June/July 2011

Voices from Industry

Moving out from inside the box

By Roussos Dimitrakopoulos

Strategic mine planning, sustainability and computing

One of the outcomes of the recent global recession was a renewed interest in breaking free of old ideas and embracing new, strategic ones that reduce investment risk and add value to society. Concurrently, there has been a push to promote a more sustainable use of mineral resources, especially as the demands of emerging economies and the developing world increase.

In response, novel concepts and ideas, new frameworks and breakthrough technologies are being developed to address market and supply uncertainties in the context of mine planning. Uncertainty, driven by fluctuating market demand for raw materials as well as the ability to mine ore bodies to meet that demand, impacts strategic planning and sustainable resource development. In Canada, where the economy relies heavily on mineral resources and is inevitably impacted by commodity cycles, there is a growing interest in ideas and tools that account for and manage uncertainty in mine modelling, optimal mine planning and production forecasting.

Advances in computing and new mathematical techniques in the last decade have challenged the long-standing traditional set of analytical, mathematical and statistical methods used for mine planning, production scheduling and forecasting. For example, the development of a new paradigm of stochastic mathematical models pushes the limits of the conventional optimization used in strategic planning. This advance enables planners to assess ahead of time the interactions of the ability of a mineral deposit to supply raw materials, operational mining uncertainties, and fluctuating market demand. These new models enhance the ability to optimize mineral resource development under uncertain conditions and this, in turn, has dramatic effects on production management and cash flows, asset valuation, option selection, mine planning and operation, which ultimately affect the maximum return on investment, resource utilization, productivity and rehabilitation.

Earlier this year, six of the world’s largest mining companies with long-term records of supporting R&D in this area – namely, AngloGold Ashanti, Barrick Gold Corporation, BHP Billiton, De Beers Canada, Newmont Mining Corporation and Vale – helped to develop and co-funded a new five-year $2.7 million grant along with the Natural Sciences and Engineering Research Council (NSERC) of Canada (in one of the largest NSRC grants ever). This research surpasses past efforts to improve long-term strategic mine planning by using computer models to simulate supply and demand uncertainty. These models are founded on stochastic combinatorial optimization and “high-order” simulation methods that integrate multiple mines, material types, ore/waste processing streams including stockpiles, and generate different product specifications suitable for a diverse group of commodities and mining complexes. In addition, the research will be put in the public domain through a unique agreement with the mining companies, making all results accessible to practitioners and academics worldwide. This pledge reinforces the industry’s commitment to sustainability and social responsibility.

The planned outcome of this joint research is to contribute new methods to the Canadian and global mining industry that will change the way problem-solving in the field is approached. It will impact: sustainable utilization of mineral resources; risk management and maximization of return on investment; social responsibility through improved financial performance; objective and technically defendable decision-making; production and product supply; management of mine remediation; and the training of highly qualified personnel that can then facilitate knowledge transfer and mobilization.

Industrial implementations of this new stochastic mine planning optimization method have shown a drastic improvement in matching forecasts to production performance and a higher total cash flow value and quantity of metal to be produced. Whether these methods will be fully embraced industry-wide remains to be seen; however, they highlight that the current generation of strategic mine planning methods need to be revisited, if not rewritten, from the start. Radically different approaches to how and when minerals are extracted will revitalize the mining industry and will provide a buffer from future economic bumps.


Roussos Dimitrakopoulos is a Professor and Canada Research Chair (Tier I) in Sustainable Mineral Resource Development under Uncertainty.

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