Project # Location Throughput (kt/day) Year of startup Desalination included Delivery Model Phalaborwa Copper Mine South Africa 25 1977 No EPCM Las Bambas Peru 140 2015 No EPC QB2 Chile 142 2023 Yes EPC Over the years, the focus has been on delivering a mining project with the associated non process infrastructure such as ports, desalination plants and pipelines between the mine and coast. Projects are becoming larger due to lower grades and more remote locations with limited logistics envelopes. In South America, as projects are being developed in more remote locations where water is an issue, there has been a move to include coastal desalination plants with pipelines delivering water to the new mine sites. Another observation is that in the last 10 to 15 years there has been a move away from the traditional EPCM contract model to an EPC self-perform with direct hire. The authors have extracted historical capital costs with the intention of illustrating the changing capital profiles for projects across the three decades under review. Figure 2 illustrates how the makeup of project costs has moved in terms of percent of total installed costs. One note here is that as observed there is a difference in “Indirect costs” between EPC and EPCM. This is by design as "Indirect costs" are always larger for EPC projects, whilst for EPCM projects, the majority of indirect costs are carried by the contractors within the direct costs for the project. Figure 3 consists of three decades of data with 5 projects from the 1990’s, 4 projects from the 2000’s, 6 projects from the 2010’s and 2 projects from the 2020’sthat have been analyzed. Figure 32– Distribution of global project costs – variation by decade and execution model Figure 2 illustrates that over three decades there has been a shift in costs from direct costs (Bulk Materials, General Equipment, Specialized Equipment / Systems and Industry Specific Equipment) to indirect costs (Field Distributable and Remote and Offshore Expenses). This shift can be ascribed to the type of project delivery model that is used, either EPCM or EPC. Secondly, the projects being delivered in Peru and Chile involve establishing construction sites complete with worker camps in remote and at altitude. This adds costs. Figure 2 is deceptive in light of the fact that not all owners costs are captured by the delivery contractors cost control systems. Westney (2014, 2015a) describes the increase in owners’ costs between 1995 and 2014 as being due to increased pressure to control projects and the subsequent operations. This includes increased owners insurance costs etc.
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