Stochastic Optimization in Mine Design and Production Scheduling: Methods, applications and value

CIM MEMO 2010
Abstract Open pit design and production scheduling is a complex and intricate process that defines the sequence of ore and waste extraction during the life-of-mine and up to some ultimate pit limit. This process deals with the management of cash flows in the order of hundreds of millions of dollars and, arguably, underpins mine value, performance and success of the industry. Uncertainty in the metal/ore and waste forecasted to be produced from a pit has a major financial impact on both the valuation and operation. To deal with this uncertainty, new technologies are being developed to overcome the limits of conventional approaches; some of the more mature technologies are presented here.
The technologies and related approach presented is based on stochastic optimization. More specifically, a stochastic integer program for mine production scheduling is developed to integrate geological uncertainty and economic discounting into the process of pit design, including pushbacks and ultimate pit limits. The approach consists of: i) open pit parameterization generating a set of nested pits; ii) selection of grouping of resulting nested pits into pushbacks; and iii) use of the stochastic scheduler and selected pushback designs to generate life-of-mine production schedules that maximize NPV, while meeting production targets and NPV forecasts. The application at a copper deposit shows that stochastic optimization leads to substantial NPV increase (~30%) when compared to design from the ‘deterministic’ standard industry practice, generates a larger ultimate pit, and increases metal production; thus contributing to the sustainable utilization of mineral resources.
Keywords: Optimization, Uncertainty, Strategic mine planning, Mine design, Production Scheduling
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