Open Pit Mine Optimization: A Practical Approach to Incorporate Market Uncertainty
Pit optimizations and the selection of an ultimate pit for further detailed designs and scheduling are highly dependent on metal prices. Standard pit optimizations are usually performed assuming a flat, known metal price called long-term metal price. Considering how volatile and unpredictable metal prices are, this flat price assumption is unrealistic and could generate a sub-optimal pit. This study outlines a practical approach to handle metal price uncertainty in open pit optimizations. The proposed optimization strategy is based on utilizing a standard pit optimization tool such as Whittle complemented by an uncertainty-based economic modeling tool employing the real options analysis methodology to evaluate all the technically feasible pit shells. Uncertainty effect on the ultimate pit selection, as well as the resources within the pit, are explored by applying the proposed approach to a case study of a multi-metal deposit. The results showed that incorporating metal price uncertainty in open pit optimizations could have a significant impact on the ultimate pit selection as well as the pit resources estimation.