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Capacity planning in open-pit mines under economies of scale and block sequence considerations

Author

Listed:
  • M. Balci

    (McGill University)

  • M. Kumral

    (McGill University)

Abstract

Capacity planning is a particular problem in the minerals industry because it depends on the heterogeneity and accessibility of the ore in the deposit, as well as on demand. If the ore is uniformly distributed within the deposit, capacity planning will be a function of project financing and demand. However, in many deposits, the ore is unevenly distributed, and it is not possible to access the ore as desired. Overlying ore and waste, considering slope angles, should be extracted earlier to access specific ore locations. Also, measuring the degree of EoS, the ratio of variable costs to total cost, called the “capacity factor,” also affects capacity planning. This research explores the critical relationship capacity planning, block sequencing, and economies of scale (EoS). By integrating EoS into a comprehensive cost-capacity relationship framework, a novel model that enhances traditional mine planning methodologies is proposed. A case study of an old gold deposit demonstrates the proposed model’s practical applicability. Results show that lower capacity factors (i.e., high fixed and low variable operating costs) for mining systems associated with large-capacity mining equipment significantly enhance net present value (NPV) compared to small-capacity equipment. On the other hand, the capacity factor for mineral processing systems has a less significant effect on NPV maximization when compared with the mining capacity factor. This emphasizes that the importance of EoS in mining systems is higher than in mineral processing systems. Even though the analysis suggests that the optimum capacity and the related NPV vary with different degrees of EoS, NPV is maximized with lower capacity factors for the mining system and moderate capacity factors for the mineral processing system. This observation highlights the critical need for accurate estimation of fixed and variable costs, as well as the degree of EoS, for a project.

Suggested Citation

  • M. Balci & M. Kumral, 2025. "Capacity planning in open-pit mines under economies of scale and block sequence considerations," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 38(2), pages 425-443, June.
    • Handle: RePEc:spr:minecn:v:38:y:2025:i:2:d:10.1007_s13563-025-00495-w
    DOI: 10.1007/s13563-025-00495-w
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    References listed on IDEAS

    as
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