Simulation analysis of relationship between production cost and natural environment of iron ore extraction and processing

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Authors:

S.V.Voloshynа, Cand. Sc. (Econ.), Assoc. Prof., Donetsk National University of Economics and Trade named after Mykhayilo Tugan-Baranovsky, Kryvyi Rih, Ukraine, е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.; This email address is being protected from spambots. You need JavaScript enabled to view it.

L.D.Kostakova, Donetsk National University of Economics and Trade named after Mykhayilo Tugan-Baranovsky, Kryvyi Rih, Ukraine, е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.; This email address is being protected from spambots. You need JavaScript enabled to view it.

Abstract:

Purpose. Establishing the substantial relationship between production cost and natural environment of iron ore extraction and processing from the perspective of cost management at an ore mining and processing enterprise.

Methodology. The results are obtained by applying general scientific and specialized research methods (comparison, generalization, typology, abstraction, correlation analysis, mathematical modelling in economics) as well as systematic and logical approaches related to implementation of the theory of cost management.

Findings. With regard to industry characteristics of ore mining and processing enterprise activities in iron ore extraction and processing, a complex of natural factors of influence on product cost based on technological process stages has been developed. Within the complex, mining and geological conditions of field development, mineral resources properties, and ecological factors are distinguished. Nature of the effect of natural factors on product cost based on technological process stages is determined and a theoretical model as a three-level interaction system is developed according to costing items and technological process stages. Formalized models of relation of the level of current expenditures under costing items to certain natural factors are constructed using correlation analysis techniques. Strength of relationship in the developed models is determined and the essence and importance of certain natural factors in changing production cost of mining and concentrating production have been substantiated. Current expenditures of an ore mining and processing enterprise were readjusted under influence of certain natural factors. Based on practical check it was proved that natural factors are to be working objects in the process of cost management at an ore mining and processing enterprise while extracting and processing iron ore.

Originality. Originality of the research lies in the definition of the characteristics and influence of natural environment on cost behaviour in the process chain of iron ore extraction, processing, concentration and agglomerating taking into account the difference between actual levels of business environment performance evaluation and those specified in the enterprise’s plans.

Practical value. Practical value of the obtained results lies in their update to the level of methodological materials and applied tools which can be used by ore mining and processing enterprises for the effective cost management.

References

1. Cherneha, O.B. ed., 2017. Socio-economic aspects of enterprise economics development. KryvyiRih: FOP Zaloznyi.

2. Kostakova, L.D., 2012. Role of the natural environment of iron ore exploitation in product costing at ore mining and processing enterprises. Formuvannia rynkovoi ekonomiky: ekonomika pidpryiemstva:teoriia ta praktyka: Special issue: zbirnyk naukovykh prats, pp. 285‒297.

3. Mutieva, A.A., 2014. Strategic cost management at mining enterprise. Science Time, 11, pp. 260‒265, [online] Available at: <http://cyberleninka.ru/article/n/strategicheskoe-upravlenie-izderzhkami-gornogo-predpriyatiya> [Accessed 5 April 2017].

4. Ishchenko, M.I., 2013. Current costs simulation and prediction at ore mining and processing enterprises in Ukraine. European vector of economic development, 2 (15), pp. 114‒123.

5. Kochura, Ye.V. and Bielkina, I.A., 2011. Iron ore quality impact on iron-ore concentrate productioncost. Naukovyi Visnyk Natsionalnoho Hirnychoho Universytetu, 4, pp. 120‒126.

6. Vagonova, O.G. and Volosheniuk, V.V., 2012, Mining enterprises’ economic strategies as derivatives of nature management in the system of social relations. Naukovyi Visnyk Natsionalnoho Hirnychoho Universytetu, 2, pp. 127–134.

7. Vagonova, O.G. and Romaniuk, N.M., 2014. Economic justification stages of the investment project of mining and processing enterprise. Naukovyi Visnyk Natsionalnoho Hirnychoho Universytetu, 3(141), pp. 159‒164.

8. Li, V., 2013. Accounting and calculation of mining costs. Manage your business, 8, pp. 1‒8, [online] Available at: <http:// consulting.1c.ru/e-journal> [Accessed 12 April 2017].

9. Dreiper, N. and Smith, Н., 2016. Applied Regression Analysis, 3rd Edition, Moscow: Dialektyka.

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ISSN (print) 2071-2227,
ISSN (online) 2223-2362.
Journal was registered by Ministry of Justice of Ukraine.
Registration number КВ No.17742-6592PR dated April 27, 2011.

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