Fuel Is the Silent Killer

Why Fuel Losses Are Rarely Obvious

Fuel-related losses persist because they are difficult to isolate and easy to rationalize.
Production remains on target. Equipment continues to run. Fuel tanks are replenished regularly. Variances are explained away as weather, pit conditions, or temporary inefficiencies.

Fuel problems rarely manifest as sudden spikes. Instead, they appear as:

• Gradual increases in cost per BCM
• Persistent variance between planned and actual fuel consumption
  
• Declining margins without a single clear cause
  

Because fuel is consumed everywhere, responsibility is often diffuse. No single function fully owns the economic outcome.

Theft and Leakage: The Obvious but Incomplete Explanation

Fuel theft does exist, particularly in remote sites where fuel is valuable and oversight is limited. It can occur through:

• Unauthorized fuel withdrawal
• Collusion between operators and fuel handlers
• Manipulation of meter readings
  

However, focusing only on theft is misleading. In many cases, process leakage costs more than intentional theft.

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Reconciliation Gaps Between Issuance and Consumption

A common weakness in mining operations is the lack of systematic reconciliation between:

• Fuel issued from storage
• Fuel consumed by equipment
• Productive operating hours
  

Fuel may be issued based on shift plans or historical averages rather than actual equipment usage. Consumption is assumed rather than measured. Variances accumulate quietly.
Without structured reconciliation, management cannot distinguish between:

• Legitimate operational inefficiency
• Poor dispatch discipline
• Mechanical issues
• Control failures
  

Fuel simply “disappears” into averages.

Manual Logs Versus Operational Reality

Many sites still rely on manual fuel logs:

• Paper forms completed at fueling stations
• Spreadsheet summaries submitted daily or weekly
• Operator-reported meter readings
  

These methods are labor-intensive, error-prone, and vulnerable to manipulation. More importantly, they are retrospective. They tell management what happened, not what is happening.

When discrepancies are discovered, they are often weeks old, disconnected from the operational context that created them.

Fuel control is not purely a technical problem. It is a behavioral one.

When operators and supervisors are measured primarily on production volume, fuel efficiency becomes secondary. When fuel variance has no clear owner, accountability diffuses. When finance reports fuel overruns weeks after the fact, operational teams feel disconnected from the outcome.

In such environments, fuel inefficiency becomes normalized. It is treated as the cost of doing business rather than a controllable variable.

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Why Traditional Controls Fail

Many contractors attempt to address fuel losses through tighter rules:

• More approvals
• Additional forms
• Increased audits
  

These measures often increase administrative burden without solving the underlying problem.

Traditional controls fail because they are:

• Fragmented across departments
• Manual and retrospective
• Focused on compliance rather than insight
  

They generate data, but not understanding.

Fuel Control as a Financial Process

Disciplined contractors approach fuel not as an operational nuisance but as a financial process embedded in daily operations.

This requires:

• Clear ownership of fuel economics
• Systematic reconciliation between issuance, usage, and output
• Timely visibility into variances
• Exception-based management rather than blanket controls
  

Achieving this consistently requires integrated systems.

How NetSuite Enables Fuel Discipline

NetSuite does not replace on-site fueling systems or equipment telemetry. It provides the financial control layer that connects fuel activity to cost, productivity, and profitability.

Inventory Management for Fuel as a Strategic Asset

Fuel is treated as inventory, not merely a consumable. Stock levels, receipts, transfers, and usage are recorded systematically, creating a reliable baseline for control.

This alone eliminates many reconciliation gaps by ensuring that every liter issued is accounted for financially.

Fuel Issuance Tracking Linked to Equipment and Projects

Fuel issuance can be linked directly to:

• Specific equipment units
• Fleets
• Pits or projects
  

This transforms fuel from a pooled expense into a traceable cost driver. Management can see which equipment or activities consume fuel disproportionately relative to output.

Systematic Reconciliation and Exception Reporting

NetSuite enables structured reconciliation between:

• Fuel received and issued
• Fuel issued and equipment hours
• Equipment hours and production output
  

Instead of reviewing totals, management focuses on exceptions:

• Equipment with abnormal fuel consumption
• Shifts with unexplained variance
• Sites where fuel efficiency trends deteriorate
  

This shifts fuel control from reactive investigation to proactive management.

Linking Fuel to Cost per BCM and Cash Flow

Because NetSuite integrates inventory, procurement, project costing, and financials, fuel consumption flows directly into cost per BCM and cash flow analysis.

Management can see how fuel inefficiency:

• Erodes margin at pit level
• Increases working capital pressure
• Distorts contract profitability
  

Fuel stops being an abstract cost and becomes a visible economic driver.

Restoring Discipline Without Slowing Operations

One of the biggest fears in mining operations is that tighter control will slow production. Disciplined contractors avoid this by focusing on visibility rather than bureaucracy.

When fuel data is timely, consistent, and trusted:

• Supervisors adjust behavior without confrontation
• Operators understand the economic impact of decisions
• Finance and operations align around the same numbers
  

Control improves without adding friction.

Strategic Benefits Beyond Cost Reduction

Effective fuel control delivers benefits beyond immediate savings.
It improves bid accuracy by providing reliable historical fuel consumption data. It strengthens contract renegotiations by grounding discussions in facts. It enhances credibility with mine owners and auditors. It also creates a foundation for future automation and analytics.

Most importantly, it restores management confidence that one of the largest cost drivers in the business is understood and under control.

Final Thoughts

Fuel does not destroy mining contractor margins through dramatic failures. It does so through quiet, persistent leakage enabled by weak visibility and fragmented control.

Contractors that continue to treat fuel as an unavoidable expense will remain vulnerable, regardless of coal prices or production volumes. Those that treat fuel as a financially managed process gain a durable advantage.

By combining operational discipline with integrated systems such as NetSuite, mining contractors can transform fuel from a silent killer into a controlled variable, protecting margins and strengthening long-term resilience.

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