The Move From Engineer to General Manager
Mining engineering professionals with 15+ years of operational experience are close to making the next step up the career ladder to General Manager positions. To make that move, professional engineering candidates at this high level should be prepared to tap into all of their experience garnered over the years in every area of mining operations including:
- Team development and personnel management
- Hands-on production and maintenance experience
- Safety programs and MSHA compliance
- Preventative maintenance management knowledge
- Operations and process improvement
- Ability to adhere to the budget
With this prerequisite experience under your belt, General Manager candidates should be ready to accept a major expansion of responsibilities which go well beyond the hands-on "nuts and bolts" experience of mine engineering.
General managers have primary responsibility for all plant operations and results including P&L, CAPEX (Capital Expenditures), and OPEX (Operating Expenses). A clear understanding of the differences between these two categories of business expenses can optimize financial advantages which are now the primary focus of the general manager.
CAPEX- Capital Expenditures in Mining
CAPEX spending is for major fixed asset purchases which will be used in the future, such as land and buildings for new or expanding mining operations, trucks, loaders, and graders, to name a few of the big-ticket items.
A report at miningintelligence.com lists the typical CAPEX for a 10,000 ton per day open pit mine. A 5.2 cubic yard hydraulic loader goes for over 1 million US dollars, and wheel loaders run close behind at $912,500 each. Other common mining assets; rotary drills, dump trucks, graders, and dozers, run the gamut from $86,000 to $938,000.
For the general manager, listing these high-value assets under the CAPEX category has the advantage of spreading costs over the years of operation, since costs can be recovered through depreciation. CAPEX oversight will require that all of the manager's mining production knowledge and operational efficiency techniques are brought to bear to justify the ROI for these CAPEX purchases.
Factors for listing assets in the CAPEX category might include:
- Will the asset be used for more than one year?
- Does the asset improve the productive life of an existing asset?
- Is it a company goal to increase or improve fixed assets?
For short-term operations, the manager may decide to lease rather than purchase these big-ticket items, which provides tax advantages when expenses can be diverted to the OPEX category.
OPEX- Operational Expenses in Mining
By the time general managers have climbed the mining engineer career ladder, they are (or should be) thoroughly familiar with day-to-day operational expenses and the most efficient production techniques which can reduce them. OPEX oversight can involve everything from managing hourly and salaried employees' schedules to fuel consumption and effective preventative maintenance.
At the top of the mine management ladder, CAPEX vs OPEX decisions frequently come into play. For example, the manager might balance the capital expenditure of an off-road tire-service truck at $167,400 against the cost of outsourcing that service to a contractor, in which case, it becomes an operational expense.
If it's still more cost-effective for the company to perform this maintenance in-house, the manager can list the cost of the service truck, whether leased or purchased, as a daily operational expense which is fully tax-deductible for the year. Production teams will benefit from the increase in fleet availability and uptime and the finance and accounting department will appreciate the tax deduction and benefits to cash flow.
In any case, candidates for top general manager positions in mining operations should be fully conversant in OPEX and CAPEX oversight. At this level, good communication with the company tax team is imperative whenever CAPEX is on the table.
General managers should be prepared to use all of their experience in reducing operational expenses without triggering drops in production or compromising quality, and they should be able to make the case for CAPEX assets when they are sure to improve P&L over the longer term.
About Resource Erectors
At Resource Erectors, we connect mining professionals at the advanced levels of mine engineering to the best mining companies in North America. We're also the go-to resource for the top candidates in manufacturing, civil engineering, tunneling, and construction. Industry leaders have been relying on Resource Erectors for decades to recruit the best-qualified talent to contribute to their company's success.
When you're ready to make a strategic professional career move, or when it's time to take your company's performance to the next level with the best available professionals in your industry, please don't hesitate to contact us for a free consultation.