Contract Mining Services

Contract Mining Services is the integral part of mining activities focusing mining efficiency

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Category Alerts


Contract extension is obtained by Perenti for a Canadian copper and gold mine.

April 19, 2023
alert level: Medium

SC orders the mining contractor for Dadam Hills to deposit Rs 3 crore.

April 13, 2023
alert level: Medium

Sandvik to provide automation systems for a copper mine in Chile.

April 06, 2023
alert level: Medium

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Contract Mining Services Industry Benchmarks

Savings Achieved

(in %)

The average annual savings achieved in Contract Mining Services category is 3.80%

Payment Terms

(in days)

The industry average payment terms in Contract Mining Services category for the current quarter is 60.0 days

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Engagement Model

Supply Assurance

Sourcing Process

Supplier Type

Pricing Model

Contract Length


Lead Time

Supplier Diversity

Targeted Savings

Risk Mitigation

Financial Risk



Geopolitical Risk

Cost Optimization

Price per Unit Competitiveness

Specification Leanness

Minimum Order Quality

Payment Terms

Inventory Control

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    Contract Mining Services market frequently asked questions

    As per Beroe's analysis, the global market size stands at a valuation of $20.88Bn and it's expected to increase at a CAGR of 3 ' 4% to reach a $22.64Bn valuation by 2019.

    The global economic slowdown, coupled with the Chinese slump, prompted the fall in commodity prices affecting the miners and the demand and profit margins of the contractors.

    As per Beroe, these are the mining contract types applicable within the industry: Alliancing-Gain Share Alliancing-with Integrated Project Management Team Schedule of Rates Alliance Contract Partnering Agreement

    Australia is the largest contract mining services consumer with nearly 50% share in the global market. The next-in-line is Africa, North America, and Asia with 16.8%, 12.2%, and 11.4% market share respectively.

    According to Beroe's study, the US, Australia, and Canada fall in the high-market maturity regions, while Africa, LATAM, Asia, and Russia lie in the medium-market maturity regions.

    The two parameters that contribute to the growth of different African regions are: Lower mining costs Higher untapped mines

    South Africa accounts for two-thirds of contract mining in Africa and it's expected to grow by 6 percent. The other regions like Ghana, Mali, Tanzania, and Guinea are expected to grow at a rate of 7%, 7.5%, and 8% respectively.

    The price in the mining industry depends on the: Type of ore Region involved Type of mining performed (surface or underground)

    According to Beroe's analysis, the main saving levers are: Leasing/renting equipment use of technology and automation Fuel usage efficiency Improved mine planning

    The top global service providers include the following names: Cimic Group Ltd. Downer EDI Ltd. Macmahon Holdings Ltd. Aveng Moolmans Redpath Group Eqstra Holdings

    Following the insights from Beroe's report, equipment costs nearly 50 percent of the total costing while labor costs (wages and benefits) approximately 20 ' 25 percent of the total costs.

    Despite the weak commodity market, the global contract mining market is expected to grow since contract mining companies are preferring to outsource over new investments to minimize their capital spend and optimize their expenditure.

    As per Beroe's report, changing mining conditions with an increase in mining activities, due to heavy equipment usage on account of a lower grade of mines, forces the mining companies to concentrate on their core capabilities like exploration, sales, and marketing.

    Contract Mining Services market report transcript

    Global Market Outlook on Contract Mining Services


    Value of Contract Signed: $5.03 billion (2022)

    Global Demand CAGR: 3–4 percent (2022–2024)

    Key Market Drivers : Depleting ore grades in mines has increased the demand for contract mining.

    • Surge in the pricing of base metals, due to macroeconomic factors, had driven the demand of contract mining services during H1 2022. Technology and workforce from mining-focused regions will provide the impetus to the contract mining market, in terms of growth prospects

    • Increase in demand for metals and minerals, coupled with declining high-grade ore heads, is the key driver for contract mining

    Contract Mining Market Overview: Global

    Globally, the contract mining industry is expected to witness growth in 2022, owing to high commodity prices prevailing during H1 2022. Push toward sustainability, coupled with a volatile pricing environment, is expected to drive the demand for automation services in the long term

    • The demand for the global contract mining services market is increased during H1 2022, owing to high metal prices prevailing in the market

    • In earlier years, the COVID-19 pandemic discouraged major mining companies from investing in exploration, owing to the weak commodity market. However, the market is improved in recent times, but uncertainty still persists, due to the spread of COVID-19 in China

    • Demand for automation services is expected to increase until 2024, owing to volatile market conditions and commodity cycles

    • On the other hand, weak macroeconomic indicators and an anticipated drop in base metal prices could slow down the demand for contract mining services during H2 2022

    • Globally, mining operations, along with mine development and drilling services, constitute around 70 percent of the services in contract mining, followed by engineering services, mine auxiliary services, and dump management contributing to the rest

    • Drilling services (15 percent) are mostly outsourced across the globe, as major mining companies are reluctant to buy capital-intensive drill rigs, which are used in exploration, as they are capital-intensive, due to volatile commodity prices

    • Coal and gold mining companies during H1 2022 actively signed new contracts/extended their contracts in Australia and Indonesia

    • Major scope of services included under the contract was mine development, drilling services, production support, and equipment maintenance services

    • However, an anticipated drop in the commodity prices during H2 2022, coupled with weak macroeconomic indicators, could slow down the growth in H2 2022

    Global Contract Mining Services –Drivers and Constraints


    Lower, defined mining costs

    • Reduced capital expense for the mine owner, which allows them to better utilize their cash and also focus on the company's other core capabilities, which may be exploration, sales, and marketing.

    Depleting ore grades in mines

    • Depleting ore grades in surface mines have influenced miners to perform deeper mineral extraction, which has increased the demand for contract mining

    Large pool of machinery and skilled employees

    • The contractor has flexibility in equipment and always deploy modern machinery to compete with other contractors

    • Deploying employees from the contractor means that the mine owner has smaller workforce and brings effective performance management systems


    Slump in demand for commodities

    • Fall in commodity prices, as a result of a decrease in demand, would deter mining investments, thereby leading to mine expansion stoppages.

    • This would affect the demand for contractors in the mining market.

    High dependence on labor

    • Mines are characterized by a low degree of mechanization. Labor spend constitutes around 35 to 40 percent of the direct mining cost.

    • Mine mechanization has been increasing steadily, there still remains a large number of mines, where drilling and clearing are performed manually.

    • The primary reason for this is narrow shafts in mines, which make mechanization unprofitable.

    Degree of mine mechanization

    • Underground mining is experiencing a shift toward mechanization, which is decreasing the need for contract workers.

    Cost Structure Breakup: Contract Mining

    The major cost factors involved are equipment purchase expenditure and labor costs, which account for ~75–80 percent of the total cost.

    • Pricing is done mostly on per ton or per meter basis, together by mine owners and contractors, also based upon the region, the ore to be mined and type of mining involved (underground rates are typically 30–40 percent higher than surface)

    • Alternatively, mine owners can float tenders inviting multiple contractors to quote based on the scope of work assigned

    • The profit margin, mostly in the range of 10–15 percent is decided based on the maturity of the contractor, the demand from the customers in that region as well as the competition among the suppliers

    Why You Should Buy This Report

    With this mining services industry report, you get:

    • Insights on the global contract mining industry outlook, maturity, industry trends, drivers and constraints.

    • Regional contract mining market trends of North America, Europe, LATAM, MEA, and APAC.

    • Porter’s five force analysis of matured and emerging contract mining industry.

    • Supply trends and insights, supplier profile and SWOT analysis of major players in the contract mining market.

    • Best sourcing models, cost drivers, cost structure, and pricing models.

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