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Stochastic Final Pit Limits: An Efficient Frontier Analysis under Geological Uncertainty in the Open-Pit Mining Industry

Author

Listed:
  • Enrique Jelvez

    (Advanced Mining Technology Center, Delphos Mine Planning Laboratory & Department of Mining Engineering, University of Chile, Santiago 8370451, Chile)

  • Nelson Morales

    (Civil, Geology and Mining Engineering Department, Polytechnique Montréal, Montreal, QC H3T 1J4, Canada)

  • Julian M. Ortiz

    (The Robert M. Buchan Department of Mining, Queen’s University, Kingston, ON K7L 3N6, Canada)

Abstract

In the context of planning the exploitation of an open-pit mine, the final pit limit problem consists of finding the volume to be extracted so that it maximizes the total profit of exploitation subject to overall slope angles to keep pit walls stable. To address this problem, the ore deposit is discretized as a block model, and efficient algorithms are used to find the optimal final pit. However, this methodology assumes a deterministic scenario, i.e., it does not consider that information, such as ore grades, is subject to several sources of uncertainty. This paper presents a model based on stochastic programming, seeking a balance between conflicting objectives: on the one hand, it maximizes the expected value of the open-pit mining business and simultaneously minimizes the risk of losses, measured as conditional value at risk, associated with the uncertainty in the estimation of the mineral content found in the deposit, which is characterized by a set of conditional simulations. This allows generating a set of optimal solutions in the expected return vs. risk space, forming the Pareto front or efficient frontier of final pit alternatives under geological uncertainty. In addition, some criteria are proposed that can be used by the decision maker of the mining company to choose which final pit best fits the return/risk trade off according to its objectives. This methodology was applied on a real case study, making a comparison with other proposals in the literature. The results show that our proposal better manages the relationship in controlling the risk of suffering economic losses without renouncing high expected profit.

Suggested Citation

  • Enrique Jelvez & Nelson Morales & Julian M. Ortiz, 2021. "Stochastic Final Pit Limits: An Efficient Frontier Analysis under Geological Uncertainty in the Open-Pit Mining Industry," Mathematics, MDPI, vol. 10(1), pages 1-16, December.
  • Handle: RePEc:gam:jmathe:v:10:y:2021:i:1:p:100-:d:713236
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    References listed on IDEAS

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    1. Bala G. Chandran & Dorit S. Hochbaum, 2009. "A Computational Study of the Pseudoflow and Push-Relabel Algorithms for the Maximum Flow Problem," Operations Research, INFORMS, vol. 57(2), pages 358-376, April.
    2. Dorit S. Hochbaum, 2008. "The Pseudoflow Algorithm: A New Algorithm for the Maximum-Flow Problem," Operations Research, INFORMS, vol. 56(4), pages 992-1009, August.
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    Cited by:

    1. Enrique Jelvez & Julian Ortiz & Nelson Morales Varela & Hooman Askari-Nasab & Gonzalo Nelis, 2023. "A Multi-Stage Methodology for Long-Term Open-Pit Mine Production Planning under Ore Grade Uncertainty," Mathematics, MDPI, vol. 11(18), pages 1-19, September.

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