Australia-based Whittle Consulting, with branch offices in Gauteng, South Africa, and Vancouver, British Columbia, Canada, recently reported on the outcomes of its latest ‘enterprise optimization’ studies for clients in the African mining sector.
Enterprise optimization, according to the firm, involves a comprehensive integrated study which identifies value-increasing opportunities that may exist in a given mining or mineral processing business by applying advanced business modeling and optimization techniques. The target, according to Whittle, is to produce life-of-mine business plans for the client with Net Present Value showing significant growth.
Work was completed in 2010 on the first phase of an enterprise optimization study for Goldfields International at its Tarkwa gold operation in Ghana, as well as both phases of a study of Assmang Ltd.’s Black Rock Mining Operations (BRMO) and related manganese ore processing, transport, ferromanganese smelting and product distribution activities in South Africa. Assmang is a joint venture company between African Rainbow Minerals (ARM) and Assore, and the study objectives were set in order to address the corporate goals of both partners.
Both studies encompassed a set of 10 optimization mechanisms offered by Whittle: pit shells, pit phases, mine or pit scheduling, cut-off grade, stockpiling, optimization of variable processes, product alternatives, logistics, capital expenditure and simultaneous optimization of all of the other mechanisms over the entire planned life of mine.
The Assmang operation involves mining of several underground orebodies from multiple shafts and haulage systems prior to exporting a number of different ore products, plus smelting certain blends of ore products to produce ferromanganese for export. Consequently, optimization of the entire value chain was a complex problem, according to Whittle, which examined the influence of product logistics costs on the operation, balance between ore to be exported and ore smelted, potential to vary the mining width affecting tonnage and grade available to be mined, and the ability of the orebody to support different sizes of operation in the future.
The main items identified by Assmang to be investigated during the exercise were:
- Mining sequence of each ore area subject to development and stoping constraints at any time.
- Potential for dynamic mining width which would affect tonnage, grade and yield from each ore body.
- Cut-off grade, stockpiling and product blending strategy.
- Product strategy, including viability of the smelter with and without sintering, and comparison of value added by producing FeMn instead of exporting ore.
- Possibility and potential timing of mine, crushing/screening plant, smelter and logistics capacity increases.
- Configuration of the above to maximize project value since all of them are interdependent.
Phase 1 of the study, completed between April and August 2010, focused on the mining operations and included the first six steps of Whittle’s typical suite of optimization mechanisms. For underground mines, these include mine phasing, scheduling within phases, cut-off grade, blending by grade band, stockpiling and simultaneous application of the preceding steps. A mathematical model of the mining operation was developed which selected and determined the net value of ore blocks, grouped them into phases or areas, applied sequencing rules for the development and stoping of these phases—enabling Whittle’s proprietary Prober optimization software to prioritize them—then applied scheduling optimization for specific ore blocks within each phase. A base case was generated which was compared with the current operational business plan.
After Phase 1 was presented to senior Assmang management, a second phase of work was commissioned and completed between November 2010 and March 2011. Additional ore resource block model information was incorporated and an assessment was made of optimization of possible mine, logistics and smelting expansion plans in parallel with engineering and costs studies being done by others. In addition, seven major alternative smelting strategies were considered, each of which had several subordinate categories. Variable and dynamic mining width was considered for each of the ore bodies, the implication being that increased mining width would result in a considerable increase in recoverable ore resource provided that product Mn grades and Mn:Fe ratios could be maintained.
Upon receiving the results of the optimization effort, Whittle said the client concluded the exercise had been of great value in aiding decision-making, while the process enabled the management team to better understand Assmang’s manganese business. In addition, the customer determined that Whittle’s approach is capable of adding considerable value if a company has a complex orebody along with equally complex logistics and processing options. Assmang said it would use the enterprise optimization model again to assist in long-term decision making.
Other project work successfully completed during the past few months included two updates of the mining and metallurgical optimization work previously done for Anglo Gold Ashanti’s Navachab gold operation in Namibia; three phases of work for Anglo Platinum’s Mogalakwena open-pit operation in South Africa in which the current mining and processing operations were considered as well as several possible future scenarios likely to be influenced by downstream processing capacities; and a study of Mimosa Platinum’s current underground mine and plant in Zimbabwe as well as possible future plans.
Finding Value Early On
According to Whittle, enterprise optimization techniques are likely to add most value in the early study phases of mine lifecycles, when a good ore block model is already available but before this has been used as the basis for fixing the size and configuration of the planned operation. However, a high percentage of optimization studies have, to date, involved existing operations.
Since the beginning of 2011, new studies have included an enterprise optimization study of Paladin Energy’s Langer Heinrich uranium operation in Namibia as well as a package of work on the Tasiast gold operation and project in Mauritania, recently acquired from Red Back Mining by Kinross. In addition, AngloGold Ashanti and Mimosa Platinum each commissioned one day in-house courses in the period under review, specifically for managers and other senior employees interested in learning more about the principles and implementation of optimization mechanisms.
Whittle said its African operation was intentionally set up with a minimal local overhead structure and draws heavily on the expertise of Whittle Consulting’s Technical Services group in Melbourne, Australia, where all proprietary software is housed and supported. In addition, Whittle’s global alliances with Gemcom and Ausenco for enterprise optimization work worldwide are expected to be used in the future to support the African region. To supplement these, strategic framework agreements were also put in place with the mining engineering consulting groups VBKom, MineQuest Consult and GMSI during the past nine months, and opportunities are actively being sought to work together on optimization projects in order to familiarize these groups with the key principles.
Steve Burks, managing director of Whittle Consulting (Africa), said: “Our aim is to identify improved operational strategies and alternative scenarios for the future, to enable the client to increase net present value of the enterprise by a significant amount. Improvements in the range 5%–35% or more in NPV have often been demonstrated to be possible when accompanied by committed implementation by the customer of the strategies identified in our studies. Frequently, this is achieved before the application of any new capital investments simply by optimizing the use of the existing assets or those already included in an approved study document,” said Burks.
Whittle Consulting said the same approach to enterprise optimization is used by all of its operational offices, and lessons learned in each region are incorporated on new projects in other regions to the extent permitted by the confidentiality agreements signed with each customer.