Oil’s biggest crash in a generation has silver lining for miners

The financial turmoil crushing industrial-metals equities has a silver lining: lower energy prices can be a boon to miners.

“It’s a big positive,” said David Harquail, chief executive officer of streaming and royalties company Franco-Nevada Corp. Fuel is a key operating cost for miners because it’s needed to run the giant machines that drill and process massive volumes of ore.

Mining companies are “big energy consumers and to the extent their costs are lower, that helps their margins,” Harquail said in a phone interview. “If you look at the typical open pit, just the energy is about 25% of the cost of moving rock and crushing rock.”