Open-Pit / Underground Mining
Also: Open-pit mining, Underground mining, Surface mining, Deep mining
The two fundamental extraction methods in mining, in which ores are recovered either in an open pit (near the surface) or underground (in deep drives and shafts).
The choice between open-pit and underground mining largely determines how expensive and how profitable it is to develop a deposit commercially — and therefore, indirectly, the global supply of precious metals and the gold price.
Open-pit mining (surface extraction)
In open-pit mining the ore-bearing rock is worked from the surface downward in large, stepped pits (open-pit). Heavy blasting loosens the rock, and excavators and haul trucks carry it to processing. This method is economic where the ore grade is low but the deposit is large in volume.
Advantages:
- Lower extraction cost per tonne of ore
- Scope for heavy mechanisation and high throughput
- Simpler safety conditions for miners
Disadvantages:
- Substantial land use and landscape disturbance
- Waste-rock volumes many times the ore volume
- A depth limit set by the stability of the pit walls
Well-known open-pit gold mines include the Boddington mine in Australia (the world's largest open-pit gold mine) and the Cripple Creek & Victor mine in Colorado, USA.
Underground mining
Where the deposit lies deep, or is made up of narrow, high-grade ore, underground mining is preferred. Through shafts and drives, miners reach the ore bodies several kilometres down. South Africa's Witwatersrand mines — historically the world's most important sources of gold — reach depths of over 4 km; the Mponeng mine, at more than 4 km, is currently the deepest gold mine on Earth.
Advantages:
- Access to deep, high-grade deposits
- Smaller surface footprint
- More selective mining reduces waste rock
Disadvantages:
- Considerably higher operating costs (ventilation, cooling, hoisting)
- More complex worker safety (heat, rock pressure, gas hazards)
- Higher capital intensity to develop
The economic threshold: the cut-off grade
The line between profitable and unprofitable mining depends on the cut-off grade — the minimum ore grade at which extraction covers total costs (including AISC). When the gold price rises, this threshold falls, and deposits that were previously uneconomic become mineable — a direct feedback effect on primary supply.
Break-even: revenue/t = ore grade [g/t] × metal price [EUR/g] ≥ AISC [EUR/t]
Silver, platinum and palladium
Silver, platinum and palladium come predominantly as a by-product of copper, lead and nickel mines. There the economics of the main metal decide whether the mine runs at all — so in these cases precious-metal supply is largely price-inelastic.
Quick recap
Open-pit mining dominates global precious-metal output by volume thanks to low unit costs; underground mining opens up high-grade deep deposits at higher AISC. Both methods shape long-term supply through their cost structures — and therefore the price trend you can trace in the historical precious metal prices.