Dynamically optimizing the strategic plan of mining complexes under supply uncertainty. (March 2019)

• Record Type: Journal Article
• Authors: Del Castillo, M. Fernanda; Dimitrakopoulos, Roussos
• Is Part Of: Resources policy. Volume 60(2019)
• Page Start: 83
• Page End: 93
• Publication Date: 2019-03
• Subjects: Mineral value chain -- Mining complex -- Integrating flexibility -- Dynamic stochastic optimization -- Strategic mine planning -- Capital expenditures; Mines and mineral resources -- Periodicals; Ressources minérales -- Périodiques; Ressources naturelles -- Gestion -- Périodiques; Environnement -- Politique gouvernementale -- Périodiques; 333.8
• DOI: 10.1016/j.resourpol.2018.11.019
• Languages: English
• ISSNs: 0301-4207

Abstract

Abstract: Mining complexes are comprised of multiple mines and mineral processing streams, each governed by internal (mineral deposit, operation) and external (commodity prices) uncertainties, and must be optimized jointly to manage technical risk and maximize economic value. This study presents a method that optimizes annual production scheduling of an open pit mining complex by developing a solution that provides a unique strategic mine plan that integrates feasible alternatives over investment decisions along the life of the asset. Accordingly, the long-term optimization is presented as a dynamic plan, which allows planning upfront for possible configuration transitions due to new capital investments, facilitating change. This method uses an adapted multistage stochastic programming model which expands upon the two-stage framework by performing multiple recourse stages that are solved iteratively, allowing feasible mine designs in a scenario-tree structure. In this model, dynamic investment decisions are made sequentially over the mine production schedule of related mines, based on new information that becomes available in each time period; these decision variables activate costs and effects over the model, letting the optimizer choose the capital investments to be considered at the mining and/or processing components of the mining complex. A copper open pit mining complex is used to test the proposed model, with options to invest in the truck and shovel fleet, and a secondary crusher to increase related capacities. Results show a substantial probability that the mine design should branch, presenting an increased expected net present value of over US$170M compared to the two-stage stochastic formulation. Highlights: The strategic plan of a complete mining complex is stochastically optimized. Uncertainty of geological attributes of interest are included in the optimization. Capital investment alternatives are dynamically integrated in the formulation. An iterative solving mechanism based on multistage programming is developed. VaR curve shows the model takes advantage of opportunities while hedging from risk.