Abstract

SALAMA, A.; NEHRING, M.  and  GREBERG, J.. Financial analysis of the impact of increasing mining rate in underground mining, using simulation and mixed integer programming. J. S. Afr. Inst. Min. Metall. [online]. 2017, vol.117, n.4, pp.365-372. ISSN 2411-9717.  http://dx.doi.org/10.17159/2411-9717/2017/v117n4a8.

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.

Keywords : mining rates; commodity price; simulation; mixed integer programming.

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