of the cost of traditional exploration methods.
Sales restructuring
Rio Tinto has restructured its sales strategies to pursue portfolio diversification. This pivot aims to maintain profitability amidst industry-wide decline in ore grades and long-term shifts in resource demand.
The mining giant continues to deliver strong iron ore output, except it now favours lumps over fines. In May 2025, Rio Tinto changed its Pilbara iron ore blend from 61.6 per cent Fe to 60.8 per cent Fe. Fortescue followed suit and announced it would replace its 60 per cent Fe Pilbara Fines product with a 55 per cent Fe ore product in October.
While lump ore may be more costly to acquire, it commands higher prices in Asian markets. Steelmakers find the resource less costly to use, so much so that they’re willing to pay a premium to enjoy lower operating expenses.
In addition to capitalising on the higher inherent value of lump products, Rio Tinto can minimise waste-material-related losses through selective mining. This extraction technique may incur the same product cost, if not higher, but opening replacement mines should cut the company’s overall losses.
In October 2023, Rio Tinto announced the construction of four new replacement mines across Western Australia’s Pilbara region, intending to reduce the mining production costs of iron ore from the range of AU$30.03 to AU$31.43 per tonne to AU$27.94 per tonne. Some of these replacement mines have been operational since then.
Boosting output while reducing costs isn’t paradoxical after all
Embracing electrification, automation, AI and diversification is key to boosting mining productivity without incurring higher operational expenses. Australia’s major operators have different business goals. Still, their actions indicate that more efficient mining fleet management, advanced data analytics, horizontal integration and dynamic sales prioritisation can lead to greater production and lower costs.
