Production phase and ultimate pit limit design under commodity price uncertainty
Document Type
Article
Publication Date
1-1-2016
Abstract
© 2015 Elsevier B.V. and Association of European Operational Research Societies (EURO) within the International Federation of Operational Research Societies (IFORS). All rights reserved. Open pit mine design optimization under uncertainty is one of the most critical and challenging tasks in the mine planning process. This paper describes the implementation of a minimum cut network flow algorithm for the optimal production phase and ultimate pit limit design under commodity price or market uncertainty. A new smoothing splines algorithm with sequential Gaussian simulation generates multiple commodity price scenarios, and a computationally efficient stochastic framework accommodates the joint representation and processing of the mining block economic values that result from these commodity price scenarios. A case study at an existing iron mining operation demonstrates the performance of the proposed method, and a comparison with conventional deterministic approach shows a higher cumulative metal production coupled with a 48% increase in the net present value (NPV) of the operation.
Publication Title
European Journal of Operational Research
Recommended Citation
Chatterjee, S.,
Sethi, M.,
&
Asad, M.
(2016).
Production phase and ultimate pit limit design under commodity price uncertainty.
European Journal of Operational Research,
248(2), 658-667.
http://doi.org/10.1016/j.ejor.2015.07.012
Retrieved from: https://digitalcommons.mtu.edu/michigantech-p/6320