We are going to talk about mine planning in this lesson, and the focus is on surface mining. However, almost everything that we cover is equally applicable to underground mine planning, even though the examples that I use here are taken from the surface rather than the underground application.
What do we mean by mine planning, and why do we do it. As to the first question, mine planning is a combination of mine design and scheduling of mining activities. The short answer to the second question is: we need to align our mining activities to meet the financial expectations of the company or its investors. We’ll look at both of these in more detail.
Mine planning involves both mine design and scheduling of mining activities.
The goal of mine design is to create a mine that will allow exploitation of the reserve in a safe, economic, and environmentally responsible manner. This design will reflect the unique characteristics of the deposit, anticipated market for the product, and the profit expectations for mine.
Mine scheduling, on the other hand, is concerned with the sequencing of operations and the assignment of equipment and people to ensure that the intended sequencing and production targets are realized. For example, if you dispatch an electric shovel and trucks to remove ore, but the dragline has not yet removed the overburden overlying the ore, you will have a problem… and you will probably be out of a job! Mine planning is performed over many different time horizons. When you are doing your initial feasibility study, you will look at a life-of-mine time frame, which might be 30 years, and as your planning progresses, you will focus more on the first five years; and once the mine is open, you’ll be looking at time frames as short as this shift or the next few shifts. Not only is mine planning an on-going activity, but the planning for the different time horizons is ongoing.
This can be summarized in the following table:
Type of Plan | Cycle for Updating the Plan | Period Covered by the Plan |
---|---|---|
Long-term | Annually | Life-of-mine |
Medium-term | Quarterly | 3 years |
Short-term | Monthly | 3 months |
Daily | Daily | 48 hours |
Let’s think about what this table is telling us.
The long-term plan is updated annually, and, basically, we want to know when it will be time to close the mine. We’re also interested to see the projected production levels in future years so that we can assess profitability as well as our ability to meet market demand. We’ll define a medium time horizon, and this will vary by commodity, company, and life of mine; but a typical horizon is three years. We’ll update this quarterly, and this planning will inform equipment purchases and other capital decisions. Our short-term plans will be concerned with detailed mining plans, e.g., where we will mine next and sequencing, how much production we’ll get, detailed equipment, supply, and personnel needs, detailed supply costs, and so on. Our daily planning will look forward over the next few shifts, and establish detailed staffing plans and equipment assignments. In a nutshell, that’s mine planning.
Now, let's add just a bit more detail to this.
Mine operators want to maximize profit while ensuring safe and environmentally responsible operations. There are many constraints that will limit the profitability of a mining project. Many of these constraints are not well known at a given point in time, and some of them can change unpredictably over time. These uncertainties create risk, and this creates complexities for mine operators. Major uncertainties for a mining project are grade, tonnage, and geotechnical conditions, as well as economic-related uncertainties such as fluctuations in price and demand for the mined product.
Good mine planning throughout the life of the mine is an essential prerequisite to realizing the financial goals of the project. Moreover, it is very important for you to appreciate the time value of money. Simply put, the value of $1 today is much higher than the value of $1 that will be received in the future. We use a metric known as the net present value, which allows us to compare future revenues or costs at the same point in time. Suppose, for example, that your project will produce $100 of revenue this year, $500 in year 5, and $1000 in year 10. My project will produce $600 this year, $600 in year 5 and $100 in year 10. Let’s say that each project requires you to make the same investment today, to realize these revenue streams. For this illustration, the amount of your investment is immaterial, but it is the same for both of them. Which project is the better investment? On the face of it, your project appears to be the better investment. Over ten years, it will return $1600, whereas my project will return only $1200.
However, this comparison neglects the time value of money. If I have money in hand, I can put it in the bank and earn interest, for example. Let’s suppose that the interest rate is 10%. Then, the question becomes what amount of money would I have to invest today at 10% so that in 5 years it would equal $500. In other words, what is the present value that will accumulate to $500 if it earns 10% interest each year for 5 years? The answer is $310. In other words, that future earning of $500 is only worth $310 today. What about the $1000 that you expect to earn in 10 years? It has a present value of $385. So, the present value of your project is ($90+$310+$385), or $850. The present value of my project is ($545+$372+$38), or $955. Thus, the value of my project is better than yours, based on the net present value. The interest rate that we use for this calculation is also known as the discount rate. As you can see, the present value of a dollar earned far in the future is very little. Further, who knows what the world will look like in 10, 20, or 30 years? So much can change. For these reasons, the decision to move forward with a project is influenced heavily by what happens in the first five or so years of operation. For now, do not worry about the calculation of present value, but only the concept of present value and how it influences mine planning and investment decisions.
In MNG 412, you will learn about several economic tools to evaluate the merits of a project, and net present value is only one. Payback period, discounted cash flow, internal rate of return, among a few others, will help to inform a decision on the worthiness of a given project. Regardless, without accurate mine planning, the investment calculations will be of little value!
As a general rule, if we are to maximize the project’s profitability, we need to maximize its net present value. Based on this concept, it makes sense that we plan our mining activity to recover the part of deposit that will yield the highest profits earliest in the life of the mine. Profit is determined by subtracting cost from income:
Profit = Income – Cost
In today's mining industry, it is the income or cash flow generated in the first 5 to 7 years of the mine life that will either make or break a surface mining operation, not the remote economics of the ultimate pit limit, which is usually at least 20 years away. Therefore, if we want to maximize profit, we have to define two objectives: (1) maximize the income and (2) minimize the cost.
How do we maximize income?
What are some of the ways to minimize the cost?
A question that may rise in your mind is: Why don’t we use a couple of huge pieces of equipment to extract all of the ore during the first year, instead of spending say 15-20 years in one operation? Actually, that is a good question at this point. Here are some reasons why that strategy isn’t practical.
It is unlikely that we would be able to sell all of the product in a short time. Therefore, we would incur expenses in the present year, but not receive income to offset those expenses until a future time. Given the time-value-of-money discussion that we’ve had, we certainly don’t want this. Moreover, when you have product to sell, but no buyer, you incur additional “penalties.” Namely, you are taking up space around your plant, or you are incurring a charge to “store” the material elsewhere; and the quality of your product may deteriorate as it lies around.
The purchase price of equipment increases with size and can become disproportionately more expensive if the piece of equipment is not in a common market range. Therefore, a small fleet of very large equipment will cost us much more than a larger fleet of smaller equipment of common size with the same overall capacity. However, the unit operating cost, which is the sum of maintenance and operating expenses for a fleet of very large equipment can often be significantly lower than a large fleet of small equipment.
Years ago, mining companies believed that bigger equipment is always better. Their reasoning was that even though the ownership cost is greater for bigger equipment, the unit operating cost is lower. Therefore, the overall unit cost, which is the sum of the unit ownership and unit operating costs, of the bigger equipment will be lower. It was true, to some extent. However, if a single piece of large equipment breaks down for a couple of hours, it will significantly delay production. On the other hand, if we have a fleet of smaller pieces of equipment, even if one needs maintenance, the rest of the fleet can generally cover its absence. Moreover, the unit operating cost of bigger equipment, especially the maintenance cost, dramatically increases as the equipment ages. Consequently, the “bigger is better” strategy must be carefully analyzed.
If we want to use really big equipment, then we’ll have to change the design parameters of our mine. Larger equipment requires sufficient space to operate. For example, if we’re talking about a larger truck, the haul roads will need to be wider, and we’ll need a better road bed and bearing surface, i.e., a more expensive haul road that will remain stable under the heavier truck weight. Wider roads in a pit will necessitate a higher stripping ratio, since the pit walls will be pushed back to the waste area, and this will increase the mine development costs.
Consider this figure in which we have an orebody shown in blue and two different pit limits for two different roadway widths. The blue pit limit corresponds to a wider road than the orange pit limit. As you can see in the below figure, the blue pit needs additional waste removal equal to the dashed area, compared to the orange pit. Therefore, more waste is now mined out per ton of ore, and the stripping ratio will be higher.
We talked earlier in the course about selectivity, and you will recall that selectivity is a measure of how effectively we can extract the ore of interest while taking as little waste material as possible. Larger mining trucks need to be matched with larger loading equipment; and larger loading machines have larger buckets. A large bucket reduces selectivity in loading, and that means you will dilute more of the ore with waste material than with a smaller piece of loading equipment.
This effect can be illustrated by considering the block of ore shown here, in Figure 7.1.3(a), assume that we have two options to load the material: a large bucket shown by the blue outline in Figure b and a small bucket the size of the blue outline in Figure c. With the large bucket, we will load all of the ore in the block, shown in orange, as well as the waste material shown in white. With the small bucket, we can be more selective, and taking three small bucket loads we get all of the ore with far less waste. As you can see, the option with the small bucket will reduce the dilution, and this in turn will reduce the unit cost of production.
The service life of mining equipment is measured in tons, hours, or years, depending on the type of equipment. A haul truck might have a life of 100,000 hours of operation, which may translate into 15 years of service life at a particular mine, and maybe as much as 20 years at a different mine with a different work schedule. Given the high capital cost of mining equipment, much effort is given to match the life of equipment with logical periods of production at the mine. This is yet another reason why mine planning is so important, to ensure that maximum benefit can be obtained from every piece of equipment over the life of the mine.
It is vital for a mining operation to determine an operationally viable mining sequence for the deposit and, subsequently, a production schedule that is achievable and economically sound. The Mine Planner's objective is to schedule and plan operations to achieve maximum return (of profit) on investment, through capital investment (e.g., mobile equipment), mine design, production scheduling, and preparation of the mineral product according to specifications that are required for the market. Therefore, “quantity” and “quality” would be important “drivers” in mine production planning.
BEFORE MOVING ON TO THE NEXT LESSON, please take a little time to think about the concepts presented in this section of this lesson. These will be underlying themes in many other topics.
We’ve talked about the economic foundation of mine planning, and we’ve looked at several examples of how the mine design and the mine schedule can affect the economics. This is a good foundation for understanding the material in this course, as well as preparing you for more detailed studies in later courses. I want to conclude this lesson on mine planning by presenting a list of objectives to guide your mine planning decisions.
The starting point for your mine planning activities will be the geological model of your orebody; and this will be true, regardless of whether you have come into the planning process at the startup of the new mine, or after the mine has been in operation for years. You will have a block model, which details the grade of the ore in discrete categories and locations. The size of the blocks and the number of categories is a separate decision, but one that does not need to be addressed here. Consider this block model, which uses one of five grade ranges for each block. So, this is your starting point – where do you go from here? Undoubtedly, your approach will be multifaceted. There is a set of planning objectives first compiled by Mathieson and published in 1982. These objectives apply more or less to underground as well as surface mining, although his famous paper was directed at the surface mining community.
Here is a list of the major objectives of any surface mine planning exercise at the feasibility level:
Mine orebody in such a way that for each year the production cost to produce a given amount of final product is minimized. What do we mean with the “Next Best”? The next best ore block here is the block that (i) maximizes the profit and (ii) does not contradict any other constraint or limitation, e.g., equipment operating room and slope design. To find the “next best” in the above figure, we will look for the red blocks that are close to the surface. We chase the red blocks because they contain a higher grade of ore that is easiest to mine. What do I mean by easiest to mine? I mean minimizing the production costs, and this normally suggests closest to the surface without any complicating factors. A complicating factor would be an environmental constraint or a geologic anomaly, for example.
Give yourself options on which mining face or faces will be scheduled for production on a given shift. If you normally have five active faces on any given shift, then you will want to have at least ten faces available for work on any given shift. Then, if there are unexpected ground control or other problems, you can simply move active work to a different face. Moreover, mining operations try to maintain enough ore exposure to meet production needs for an extended period, e.g., six months. This helps the company to reduce the risk that unforeseen events will adversely impact production. This is particularly true in the early years that are so critical to economic success. Unforeseen events could include a shortage in the equipment fleet due to delivery delays or significant breakdowns, labor issues due to union strikes, or difficulty in recruiting and retaining certain positions, adverse weather events, slope stability issues, and so on. Don’t forget to account for geological and engineering miscalculations. In the early stages of mine planning, geologic and operational information is limited, and this creates a greater level of uncertainty.
Adequate bench width and properly designed haul roads are essential to achieving the design level of production. Limited operating space on the bench can increase the cycle time of the operation, which will decrease productivity and production, and it may pose a safety hazard for the equipment and workers. Improperly designed haul roads can: increase the round-trip cycle time, which will affect productivity and production; greatly increase tire wear, and tire replacement represents a major cost element in many surface operations; and create safety hazards.
Let’s take a look at this picture of an open-pit copper mine. A loading and hauling operation is identified with arrow #1. If there were not enough operating room for the shovel, it would take longer for the shovel to dig, load, and dump the material. Concurrently, the truck driver will likely require more time to maneuver into position for loading. Arrow #2 points to a loaded truck traveling uphill to the dumping point and an empty truck making the return trip down-hill to the loading point. If proper operating room is not maintained, the trucks will need to reduce speed when passing. More importantly, there may be an increased risk for a truck to lose control and then go over the edge or crash into another truck. Therefore, it is incumbent on the mining engineer to design properly the benches and haul roads to ensure that safety and production are not compromised.
As we discussed before, we would like to expedite profit making in the early years of operation, and to the extent that it is logical and achievable, we want to minimize the amount of stripping required to access the orebody. In the process of deferring stripping, we don’t want to compromise other objectives, such as the two that we just discussed.
The production rate that is used for the early years of the mine is one of the more critical variables in determining the initial cash flow. Yet, it is also the variable that is subject to significant change over which you may have little control. Equipment delivery, outside contractor performance, workforce startup and training issues, and initial geologic uncertainty are examples of factors that can halve your production target in a given year. Imagine if your financial projections as supported by mine planning missed their target by 50%! Once again, you’d be looking for a new job! Consequently, the first year or two of production is de-rated to account for these uncertainties. If you were designing the mine to produce 6 million tons per year, it would not be unreasonable to choose a target for two million for the first year and three million for the second year. These aren’t arbitrarily chosen but will be based on simulations and risk analysis. The point here is that it is important to determine achievable production levels in the first few years of the mine life.
We’ve looked at a few examples to illustrate the effect of the ultimate pit slope on stripping ratios and economics; and the “take-away message” is that the steeper the slope, the more favorable the economics! Unless, of course, you have slope failure! And then, once again, you are looking for a new job! Just kidding ... Even with very good ground control, slope failure can occur. It’s like walking a tight rope. The slope stability calculations are limited by geologic uncertainty, and so, safety factors are required. But how much of a safety factor: 1.5, 2.0, 4.0, or 10? There are analytical methods in rock and soil mechanics to improve the accuracy of your predictions, and the use of risk analysis is standard. Nonetheless, the possibility of a slope failure weighs on the operations and engineering personnel. A clever and necessary approach is to choose a smaller safety factor, but utilize sophisticated slope monitoring instrumentation and techniques to detect the earliest signs of incipient slope failure. Engineering and operational interventions can be initiated immediately to prevent a catastrophic loss.
Mining companies perform market surveys to make an accurate estimation of the amount of product that can be sold every year, and at what price. Remember, the cutoff grade was based on an assumed selling price and an assumed mining cost. As the market changes, the cutoff grade will change, and as production costs change, for better or worse, the cutoff grade will change.
As an example, the annual tonnage that can be sold is suggested by the marketing surveys for a copper mining operation. The annual production rates for the mill and mine are calculated accordingly. Keep in mind that mill production rate only depends on ore, whereas the mine production rate includes both ore and overburden removal. The mining equipment should be selected in such a way that sufficient ore is sent to the mill, and so, there is sufficient capacity to maintain additional faces to satisfy the “sufficient exposure” constraint. There are flexibilities for both ore production and waste mining plans. Moreover, multiple destinations may be considered for the material, including sending material to a waste dump, a low-grade leach dump, a high-grade leach dump, the mill and sometimes an ore stockpile, which is used to feed the mill when mine production is down. Cutoff grades need to be determined for each of these destinations. I imagine that you are beginning to appreciate the need for thorough mine planning to support these decisions — hence, this objective to examine the economic merits of alternative production scenarios, including different ore production rates and cutoff grades, for the purpose of optimizing the cutoff grades and production rates.
Earlier in this module, the importance of selecting the proper size of mining equipment was discussed. We learned that all of the possible options for the fleet should be studied and the best option should be selected. Mining equipment selection is a complex multi-criteria decision-making problem. These parameters include, but are not limited to, the unit cost of the operation, equipment availability, selectivity, operating space, environmental impact, and many other technical and economic parameters. A mine planner should subject the proposed mining strategy, mine development plans, equipment selection, and environmental protection plans to very thorough "what if" contingency planning.
This is also a good time to remind you that mining methods and equipment can evolve and change over the life of a mine. Just because you started out with a specific method and unit operations, does not mean that you have to stick with those for the next 30 years! You may want to change one or both based on new conditions, new technology, and so on. This can only be assessed through ongoing engineering simulations and analyses.
This concludes the summary of mine planning objectives as first outlined by Mathieson. While these eight objectives are timeless in their guidance, i.e., they were true 30 years ago and will be every bit as true 30 years from today, we need to add one additional objective to reflect society’s nascent and evolving value of sustainability.
We talked about sustainability in mining and its importance. If we are to mine in a sustainable manner, then our mine planning must reflect that value. This means taking steps to avoid sterilizing the reserve, maximizing recovery rates, minimizing environmental impact, and ensuring worker safety and health through the design of the mine, the selection of equipment, and the choice of unit and auxiliary operations. Much, but not all of the mining industry has been the vanguard of the triple-bottom line: economic, safe, and environmentally responsible operations. The triple bottom line concept has evolved and changed into the term sustainable operations. It will be your responsibility through mine planning to ensure that the industry continues its journey to sustainable mining in all commodities and in all locations.
Now, armed with an understanding of mine planning, let’s take a look at surface mining methods!