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Production phase and ultimate pit limit design under commodity price uncertainty

Listed author(s):
  • Chatterjee, Snehamoy
  • Sethi, Manas Ranjan
  • Asad, Mohammad Waqar Ali
Registered author(s):

    Open pit mine design optimization under uncertainty is one of the most critical and challenging tasks in the mine planning process. This paper describes the implementation of a minimum cut network flow algorithm for the optimal production phase and ultimate pit limit design under commodity price or market uncertainty. A new smoothing splines algorithm with sequential Gaussian simulation generates multiple commodity price scenarios, and a computationally efficient stochastic framework accommodates the joint representation and processing of the mining block economic values that result from these commodity price scenarios. A case study at an existing iron mining operation demonstrates the performance of the proposed method, and a comparison with conventional deterministic approach shows a higher cumulative metal production coupled with a 48% increase in the net present value (NPV) of the operation.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0377221715006451
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    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 248 (2016)
    Issue (Month): 2 ()
    Pages: 658-667

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    Handle: RePEc:eee:ejores:v:248:y:2016:i:2:p:658-667
    DOI: 10.1016/j.ejor.2015.07.012
    Contact details of provider: Web page: http://www.elsevier.com/locate/eor

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