AKTU Mine Economics (BMN071) Syllabus PDF – B.Tech 4th Year
Mine Economics BMN071
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- Semester 7
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Syllabus — Mine Economics
Download PDFBMN071 · 3 credits · L-T-P 3-0-0
Course Outcomes
| Course Outcome: Student will be able to | Bloom Taxonomy | |
| CO 1 | Classify mineral resources and reserves as per UNFC; carry out sampling and grade-reserve estimation for mineral deposits. | K2 |
| CO 2 | Apply standard methods of mine valuation (Hoskold's, Morkill's, present-value) and compute depreciation and capital recovery for mining assets. | K3 |
| CO 3 | Evaluate mining investment proposals using discounted and non-discounted cash flow methods and perform sensitivity analysis. | K4 |
| CO 4 | Explain principles of financial management of mining enterprises and apply provisions of mineral taxation under MMDR Act and related rules. | K3 |
| CO 5 | Prepare profit-and-loss account, balance sheet and cost-of-production statements; demonstrate awareness of National Mineral Policy and sustainable mining. | K3 |
UNIT I [06 Hours]
Mineral Resources, Reserves and Sampling Resource and Reserve Classification: concepts; IBM and UNFC frameworks; JORC and CRIRSCO codes; measured, indicated and inferred resources; proved, probable and possible reserves.
Sampling and Statistical Analysis: grab, channel, chip, bulk and drill-core sampling; sample preparation and reduction; salting and precautions; statistical treatment — mean, variance and standard error of grade.
Grade and Reserve Estimation: cut-off grade and break-even grade; reserve estimation by cross-section, polygonal, triangular and inverse-distance methods; introduction to geostatistics and kriging; grade-tonnage curve.
UNIT II [07 Hours]
Mine Valuation Valuation Fundamentals: objectives and scope of mine valuation; factors affecting mine value; valuation for sale, taxation and mortgage; distinction between mine, accounting and market valuation.
Methods of Mine Valuation: present-value method; Hoskold's, Morkill's and O'Donahue formulae; replacement-cost and comparative methods; relative merits and limitations.
Life and Capacity of a Mine: Taylor's rule for optimum capacity; relationship between reserve, capacity and life; effect of cut-off grade on life and capacity.
Depreciation and Capital Recovery: straight-line, declining-balance, sum-of-years-digits, sinking-fund and production-unit methods; amortization of intangibles; redemption of capital; depletion allowance.
UNIT III [09 Hours]
Discounted Cash Flow Analysis Time Value of Money: compounding and discounting; present value, future value, annuity and perpetuity; effect of compounding frequency.
Cash Flow Analysis: project cash flow diagrams; project life cycle — exploration, development, production and closure; treatment of escalation, inflation and working capital; tax-affected cash flow.
Investment Appraisal Methods: non-discounted methods — payback period and accounting rate of return; discounted methods — NPV, IRR, discounted payback, profitability index, B/C ratio, modified IRR; conflict between NPV and IRR for ranking.
Sensitivity and Risk Analysis: one-way sensitivity (spider and tornado diagrams); scenario analysis;
Monte-Carlo simulation (overview); risk-adjusted discount rate.
Project Selection: ranking of mutually exclusive projects; capital rationing; replacement decisions; case studies on mining-project appraisal.
UNIT IV [09 Hours]
Financial Management and Mineral Taxation Business Organization and Financing: forms of business organization; memorandum and articles of association; sources of short-term and long-term capital for mining enterprises.
Capital Structure: equity shares, preference shares, debentures, retained earnings and term loans; cost of capital; weighted average cost of capital (WACC); leverage.
Break-Even and Inventory: break-even chart, break-even point, margin of safety and contribution margin; ABC analysis, Economic Order Quantity (EOQ), reorder level and safety stock.
Mineral Taxation: royalty (tonnage and ad-valorem); dead rent; cess — District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET); income tax on mining; GST impact; MMDR Act 1957 (as amended in 2015 and 2021); Mineral Concession Rules 2016.
Mineral Pricing: factors governing mineral prices; primary versus secondary markets; price volatility and cyclical nature of the mineral economy; long-term contracts versus spot markets; commodity exchanges.
UNIT V [05 Hours]
Financial Statements and Mineral Economics in Practice Book-Keeping Essentials: double-entry system; journal, ledger and subsidiary books; trial balance; rectification of errors.
Financial Statements: preparation of profit-and-loss account and balance sheet; key financial ratios — current ratio, debt-equity, ROCE and earnings per share.
Cost of Production: cost classification — fixed, variable, direct, indirect and overhead; cost per tonne; cost centres in a mine.
Mineral Economics in Industry: National Mineral Policy 2019; pre-feasibility, feasibility and bankable feasibility studies; sustainable mining and ESG reporting (overview).
Reference Books
- Deshmukh, R. T., Mineral Economics, Lovely Prakashan.
- Chatterjee, K. K., An Introduction to Mineral Economics, Wiley Eastern.
- Hartman, H. L. (Ed.), SME Mining Engineering Handbook, Vol. I (Economic chapters), 3rd Ed., SME.
- Hustrulid, W., Kuchta, M. and Martin, R., Open Pit Mine Planning and Design, Vol. 1: Fundamentals, 3rd Ed., CRC Press.
- Pandey, I. M., Financial Management, Vikas Publishing House.
- Indian Bureau of Mines — Indian Minerals Year Book and National Mineral Inventory (latest issues).
- MMDR Act 1957 (as amended in 2015 and 2021) and Mineral Concession Rules 2016 — Ministry of Mines, Government of India.
- Annual Reports of major Indian mining companies — NMDC, Coal India, Hindustan Zinc, Vedanta (latest available).
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