Australia is the biggest contributor to a global cost blow-out that led to mining shareholders' wealth taking a 20 per cent hit last year.
A combination of soaring costs and falling commodity prices in the past five years has sparked a dramatic reversal of fortune for the world's 42 largest miners, a global survey Boston Consulting Group (BCG) found.
Mining costs at Australian open cut copper mines were found to have more than quadrupled between 2002 and 2012 from 79 US cents a tonne moved to $US3.26.
And as costs rose, shareholder returns began to slide.
Average annual total shareholder returns (which includes share price change and dividends) of the 42 companies plunged 20 per cent in 2013.
Those same companies' returns had risen 16 per cent in the previous decade, double the returns of the US S&P500 index.
The top 10 performers' returns were 35 per cent.
The global leader of BCG's mining and metals practice, Dr Alexander Koch, said value creation by miners was flat in the last three years of the decade, and slid into reverse in 2013.
Prices of major commodities typically fell by eight to 10 per cent last year.
"In the decade to 2012, costs grew at an annual average compound rate of 11 per cent," he said.
"Australia is now at the top of the cost table and would need to slash a third from its cost base to match its next nearest competitor."
Dr Koch said mining costs in Australia were leading the destructive trend.
Mining costs at copper mines also rose in the US, Canada and Chile, but by 149-256 per cent, compared to 312 per cent in Australia.
A dominant theme for global miners since 2012 has been to cut or stall spending and reduce debt but securing long-term productivity growth was proving to be more complicated, the report found.
Rio Tinto's Mongolian copper and gold mine Oyu Tolgoi is the latest to cut jobs, which was announced to staff this week.
Productivity beyond simply reducing unit costs and increasing volumes also encompassed disciplined capital allocation was the key.
"Long term productivity gains require a new mindset and a willingness to make organisation and cultural changes," Dr Koch said.
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