Operating costs and capital costs are both expenses all companies endure.

Operating costs deal with the day-to-day expenses. These expenses are paid year after year, and include items such as wages or salaries to employees, fuel, and equipment maintenance.

Capital costs, on the other hand, are expenses paid for non-consumables (i.e., items that must be acquired to develop the mine or specific part of it).

Consider the example of a conveyor belt to transport materials. The initial expenditure would fall under capital cost while the daily expense to run the belt would fall under operating costs.

Some examples specific costs in each category:

Operating Cost Capital Cost

Utilities (electric, gas, water) Construction of a new building

Maintenance Acquisition of new machinery

Salaries and Wages One-time consulting fee

Monthly Rent Purchase of new land