Diesel Drought Threatens Mines Viability

Sparked by the war in Ukraine, a diesel drought is threatening the costs and the viability of the Australian mining industry. Diesel fuel is essential, especially for open pit mining and earthmoving equipment. In Australia, the average diesel price has risen 35% since the start of 2022.

According to the latest report by Fortescue Metals Group, diesel fuel, followed by labour shortages and higher-priced consumables, have all affected the industry. Miners have been able to offset higher fuel prices by selling minerals and metals into strong commodity markets, however, a more permanent solution will need to be found.

Oil and gas, Russia’s two biggest exports, are facing ever-tightening sanctions, which threaten to spark an economic shock to rival the oil shock of the 1970s.

Europe imports half its diesel from Russia and is seeing a catastrophic effect from the rise in fuel price, however, this is a global problem.

For mining companies, the diesel shortage is not yet a crisis, but the longer the shortage lasts, the more damage it will do to profits, especially for remote mines