Parametric estimation of capital costs for establishing a coal mine

Capital cost estimates are critical for the decision-making process in mining projects, influencing whether they proceed, are delayed, or abandoned. This study addresses the lack of literature on capital cost estimation in coal mining, particularly in countries like South Africa, which face challenges due to inadequate historical data. The objective is to explore parametric estimation methods for accurately assessing capital costs in coal mine development, providing a necessary framework for junior coal miners who may lack comprehensive databases. Methodologically, the investigation employs a parametric approach to estimate capital costs, integrating various components such as start-up and stay-in-business costs associated with mining projects. The results indicate significant disparities between actual and estimated capital costs across different coal operations, highlighting the importance of precise estimation techniques in mitigating financial risks. By focusing on South Africa as a case study, this research contributes to the body of knowledge required for effective project planning and execution in the coal mining sector, ultimately supporting better investment decisions and fostering industry growth.