Sustaining capital: From chaos to discipline

Frustrated by poor compliance and missed budget targets, many mining executives are rethinking how they manage sustaining capital investments – applying the same disciplined, enterprise-wide strategy used for growth capital projects.

While sometimes overlooked, sustaining capital – the broad investments required to maintain operations and output – can reach billions of dollars annually, rivalling expansion spending. In mining, it has accounted for 50% or more of annual capital expenditures in recent years. Like other industrial sectors, mining companies face rising sustaining capital expenditures due to sustainability pressures, equipment replacement cycles, and new site development.

Where value gets lost

Despite the scale, sustaining capital rarely receives the same discipline, transparency, or strategic attention as major expansion projects. Budgets typically encompass hundreds or thousands of distributed expenditures – from US$100 million waste management projects to US$100 000 equipment replacements – making coordination and efficiency difficult.

Over a five-year period, one global mining company’s annual sustaining capital spending swung between 20% below and 20% above its budget. It achieved 80% compliance for large projects but only 40% for smaller ones; 60% of budgeted projects did not launch on time, and 75% of those executed were unplanned.

Leading companies are discovering a better way – balancing site ownership of sustaining capital projects with enterprise-wide discipline to improve visibility, execution, and returns.

Achieving sustaining capital excellence

The most effective sustaining capital managers follow seven best practices:

• Balance execution ownership between sites and the centre.
• Link budgets to long-term asset plans.
• Maintain a multiyear pipeline.
• Focus on the highest-value projects and clearly defined value levers.
• Reallocate budget in-year as priorities change.
• Tailor execution to project type.
• Create spending transparency.

Among these, four areas stand out.

1. Balance execution ownership between sites and the centre. Sustaining capital projects are often delivered by frontline teams without the support given to major investments. Leading companies define clear guardrails that preserve site ownership while ensuring consistent standards. Central teams oversee the highest-value, most complex projects; regional and site teams manage routine projects suited to their expertise and knowledge of day-to-day operations. The result is faster execution, clearer accountability, and smarter resource allocation across the portfolio.
2. Anchor budgets to long-term asset plans. Many companies still rely on reactive, site-driven requests. Best-in-class organisations link budgets to life-of-asset plans, recognising that 50%–70% of sustaining capital needs follow predictable patterns. Proactive alignment improves accuracy, efficiency, and adaptability as asset plans evolve.
3. Focus on value, not volume. Roughly 80% of sustaining capital spending typically comes from 20%–30% of projects. High-performing organisations focus detailed budgeting and performance tracking on these top-tier projects. Smaller, lower-priority investments draw from flexible site-level budgets that can adapt to changes, helping to build trust between the centre and front line. Key to all of this is tracking spending accurately and efficiently.
4. Reallocate funds as priorities change. Traditional budgets are rigid, but priorities, plans, and readiness shift. Effective managers maintain a centralised fund for the largest projects, releasing capital based on strategic importance, while smaller projects operate from site-level pools. Unused funds are reallocated to cover delays, cancellations, or scope changes, ensuring capital flows to where it adds the most value.

The global mining company referenced earlier adopted this approach. It introduced standardised tools; a new, centralised database for capturing cross-project information; cross-functional planning workshops that enabled the creation of a multiyear sustaining capital pipeline across all sites; and a new governance system with monthly performance tracking dashboards and a central contingency fund. As a result, the company gained visibility into about 80% of sustaining capital spending, improved reporting, and aligned capital allocation with strategic priorities. By applying the same rigour to sustaining capital as to growth investments, the company set a new standard for capital excellence across the organisation.

Read the article online at: https://www.globalminingreview.com/mining/27102025/sustaining-capital-from-chaos-to-discipline/