Surface / Underground Mining
Also: surface mining, underground mining, open-pit mining, deep mining
Two fundamental mining methods in which ores are extracted either in open-pit surface mining (near the surface) or in underground mining (in deep tunnels and shafts).
The choice between surface and underground mining is decisive for how expensive and how profitable it is to develop a deposit economically — and thereby, indirectly, for the global supply of precious metals and the gold price.
Surface mining (open-pit)
In surface mining, the ore-bearing rock is extracted from the earth's surface in large, stepped pits (open-pit). Massive blasting loosens the rock, and excavators and dump trucks transport it for processing. This method is economical where the ore grade is low but the deposit is large in volume.
Advantages:
- Lower extraction cost per tonne of ore
- High mechanisation and throughput rates possible
- Simpler safety conditions for miners
Disadvantages:
- Considerable land use and landscape disturbance
- Waste-rock volumes many times the ore volume
- Depth limited by the stability of the pit walls
Well-known surface 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 consists of narrow, high-grade ore, underground mining is preferred. Through shafts and tunnels, miners access the ore veins several kilometres deep. The South African Witwatersrand mines — historically the world's most important gold sources — reach depths of over 4 km; the Mponeng mine, at more than 4 km, is currently the deepest gold mine in the world.
Advantages:
- Access to deep, high-grade deposits
- Lower surface land use
- More selective extraction reduces waste rock
Disadvantages:
- Considerably higher operating costs (ventilation, cooling, haulage)
- More complex occupational safety (heat, rock pressure, gas hazards)
- Higher capital intensity for development
The economic threshold: cut-off grade
The line between profitable and unprofitable extraction 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 previously uneconomic deposits become recoverable — a direct feedback effect on primary supply.
Break-even: revenue/t = ore grade [g/t] × metal price [£/g] ≥ AISC [£/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 determine whether the mine operates — in these cases the precious-metal supply is largely price-inelastic.
In brief
Surface mining dominates world precious-metal production by volume through low unit costs; underground mining develops high-grade deep deposits at higher AISC. Both methods influence long-term supply through their cost structures — and thus the price trend, which you can trace in the historical precious-metal prices.