Optimizing mining rates under financial uncertainty in global mining complexes

AbstractThis paper presents a distributed and dynamic programming framework to the mining production rate target tracking of multiple metal mines under financial uncertainty. A single mine׳s target tracking is stated as a stochastic optimization problem and the solution is obtained by solving the dynamic program which gives the optimal production rate schedule of each mine as a Markovian feedback control on the price process. The global solution is distributed on multiple mines by a policy iteration method, and this iterative method is shown to provide the unique equilibrium among Markovian strategies. Numerical results confirm the efficacy of the proposed global method when compared to individual optimization of mining rate target tracking

EVALUATING GEOMECHANICAL UNCERTAINTY IN OPEN PIT MINE PLANNING

Open pit mine planning encompasses a variety of uncertainties. Uncertainty due to geomechanics is most critical for a safe operation in an open pit mine. Without sufficient knowledge of the geomechanical properties of the subsurface, a reliability analysis of the slope stability could be challenging. Slope stability is a crucial step in pit optimization since the cash flow analysis of a mine is constrained by a stable slope angle. However, obtaining a stable slope angle with certainty is difficult to achieve as geomechanical parameters are modeled using a very limited number of samples. This thesis proposes a method to integrate geomechanical uncertainty, specifically uncertainty regarding slope stability, in pit optimization through reliability-based analysis. This research explores gold deposit data received from exploration drilling in Alaska, with potential to build an open pit mine. The gold grade was estimated by ordinary kriging (OK) using exploration drilling data. Rock Quality Designation (RQD) is the only geomechanical data available from this deposit, and it was used to calculate cohesion, angle of internal friction, and unit weights of the rock. The uncertainty of the RQD was quantified for each rock type of the deposit. The probability density function (PDF) of RQD for each rock type was fitted using log-normal distribution. The uncertainty-based slope stability analysis was carried out using the limit equilibrium method. The reliability and failure probability of the different slope angles were calculated, and the maximum slope angle with 100% reliability is 50°. The cash flow for each slope angle was identified and assessed along with the probability of failure for three different factor of safety values. The results showed that the steeper the slope angle used, the more profit would be generated, but the probability of failure increased. In contrast, using shallower slopes did not generate as much profit, but the probability of failure was lower. A threshold slope angle of 51.5° was determined to be the highest angle that can be utilized without the probability of failure outweighing the profit generated

Geostatistical analysis of the troilus deposit : uncertainty and risk assessment of the mine planning strategy

Ce mémoire étudie l’effet de l’incertitude locale et spatiale sur les réserves du gisement d’or Troilus. Deux méthodes géostatistiques ont été utilisées, soit le krigeage des indicatrices et la simulation séquentielle des indicatrices. En premier lieu, une nouvelle interprétation géologique du gisement a été faite basée sur les trous de forage d’exploration. Pour chaque zone définie, une série de variogrames ont été calculés et un modèle de bloc a été interpolé par krigeage des indicatrices. La calibration de ce modèle a été faite en le comparant au modèle basé sur les trous de forage de production et aux données actuelles de production. L’incertitude reliée à la variabilité de la minéralization a été quantifiée par l’entremise de 25 simulations séquentielles. Une série de fosses optimales basées sur chaque simulation ont été réalisées afin d’analyser l’impact sur la valeur présente nette, le tonnage de minerai et le nombre d’onces d’or contenues.This thesis examines the effect of local and spatial uncertainty of the mineral reserves estimates for the Troilus gold deposit. Two geostatistical methods have been used: indicator kriging and sequential indicator simulation. A new set of geological envelope has been defined based on the grade distribution of the exploration hole samples. For each zone, composites, statistics and variograms have been calculated based on gold assays coming from exploration holes (DDH) and production blastholes (BH). A recoverable reserve block model based on indicator kriging was created from the exploration holes and a grade control block model was produced from the production blastholes. The recoverable reserve model was calibrated based on the grade control model and the data from the mined out part of the orebody. Uncertainty related to the variability of the mineralization was assessed through 25 conditionally simulated block models. Open pit optimization Whittle software was used as a transfer function to compare each model. Elements such as ore tonnage, grade, ounces contained and discounted value (NPV) have been used to analyse the risk inherent to each model. Finally, reserve estimates within an already established pit design were used as a second method of comparison

Market-Based Task Allocation Mechanisms for Limited Capacity Suppliers

This paper reports on the design and comparison of two economically-inspired mechanisms for task allocation in environments where sellers have finite production capacities and a cost structure composed of a fixed overhead cost and a constant marginal cost. Such mechanisms are required when a system consists of multiple self-interested stakeholders that each possess private information that is relevant to solving a system-wide problem. Against this background, we first develop a computationally tractable centralised mechanism that finds the set of producers that have the lowest total cost in providing a certain demand (i.e. it is efficient). We achieve this by extending the standard Vickrey-Clarke-Groves mechanism to allow for multi-attribute bids and by introducing a novel penalty scheme such that producers are incentivised to truthfully report their capacities and their costs. Furthermore our extended mechanism is able to handle sellers' uncertainty about their production capacity and ensures that individual agents find it profitable to participate in the mechanism. However, since this first mechanism is centralised, we also develop a complementary decentralised mechanism based around the continuous double auction. Again because of the characteristics of our domain, we need to extend the standard form of this protocol by introducing a novel clearing rule based around an order book. With this modified protocol, we empirically demonstrate (with simple trading strategies) that the mechanism achieves high efficiency. In particular, despite this simplicity, the traders can still derive a profit from the market which makes our mechanism attractive since these results are a likely lower bound on their expected returns

Responsible sourcing of rare earth elements

Rare earth elements (REE) are considered to be critical raw materials due to the combination of their high importance in a range of low-carbon technologies and the concentration of supply, which is dominated in China. The REE industry has a legacy of environmental damage and the mining, processing, and separating out of the REE requires a significant quantity of energy and chemicals. Life cycle assessment (LCA) is a method to quantify the environmental impacts of a product or process and can be applied to the raw materials production sector. This thesis presents how LCA can be applied for REE projects in development. The results can help identify environmental hotspots for a project, and analyse alternatives to help reduce the environmental impacts of REE production. Mineral processing simulation are commonly used in REE project development and data generated from these studies can be used to carry out a LCA. This approach was presented with the Songwe Hill REE project in Malawi. The mineral processing simulation output data which includes energy and chemical flows is used as the life cycle inventory data (LCI) and calculated with characterization factors to generate life cycle impact assessment (LCIA) results such as global warming potential. This data can inform future engineering studies or process simulations. REE projects, like all mining projects, can last decades and extract different ore compositions throughout this life-time. A method is presented to generate tempo- rally explicit LCA results. The Bear Lodge REE project, which is in the prefeasibility stage of development and located in the United States, is used as a case study. LCIA results highlight that grade and mineralogy can influence the LCIA results. The relationships between environmental impacts and grade and mineralogy are explored. Thirdly, a method is presented to include LCA data in the mine scheduling pro- cess. LCIA data can form an environmental block model alongside the economic block model for a deposit. These spatially explicit data can then be used as a constraint within long-term mine scheduling simulations. The results indicate that significant reductions in global warming impact can be achieved at a small economic cost. Finally advances to the current resource depletion impact categories are achieved, advancing the previous methods which neglect socio-economic, regulatory and geopolitical aspects, nor do they include functionalities such as material recycling or reuse that control the supply of raw materials. I examine the economic scarcity potential (ESP) method and make advances based on recent developments in material criticality. ESP criticality scores for 15 REE with the addition of Au, Cu, platinum-group metals (PGM), Fe and Li are measured and a case study is presented to for the inclusion of REE ESP scores for the materials that form a NdFeB permanent magnet. This thesis has a focus on utilising LCA in a proactive manner and incorporating it into the planning stages of REE projects to encourage responsible production of REE

Counterparty credit risk management in industrial corporates

Ever since the financial crisis of the banking system of 2008 - 2010 the paradigm that deposits or other exposures towards major banks are safe has been fundamentally questioned. This put industrial corporates, who to support their business usually need to manage significant cash holdings or incur counterparty credit risk via derivatives, in the situation to develop or extend their resources for counterparty credit risk management. This paper provides a comprehensive overview over the practical issues into the subject benefitting largely from the findings of an interview series conducted with the respective heads of counterparty and customer credit risk management in the time period April - September 2011 of 25 large european enterprises with a large subset being members of the German DAX Index.Financial Risk Management; Credit Risk; Counterparty Credit Risk; CCR Management; Organisation; Financial Controlling; Financial Institutions; Banks

Weapons-grade plutonium disposition : an alternate immobilization strategy

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Nuclear Engineering, 1997.Includes bibliographical references (p. 219-224).by Kory William Bundlong Sylvester.Ph.D