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(OWN-2657) Managing Capital Cost Overrun Risks in the Mining Industry

Level: Intermediate
Author(s): Tin Lwin, P.Eng.; Jose Lazo
Venue: 2017 AACE International Annual Meeting, Orlando, FL

Abstract: Large capital cost overruns have been endemic in the mining industry, particularly during the commodity super cycle. As a financial institution with a significant mining portfolio facing the consequences of the overruns, there was a need to assess the significance and mitigation of such events. Consequently, internal studies were conducted to characterize attributes of the projects that experienced capital cost overruns and sought to identify factors that could potentially be used as leading indicators to capital cost performance of mining projects. The paper also discusses how the findings of these studies have come to influence a lender’s perspective in addressing capital cost overruns in mining projects.