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Optimal production scale of open pit mining operations with uncertain metal supply and long-term stockpiles

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  • Waqar Ali Asad, Mohammad
  • Dimitrakopoulos, Roussos

Abstract

An open pit mining operation consists of various stages, and the calculation of the production capacities of these stages depends upon the available supply of ore (mineralized material of economic value) and waste material. Cutoff grade is the criterion that specifies the amount of ore and waste. The material with grade equal to or higher than the cutoff grade is classified as ore. The material with grade less than the cutoff grade is considered waste. While this explains the link between cutoff grade theory and the calculation of production capacities, the majority of optimization models for finding production capacities not only disregards this relationship but also ignores expected variations and uncertainty in metal content or the available supply of ore and waste material.

Suggested Citation

  • Waqar Ali Asad, Mohammad & Dimitrakopoulos, Roussos, 2012. "Optimal production scale of open pit mining operations with uncertain metal supply and long-term stockpiles," Resources Policy, Elsevier, vol. 37(1), pages 81-89.
    • Handle: RePEc:eee:jrpoli:v:37:y:2012:i:1:p:81-89
    DOI: 10.1016/j.resourpol.2011.12.002
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    References listed on IDEAS

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    1. Abdel Sabour, S. A., 2002. "Mine size optimization using marginal analysis," Resources Policy, Elsevier, vol. 28(3-4), pages 145-151.
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    4. Dimitrakopoulos, Roussos G. & Abdel Sabour, Sabry A., 2007. "Evaluating mine plans under uncertainty: Can the real options make a difference?," Resources Policy, Elsevier, vol. 32(3), pages 116-125, September.
    5. James Otto & Craig Andrews & Fred Cawood & Michael Doggett & Pietro Guj & Frank Stermole & John Stermole & John Tilton, 2006. "Mining Royalties : A Global Study of Their Impact on Investors, Government, and Civil Society, Appendixes," World Bank Publications - Books, The World Bank Group, number 7136.
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    Cited by:

    1. Asad, Mohammad Waqar Ali & Dimitrakopoulos, Roussos, 2013. "A heuristic approach to stochastic cutoff grade optimization for open pit mining complexes with multiple processing streams," Resources Policy, Elsevier, vol. 38(4), pages 591-597.
    2. Zeng, Lanyan & Liu, Shi Qiang & Kozan, Erhan & Corry, Paul & Masoud, Mahmoud, 2021. "A comprehensive interdisciplinary review of mine supply chain management," Resources Policy, Elsevier, vol. 74(C).
    3. Xiao, Chang & Florescu, Ionut & Zhou, Jinsheng, 2020. "A comparison of pricing models for mineral rights: Copper mine in China," Resources Policy, Elsevier, vol. 65(C).
    4. Khan, Asif & Asad, Mohammad Waqar Ali, 2021. "A mixed integer programming based cut-off grade model for open-pit mining of complex poly-metallic resources," Resources Policy, Elsevier, vol. 72(C).
    5. Kuangyuan Zhang & Richard Olawoyin & Antonio Nieto & Andrew N. Kleit, 2018. "Risk of commodity price, production cost and time to build in resource economics," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(6), pages 2521-2544, December.
    6. Savolainen, Jyrki, 2016. "Real options in metal mining project valuation: Review of literature," Resources Policy, Elsevier, vol. 50(C), pages 49-65.
    7. Tabesh, Mohammad & Moradi Afrapoli, Ali & Askari-Nasab, Hooman, 2023. "A two-stage simultaneous optimization of NPV and throughput in production planning of open pit mines," Resources Policy, Elsevier, vol. 80(C).

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