The Next Challenge in Optimising Mining Operations

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    J WhittleMINE PLANNING AND EQUIPMENT SELECTION

    (MPES) CONFERENCE 2010

    The Next Challenge in Optimising Mining

    Operations

    Faculty of Mining and Metallurgical Engineering

    Mining Engineering Department

    Third Lecture of Surface Mining & Sustainable Development

    Provided By: Ali Mahmoodi1

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    INTRODUCTION

    main aim? maximise shareholder value maximise reserves or to maximise mine life

    To maximise shareholder wealth, we must maximize netpresent value (NPV).

    In developing a long-term plan we have to design the pit and the mining phases We have to plan

    how fast to mine. what plant to install what throughput recovery to operate it

    all these planning decisions interact

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    HISTORY Roughly 25 years ago software became widely available that would find

    the pit outline with the maximum total cash flow. It was a start, but total cash flow is not NPV

    Within a couple of years there was software thatwould generate a series of pit shells based on arange of product prices, and which wouldcalculate an NPV by simulating a crude mining

    schedule using mining phases based onparticular pit shells.

    but you still had to design the pit and fix thephases before optimising the schedule

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    HISTORY Later, software to optimise cut-offs became

    available, but it assumed a pit design, a phasedesign and a schedule

    About a dozen years ago, software wasdeveloped that would optimise a number ofplanning aspects simultaneously

    further software development, has led to somelarge gains in NPV.

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    WHAT CAN NOW BE DONE

    Given a pit design and a set of phases

    simultaneously optimise the

    mining and processing schedule

    the cut-offs and stockpiles

    the mill throughput/recovery set-up

    the logistics and the capital expenditure

    the whole long-term plan can be optimised.

    This can be done for a single pit or for a complex ofdozens of open pits and underground mines with multipleprocessing options and products

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    EXAMPLE

    Marvin copper/gold mine single copper/gold pit with four phases

    60 Mt/a mining

    20 Mt/a crush/grind/float producing %28 copper

    concentrate

    %88 copper recovery, %60 gold recovery

    70 km 600 Ktpa pipeline to port

    offshore smelter/refinery

    gold price $900/oz

    copper price $2.50/lb (5511 $/ton)

    and initial capital expenditure of $M582

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    Manual Plan

    The starting point is a manual pit and phasedesign, scheduled with five bench fixed-leadbetween phases.

    All economic material is processed, and there is nostockpiling

    The NPV obtained $M1597

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    EXAMPLE: Normal Modern

    Planning

    We started from a manual design and schedule.

    We then did pit limit, phase, skin and schedule

    optimisation using the Gemcom-Whittle software. These were optimised separately, but they were

    iterated manually.

    The NPV increased from $M1597 to M1885 18 %

    This can be regarded as normal modernplanning.

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    Fully Optimised Plan We next added cut-off and stockpile

    optimisation, which is available in Gemcom-Whittle. Again the different components wereoptimised separately but iterated manually. This

    raised the NPV to $M2201 17%

    Next we used different software to do schedule,cut-off and stockpile optimisation

    simultaneously, with manual iteration of the pitlimit and phases. 10% This added a further tenper cent.

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    fully optimised plan Finally we added simultaneous optimisation of the mill

    throughput/recovery calibration, the concentrate

    percentage, and the capital expenditure on the

    mining fleet and the pipeline. This gave an NPV of

    $M2775. 15 % This final NPV was 74 % higher than the manual plan

    and 47 % higher than the normal modern planOptimisation plan NPV $m NPV incrementmanual plan 1597

    74%

    normalmodern pit limit, phase, skin and schedule optimisation 1885 18%

    47%

    fully

    o

    ptimisationadded cut-off and stockpile optimisation 2201 17%

    schedule, cut-off and stockpile optimisation simultaneously 2421 10%

    simultaneous optimisation of the mill throughput/recovery

    calibration, the concentrate percentage, and the capital

    expenditure on the mining fleet

    2775

    15%10

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    What about the implementation?

    Those are the gains.

    Are there difficulties?

    Are there impossibilities? Will your life be more comfortable?

    Will the mine be much more profitable?

    What did this plan look like?

    Yes

    No

    No

    Yes, by any measure!

    Its most obvious feature is that every year is different

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    look at a couple of aspects of theplan Let us look at a couple of aspects of the plan.

    The optimiser spent more capital to increase the

    mining capacity from 60Mt/a to 83Mt/a but only usedthe whole capacity in three of the years. There are significant periods with idle equipment

    says the Mining Managerotherwise we increase the average cost per tonne of

    mining and that is against my key performance indicator.12

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    look at a couple of aspects of theplan Now we are getting near to the real problem.

    Our aim is to maximise NPV, not to minimise mining cost.

    Figure 2 shows the mill throughput for the fully optimised plan.

    Remember that the nominal throughput was 20Mt/a.

    We have sacrificed recovery for throughput for most of the life ofthe mine.

    nominalthroughput

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    look at a couple of aspects of theplan

    There are other radical changes but, in summary,we have:

    reduced the size of the ultimate pit and hence thereserves

    increased the mining cost per tonne

    reduced the recovery in the plant for much of theproject life

    increased the capital expenditure by 5%, and reduced the life of the operation by three years

    Note that each of these changes is counter-intuitiveand would have been resisted by the relevant

    manager. Also, if any of them were to be made in14

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    THE REAL CHALLENGE The real challenge is a human one. We need to

    change the way mines are managed. Currently somedecisions, like the mining and processing rates, aremade. It then becomes difficult, though notimpossible, to change them.

    The reserves are announced to the share market tosupport the share price

    Management will protest that, if we reduce thereserves, the share price will go down! Well it wont

    if we tell the market that we now plan to pay back thewhole of the capital cost in eight and a half monthsrather than seventeen months, and that the netrevenue for the first three years will be four times thecapital cost.

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    The point is that the gain is so

    substantial that it improves the mine

    value however you measure it.

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    WHAT SHOULD BE DONE?

    Let us assume that you are operating a mine alongtraditional lines and not using the techniques describedin previous slides.First you need a champion. Hopefully it is the ChiefExecutive Officer (CEO) or Chief Operating Officer

    (COO).An internal task force needs to be set up with seniorrepresentatives from geology, mining, processing,logistics, sales, finance and human resources, and thefocus should be primarily on NPV.

    For an effective enterprise optimisation, decision-makers from all aspects of the enterprise need to beinvolved.This is not a job that can be handled by the miningdepartment alone. This is enterprise optimisation, not

    mining optimisation. Many of the gains are made bymodifying the operation of more than one silo at once.17

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    WHAT SHOULD BE DONE? The task force meetings should be chaired by the

    CEO or COO and mediated by someone withskills in this type of optimisation. You need accessto suitable software and a skilled operator to run

    it. This software cannot be treated as a black box

    that you put a block model into and get a finelytuned plan out of.

    For example, the study I have described required58 different runs of the optimiser.

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    CONCLUSIONS The next challenge in optimising mining

    operations is not to develop new software.

    The next challenge is to change the way minesare managed and to change the way

    management reports to the stock exchange.Isolated silos are just not good enough, and weneed to report more than just reserves

    Enterprise optimisation and money mining

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    Thank you for your attention

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