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

Jelvez, Enrique and Morales, Nelson and Ortiz, Julian M. (2021) Stochastic Final Pit Limits: An Efficient Frontier Analysis under Geological Uncertainty in the Open-Pit Mining Industry. Mathematics, 10 (1). p. 100. ISSN 2227-7390

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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.

Item Type: Article
Uncontrolled Keywords: stochastic final pit; geostatistics; open-pit mining; risk management; Pareto-optimal front
Subjects: Universal Eprints > Mathematical Science
Depositing User: Managing Editor
Date Deposited: 08 Nov 2022 04:18
Last Modified: 25 Aug 2023 05:52
URI: http://journal.article2publish.com/id/eprint/72

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