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Financial analysis of the impact of increasing mining rate in underground mining, using simulation and mixed integer programming
Luleå University of Technology, Department of Civil, Environmental and Natural Resources Engineering, Mining and Geotechnical Engineering.
Luleå University of Technology, Department of Civil, Environmental and Natural Resources Engineering, Mining and Geotechnical Engineering.
University of Queensland, School of Mechanics & Mineral Engnineering.
2017 (English)In: The Southern African Journal of Mining and Metallurgy, ISSN 2225-6253, E-ISSN 1543-9518, Vol. 117, no 4, 365-372 p.Article in journal (Refereed) Published
Abstract [en]

This paper challenges the traditional notion that mine planners need to plan production so as to incur the lowest mining cost. For a given mine configuration, a mine that increases its mining rate will incur increased mining costs. In an environment in which operations are fixated on cost reduction, a proposal that increases costs will not be readily accepted. Such a proposal requires financial justification-the increase in costs might be recuperated by the additional production. This paper evaluates the net present value (NPV) across a range of copper prices for two underground orebodies located at different depths, using a production rate of 300 kt per quarter and a scenario that introduces additional equipment and costs for 450 kt per quarter. The evaluation was based on the changes of NPV for the orebody located at a shallow depth compared with the orebody at a greater depth. Discrete event simulation combined with mixed integer programming was used for analysis. Unlike traditional sensitivity analysis, this study re-optimizes the mine plan for each commodity price at each production rate. The results show that, for the low mining rate at the final copper price, an NPV of A$ 1530.64 million is achieved, whereas an NPV of A$ 1537.59 million is achieved at a higher mining rate. Even though pushing mining rates beyond traditional limits may increase mining costs, this option may be beneficial at certain commodity prices, particularly when prices are elevated.

Place, publisher, year, edition, pages
Southern African Institute of Mining , 2017. Vol. 117, no 4, 365-372 p.
National Category
Other Civil Engineering
Research subject
Mining and Rock Engineering
Identifiers
URN: urn:nbn:se:ltu:diva-65151DOI: 10.17159/2411-9717/2017/v117n4a8ISI: 000406200400008OAI: oai:DiVA.org:ltu-65151DiVA: diva2:1133873
Note

Validerad; 2017; Nivå 2; 2017-08-17 (andbra)

Available from: 2017-08-17 Created: 2017-08-17 Last updated: 2017-08-17Bibliographically approved

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CiteExportLink to record
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