Strategic mine planning

Finding the optimal in pursuit of the ideal

by Ryan Bergen
A
t one point during the Second World War,
researchers took another look at what colour
Britains Royal Air Force should paint its bombers.
The prevailing wisdom that led the planes to be black, it
turned out, was wrong. In fact white planes are harder to
spot against a night sky.
The review of strategy also prompted a change in the
detonation depth of its explosives and the RAFs efficiency
in crippling German U-boats doubled. There can be few
cases where such a great operational gain had been
obtained by such a small and simple change of tactics,
wrote a physicist who contributed to a number of such
adaptations during the war.
These innovations didnt introduce new technology but
rather, they made better use of available resources.
Progress came from challenging and systematically testing
what had previously seemed assured.
After the war, this research approach was adopted by
civilian industry, mining included. Operations research, as it
came to be known, showed how things can be done better.
innovation
46 | CIM Magazine | Vol. 5, No. 1
From innovation to application - a page from Lerchs and Grossmans Optimum Design of Open-Pit Mines with a photo of the Sadiola Gold Mine in Mali.
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For the mining industry, it planted the seeds that have
grown into strategic mine planning, a discipline that at its
core matches mining operations to long-term strategic
objectives. It relies on the knowledge and collaboration of
every arm of the mining operation, including finance, geol-
ogy, mining and production scheduling, processing, engi-
neering and human resources; the informed application of
optimization tools. It also calls for a clear strategic vision for
the company. Capturing and managing all of these aspects
with a defined goal in mind can spark a shift in thinking,
and counter-intuitive approaches that can effect:
how and when minerals are extracted;
how facilities are designed and where they are installed;
and
how much value is ultimately realized.
The latest recession toppled many assumptions. A ded-
icated strategic mine planning approach will test the
assumptions still intact. How far will conventional stan-
dards take us? Where can new, substantial value be found?
A durable solution
Forty-five years ago, the CIM Bulletin had a radical
answer. Helmut Lerchs and Ingo Grossmans paper,
Optimum Design of Open Pit Mines, outlined an algo-
rithm based on graph theory that could help planners
determine the ultimate limits of an open pit mine in three
dimensions by maximizing the difference between the
total mine value of ore extracted and the total extraction
cost of ore and waste.
But even as the two IBM researchers opened up a new
frontier in optimization, they also traced its limits. Markets,
processing facilities, mining methods, production schedul-
ing, transport options, they noted, had, and continue to
have, a bearing on plans. There is an intimate relationship
between all the above points, and it is meaningless to con-
sider any one component of planning separately, they
wrote. A mathematical model taking into account all pos-
sible alternatives simultaneously would, however, be of for-
midable size and its solution would be beyond the means
of present know-how.
Over the decades, a cascade of algorithms and new
optimization programming methods led by Jeff Whittles
efficient implementation of the Lerchs-Grossman
algorithm in a commercial software package along with
the efforts of software designers and the exponential
February 2010 | 47
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Students at McGill Universitys COSMO laboratory learn modelling techniques that
integrate geological uncertainty.
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increase in the power of the tools at their disposal have
pushed the boundaries of know-how.
The advances in computer capacity the speed
have enabled us to bring down the processing time,
says Cindy Tonkin, technical product manager for
Gemcom, which markets Whittle software. Models that
once took days can take minutes. That provides us with
the ability to examine multiple options, to look at
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Whittle enables visual validation of the results of its optimization output.
48 | CIM Magazine | Vol. 5, No. 1
scenarios to determine a mine plan that can take us into
the future or a range of different futures but to be
robust enough to deliver value in that range of futures.
We can generate optimizing models that are now up to
three gigabytes. That would have been unheard of 15
years ago.
The scope and complexity of optimization applications
that serve the strategic mine planning process continue to
grow. Australia-based Whittle Consulting is pressing ahead
with a third version of Prober, an in-house proprietary
global optimizer. Prober combines an algorithm with linear
programming to create an optimized schedule that
addresses a litany of issues including ultimate pit limits,
mining methods, schedules, equipment needs, cut-off
grades and blending. Twenty-five years ago, the optimiza-
tion software that Jeff Whittle first developed for the mar-
ket using the Lerchs-Grossman algorithm could calculate
one option for pit design alone.
Way back, says Jeff Whittle, I used to talk about a pro-
gram such that each morning, you fed into it all the latest
production figures, drill results, costs and prices, etc. It then
thought a bit before telling you precisely where to mine
today optimally! I dubbed it The Hallelujah Program. I
dont expect to see such a program in my lifetime,
[Whittle is now in his 80s] but we can work towards it,
and Prober is a step along the way.
Finding higher value at depth
Expectations for automated underground optimization
solutions remain more modest. Unconstrained by the
top-to-bottom progression that is given in open pit plan-
ning, underground planning and scheduling is far more
complex.
Its a problem that researchers at Sudbury-based Mining
Innovation, Rehabilitation and Applied Research
Corporation (MIRARCO) have been tackling with backing
from industry. As a part of an AMIRA International project
called PRIMO (Planning and Rapid Integrated Mine
Optimization), the MIRARCO developers who created an
underground schedule optimization tool (SOT) are collabo-
rating with others focused on stope design, ore access,
financials and mixed-integer programming a form that
allows solutions to be expressed in greater detail than a
binary true/false answer to create an automated opti-
mization solution to support the planning, design and
development of underground projects. SOT organizes the
information gathered from other programs using a genetic
algorithm the same approach as Internet searches and
generates mine schedules that account for a range of geo-
logical and financial variables.
Moving forward, says MIRARCOs scheduling develop-
ment project leader Bryan Maybee, work will focus on
combining the growing range of tools designed to address
various constraints related to issues such as geotechnical
and ventilation systems. The ability to start to look at these
things in a risk management context provides huge
opportunities, he says.
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A fresh perspective
Harnessing new computer tech-
nologies, optimization advances and
mathematical modelling can only
take strategic mine planning so far.
Before scenarios can be tested, they
must be imagined or, in some cases,
re-imagined.
This recently drove Canadian min-
ing company IAMGOLD to inaugu-
rate an operating strategy group. The
aim, explains Gordon Stothart,
IAMGOLDs executive vice-president
and COO, is to provide opportunities
to explore new ideas. It is like revis-
iting the original concept and prefea-
sibility study that went into an opera-
tion, he explains. We want to go
back and look at a deposit with fresh
eyes, almost as if we were trying to
engineer it from scratch.
Part of the exercise, he says, involves setting existing
constraints, such as processing capacity and methods,
aside, which often proves to be a challenge. Engineers
and finance people like concrete things; they like con-
straints, explains Stothart. Introducing a greater degree of
freedom is sometimes uncomfortable for people. They
often get pet ideas about what is possible. Sure, we will
evaluate a pet idea, but what we want to do is to evaluate
a range or surface of opportunities. If you have looked at
price scenarios and, for example, you are presented with a
February 2010 | 49
innovation
Innovation relies on execution a team confers at IAMGOLDs joint venture Sadiola Gold Mine.
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bear market going forward, this approach helps you design
proactively rather than reactively.
A suite of optimization software, including Gemcom
Whittle and COMET from Strategy Optimization Systems,
helps analyze these scenarios. The work may just validate
what you are already doing, says Stothart. Or, it may open
up some doors that people havent considered.
Ultimately, he says, the people, not the process or the
tools, will be the decisive factors in the new approach.
The operating strategy group is composed of mining
engineers, metallurgical engineers, geologists, mine plan-
ners and financial analysts, he explains. Its a mixed disci-
pline group on purpose. The ones on site who are in touch
with the project on a daily basis need to be on board.
Theyll support the execution of the plan because they
played a role in creating it.
Evaluating the unknown
Even with todays optimization tools, uncertainty is still
woven through each aspect of strategic mine planning.
Settling on a single value of the ore in one mining block
of a model to start the optimization process, for example,
can provide an answer, but it is almost certain to be incor-
rect. This guesswork affects every subsequent step in the
planning process. It is like looking out the window a
couple times in a week and then making a forecast for
the rest of the month, says Roussos Dimitrakopoulos of
McGill University and Canada Research Chair in sustain-
able mineral resources development and optimization
under uncertainty. The question of how to address such
uncertainty fuels the work of the researchers in the
McGill University COSMO stochastic mine planning labo-
ratory headed by Dimitrakopoulos.
Dimitrakopoulos and his team are trying to find not one
answer, but a series of them weighted with different prob-
abilities of accuracy. COSMOs work builds on modelling
conducted in the petroleum industry where there is a
longer tradition of including risk management in the plan-
ning process. Currently, he explains, optimizers cannot han-
dle a range of possible values. They tend to underestimate
what is in the ground, which affects sequencing, how you
mine, as well as production.
Accounting for the uncertain stochastic variables for
any given mining block (metal, recovery, commodity price,
costs) will result in various scenarios with different proba-
bilities. Each has its respective advantages and disadvan-
tages, but they all have the same character, he explains.
They come closer in meeting production targets and the
net present value is substantially higher than models
created the conventional way. The method, says
50 | CIM Magazine | Vol. 5, No. 1
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52 | CIM Magazine | Vol. 5, No. 1
innovation
Dimitrakopoulos, has been tested in numerous settings,
including at KCGMs Super Pit gold mine in Kalgoorlie,
Western Australia, where it generated production sched-
ules 25 per cent higher in value.
The approach has not yet been widely embraced by the
industry. BHP Billitons exploration and mining technology
group has begun developing optimization software that
accounts for ore body uncertainty. However, at least one
geologist, reported the National Post, labelled
Dimitrakopoulos uncertainty-based approaches and sto-
chastic optimization bullshit. In this regard, hes in good
company. Jeff Whittle recalls that 25 years ago when he
brought his software to market, there were plenty of
naysayers. No one believed it would do what we said it
would. We also heard optimization is crap, and My grand-
daddy taught me how to design a pit and thats good
enough for me.
Ensuring mining engineering students and industry
professionals are exposed to new methods will help the
industry leave these prejudices behind, says
Dimitrakopoulos. Over the summer, he is leading a
course on ore reserve risk and mine planning optimiza-
tion for those working in the industry. He maintains that
industry associations like CIM should foster a strategic
mine planning community to focus and grow the field in
this country.
The volatility in the global markets will also help smooth
the introduction of methods like stochastic optimization
and tools such as SOT, says Andrew Dasys, who was, until
February, MIRARCOs startup director. There will be a pull
from the investment community that is looking to
decrease their risk. Some of the leading mining compa-
nies are focusing on tools that provide more robust risk
assessment tools and, he continues, once the rest of
industry particularly juniors start seeing the potential
benefits you can have from this type of analysis, it will be
of huge value for anyone looking for financing or trying to
advance a project.
The shift will also rely on a sustained commitment to
long-term strategic objectives, says Dimitrakopoulos. How
do you increase your margin of profits? You plan and mine
smarter.
CIM