Integration and communications are the key to preserving value over the life of mine
By Steve Fiscor, Editor-in-Chief
Mine planners are under constant pressure to create long- and short-term plans that represent optimal mining strategies using a complex set of data inputs. As much as mine financiers and executives would like a long-term plan to be set in stone, the reality is that mine plans are dynamic works in progress. With proper planning and design, a mining company can develop a plan to extract minerals at the highest rate of return on investment.
Mining a mineralized deposit profitably requires extensive evaluation and planning. Engineers must determine the size of the mineable reserves and then determine what approach to extract the ore would work best. Considerable thought must be given to the mine design, the development sequence, and the required equipment for mining and processing. By quickly incorporating changes, such as metal prices, production costs, drill data, etc., to model and remodel the mine plan, operations can keep mining activity on track and profitable.
More frequently mining companies view mine planning as an integrated strategic process. The long-term mine plan sets a goal for the company across a 20- to 30-year life or more. Short-term mine plans are designed to meet production requirements. Any detour from the path could jeopardize profits and endanger project viability.
Obviously, each mine plan is site specific. Taking an industrial or manufacturing approach from another sector and trying to overlay it on mining does not usually work well. Several companies have developed enterprise planning and design software geared specifically for mining applications. These companies have experience and they have perfected their craft as technology has evolved. The computing power available today lets mine planners evaluate situations with speeds that were unimaginable a little as 10 years ago.
Oftentimes, however, what looks good on paper, cannot always be effectively executed in the pit. Mine plans fall behind and the alignment in scheduling tasks becomes tedious. Eventually, productivity sags until the operations can reorient themselves. The good news is that, when everyone understands the mine plan, these situations can be minimized by the better use of technology and effective communications.
Long-Term Mine Plans
Long-term mine plans not only act as the basis for feasibility studies in the early stages of project consideration, they also serve as a road map throughout the life of mine. Long-term mine plans rely on assumptions, such as metal prices or demand, and estimated data regarding costs and equipment performance. Due to the complexity of evaluating mineralized zones, engineers update long-term plans frequently, including better data and revising initial assumptions.
In a white paper, Long Term Planning for Open Pit Mines, the engineers at Mintec, headquartered in Tucson, Arizona, USA, discuss the tasks related to the process and the use of the company’s MineSight software. They describe the evaluation of a mineral deposit as a two-stage process. The first stage involves scoping studies to determine the economics of the mineral deposit (or ultimate pit limits), the best place to begin mining and the direction, and a mining sequence; and estimated capital costs and mining scenarios based on cutoff grades and accounting figures, such as cash flow, net present value (NPV), and internal rates of return. The tasks in the first stage provide estimates of reserves, mine life and profitability, and the sensitivity of these estimates to production costs, metal prices and recovery rates.
Depending on the results, the project advances to the second stage, this includes more detailed scheduling and design plans. Engineers design detailed pushbacks extending to the ore zone’s economic limits, waste dumps, tailings dams, etc. They calculate ore reserves and stripping requirements. They also calculate detailed life-of-mine schedules using pushback tonnages and grade, production rates and cutoff grades, capital and operating costs, and recovery and prices. From these plans, they can determine the mine’s equipment requirements and the associated economics.
The information from the second stage refines the first stage by providing the level of accuracy required by most feasibility studies for expansions at existing mines or new deposits. The figures can be revised throughout the mine’s life with more precise drilling data, actual production rates and changing economic conditions. The planning tasks associated with the second stage, however, are time consuming because of the attention to detail, especially in mine design.
The MineSight software assists the planning engineer at each stage in the mineral deposit evaluation process. For optimizing tasks, it is has an economic planner with display tools. As the evaluation moves to the more detailed stage two tasks, a truck haulage simulator and strategic planner offer more details.
The MineSight Economic Planner uses two evaluation programs (MSOPIT and MSVALP) and several supporting programs for miscellaneous data handling functions. MSOPIT is used for stage one tasks and relies on algorithms to determine economic pit limits based on a set of assumptions and pit slope criteria. The program can quickly generate ultimate pit limits at different metal prices to determine the price sensitivity of the deposit.
MSVALP schedules the mining sequence using a cutoff grade optimization technique to maximize NPV of the deposit. Mine planners can use the tool to find the best production rate and associated mine life for the deposit based on NPV evaluations. They can also capture the cutoff grade strategy that produces the best result. For each case evaluated, the program will find the cutoff grade to use each year to maximize the NPV of the schedule. The determination is based on using any available excess mining capacity to mine higher grade material earlier in the schedule to increase NPV.
To move from pre-feasibility to feasibility, new and expansion projects need more detailed pushback designs. Using MineSight’s MS3D, engineers can model toe/crest designs, including ramps, safety berms, bench geometry for each successive push back to final pit limits. The program also has two CAD tools for designing waste dumps, leach pads, tailings dams, etc. It can also be used for overland roads from the pit to surrounding destinations.
One of the important aspects of mine planning is determining mining equipment requirements for the life of mine. The haul truck fleet is a significant cost. The MineSight Haulage package can be used to define haul profiles, specify truck types/speed, and calculate cycle times.
Throughout long-term planning, reserve estimations are necessary from preliminary reserves to final reserves based on final pit design. Reserve calculation can be customized to suit the deposit and the mining company’s needs. Grades for up to 30 different elements can be reported for each reserve category and the reserve can be broken down using bench-by-bench reporting.
All of these efforts, according to Mintec, culminate in a detailed life-of-mine plan for the mineral deposit. The detailed plan is required by financial institutions and mining companies to justify the project. It can also be used by the short and medium term planners as guidelines for their scheduling duties. The MineSight Strategic Planner (MSSP) builds an annual life-of-mine schedule using optimal production rates, optimal cutoff grades, and detailed bench-by-bench reserves from mining phase designs, all determined and developed in earlier tasks in the work chain. In addition to evaluate detailed scheduling data, the program has a complete checklist of scheduling controls to aid the mine planner in producing operational long-term mine plans. To read the entire white paper, visit www.minesight.com.
No doubt, as computing speed increased, mine planning processes improved across the industry. According to the engineers at Minemax, located in Perth, W.A., as little as 10 years ago, little attention was paid to strategic mine planning outside of carrying out pit optimizations. Today, beyond pit optimization, mining companies are creating high-value strategic plans. In the white paper, Collaborative Mine Planning and Scheduling, Minemax explains strategic schedule optimization creates a long-term schedule which considers not just when blocks are mined, but how they are processed in the context of alternative processing options, each with their own cost and recovery.
In the past long-term planning was considered more of a manual process. Engineers used custom-designed spreadsheets as a scheduling tool. More recently optimization technology has been used to create NPV optimal life-of-mine schedules that satisfy operational constraints. Before strategic schedule optimization became popular, most mining companies had operational short- and medium-term planning processes in place. The tools ranged from spreadsheets to custom-built programming and it was this level of planning that was closest to actual production operations.
One of the effects of the evolution of the mine planning process, according to Minemax, is the connection between the strategic planning process and operational planning has been an after-thought. Mining projects suffer a loss in value when the long-term plan is not followed at a short-term planning level or in operations. Not considering the implications for the long-term plan when responding to unplanned events at an operational level has a similar negative effect. The challenge is to further refine the mine planning process to integrate the different levels in the process such that the respective schedules are aligned, regaining lost value.
Collaborative mine planning and scheduling is a framework to address the issues of poor mine plan compliance by optimizing the strategic plan in terms of NPV, then integrating the planning for the short-, medium-, and long-term horizons and optimizing the alignment of these plans. Studies have shown that, without using optimization technology in strategic mine planning, mining companies can expect to lose as much as 8% NPV. That is a significant loss especially for long-life projects. Not all applications of optimization technology are the same and, when considering a plan, engineers should ask the following:
• Does the system simultaneously consider all time periods in a single optimization?
• Does the system decide optimal processing, dumping and material storage options in addition to when material in mined, or are these options pre-determined before optimization?
• Are resource requirements and availability accurately expressed in the optimization?
Having an optimal strategic plan is just the starting point. The next challenge is to translate the plan through the ranks of planning hierarchy into an operational plan that is aligned with the strategic plan. Unfortunately, most mines do not have the ability to achieve a high level of alignment, which results in a significant loss of value.
Plan misalignment occurs when one or more of the assumptions of the guiding plan becomes invalid. Prime examples include grade estimation and equipment availability. Misalignment also occurs when detail is added which was not accounted for at the strategic level.
There are methods for measuring the spatial dimension associated with plan alignment. A short-term plan needs to take the same amount of material from the same areas as the higher level plan. An Incremental Spatial Alignment Index (SAI) for a low level mining area (a block) can be measured by:
ISAI = Short Term Planned Tons
Long Term planned Tons
Incremental SAI for a higher level mining areas (e.g., bench, pit, pushback, etc.) can the calculated by: Σall blocks (ISAI * Long Term Planned Tons) Σall blocks Long Term Planned Tons
These indices can be modified to account for cumulative SAI
In addition to plan alignment, mine compliance is a crucial measure of value retention in mining operations. With low mine compliance, a high loss of value follows. Measuring a reporting plan compliance is becoming more commonplace in mining operations. Comparing actual vs. planned production is the first stage of compliance reporting. The next step would be spatial planned vs. actual reports. An even higher level of reporting is that of spatial inter-plan compliance. This is a measure of plan compliance between, for example, the three-month plan and the two-year plan.
According to Minemax, measuring plan compliance and plan alignment is a sign of organizational competency (See Figure 2). Once measurement processes and supporting systems are established, organizations should consider targeting a level of excellence in mine planning which is signified by a system for generating operational plans which optimize mine plan alignment. To read the entire white paper, visit www.minemax.com.