Reserve characteristics and mining costs An empirical study of the phosphate industry

This paper deals with an estimation of phosphate mining cost function. Here, it is argued that other characteristics of reserves, besides their size, could be quite important in the cost function. The result of a cross-sectional analysis of phosphate mining in the world shows that reserve size and average total cost have a positive and modest statistically significant relationship in one of the two models. Among many qualitative characteristics and location factors tested in this paper, overburden, grade, ore/product ratio, water availability, and the price of capital are significant with expected signs. Finally, the results confirm the existence of economies of scale in phosphate mining which seem to be more related to mining technology than to reserve size.