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By S J. Chen, N Jiang, Y S. Ding, F X. Li, D W. Yin, F Wang

This study assessed the deformation failure characteristics of rock-coal composites with different height ratios. Uniaxial compression tests were conducted using an acoustic emission monitoring system and XTDIC three-dimensional full-field strain measurement system. The results showed that with the increase in rock-coal height ratios, the uniaxial compressive strength of composite samples increased from 5.26 MPa to 14.61 MPa. The evolution of the deformation localisation zone of the composite samples is closely related to the initiation and propagation of the primary cracks in the coal samples. At the moment when the main fracture of the coal samples occurs, there is a large drop after the peak of the stress-strain curve of the composite samples, and the height of the rock samples increased to varying degrees, which indicated that the failure of the coal samples induced the rebound deformation of the rock samples. With the increase in rock-coal height ratios, the rebound deformation amount of the rock samples decreased from 0.042 mm to 0.008 mm, and the rebound deformation rate decreased from 0.210 per cent to 0.010 per cent. Meanwhile, the rock samples’ rebound deformation releases part of the elastic energy to act on the coal sample, further contributing to the destruction of the coal samples. Compared with single composite coal samples, the coal samples of the composite samples have much more failures. In addition, with the increase in rock-coal height ratio, the input energy density, elastic energy density, post-peak release energy density, and residual elastic energy density of the composite samples increased, the dissipation energy density decreased, and the percentage of pre-peak elastic energy density increased from 98.56 per cent to 99.86 per cent. These results revealed the deformation failure characteristics of rock-coal composite with different height ratios and provided a theoretical reference for understanding the underground dynamic rock failures.

Nov 29, 2022

By J Joy, D Griffiths, A Bye, G V. Kizil

Poor standards of electrical installation and maintenance continue to contribute to electrical related fatalities and injury risk in the mining industry. Electrical isolation has the potential to initiate major unwanted events (MUEs) and as such requires thorough analysis to demonstrate adequate management. There have been 719 incidents related to accidental contact with electricity over the past five years in the Queensland mining industry (Queensland Government DME, 2012a, 2012b) with the last fatality being recorded in 1997 (MESA, 2012).A project funded by the Australian Coal Association Research Program (ACARP) has developed a form of a safety case using the four-layered æCoal Mine Safety Regime (CMSR)Æ approach. The CMSR is transparent and robust as it includes full site risk assessment and special issues risk assessment to be demonstrated as part of the process.The practical application of the CMSR has been demonstrated using a longwall mining case study site, where a unique 11 kV armoured face conveyor (AFC) is in operation. The case study has involved progressive application of the requirements of each layer of the CMSR (see Figure 1) to high voltage (HV) electrical isolation related issues. The project has specifically concentrated on understanding and analysing two high priority MUEs, electric shock and unplanned movement of equipment, through Layer 1 analysis. These two MUEs are an important part of the project as they have demonstrated the steps that may be taken to satisfy the risk management processes at Layer 1 of the CMSR and have contributed to resolving issues at the other three layers of the CMSR.The analysis of HV electrical isolation has been used as an exemplar to demonstrate the CMSR process and its practical application. The CMSR is applicable to major/principal hazards management as identified by the New South Wales and Queensland jurisdictions.This paper provides an overview of the development of a form of safety case using the CMSR and introduces the case study application for HV electrical isolation risk management at underground coal mines focusing on the major unwanted event of electric shock.This project provides the mining industry with a documented, publicly accessible, form of safety case using the CMSR approach for the first time.CITATION:Kizil, G V, Griffiths, D, Bye, A and Joy, J, 2012. Using a coal mine safety regime approach to the management of high-voltage electrical isolation, in Proceedings International Mine Management 2012, pp 59-74 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Nov 20, 2012

New technology is a significant factor in the present upsurge in world, and Australian, gold extraction and production. The main technologies in current use for gold production are described, referring to overseas developments. Areas where existing techniques have shortcomings or new methods are needed are pinpointed and discussed. Much research work on gold metallurgy is under way round the world, and many new developments have potential. Many of the current research activities round the world are covering unusual and striking areas, with surprising results starting to come through. Some of the "blue sky" techniques reportedly under investigation are identified, together with consideration of when changes in technology are of value. The consequences of new technology for personnel involved in gold plant operations will be raised, including the new education now required.

Jan 1, 1986

By Ho SE, Neil Phillips G, Houstoun SM

There are numerous individual gold deposits in the Archaean greenstone belts of Western Australia, but only 26 have productions and/or quoted reserves in excess of 10 tonnes Au. Most gold production has come from mineralization in shear zones, quartz veins or stockworks in volcanic or intrusive host rocks, particularly tholeiitic basalts or dolerites metamorphosed at sub-amphibolite facies (e.g. Kalgoorlie). Significant prod- uction has also come from BIF-hosted deposits (e.g. Hill 50), and large reserves are quoted for mafic hosts at high metamorphic grade (e.g. Big Bell). Most deposits have marked structural control, great depth extension, and are characterized by zoned alteration haloes of pyritization (with Au), K-metasomatism and carbonation. On the regional scale, most larger volcanic- or intrusive-hosted deposits occur in younger (ca 2.8 b.y.) rift-phase green- stones (Norseman-Wiluna Belt). These belts also have a high prospectivity (36 kg Au/km2 of greenstone belt). Younger (ca 3.0 b.y.) and older (ca 3.5 b.y.) platform-phase green stones of the Murchison and Sodthern Cross Provinces and the east Pilbara, respectively, are progressively less prospective (14 kg Au/km2 and 0.8 kg Au/km2, respectively) and also have progressively smaller deposits. The important regional- and local-scale characteristics of most gold deposits can be explained in terms of a metamorphic- replacement model. In this model, metamorphic H2O-CO2 fluids, focussed by faults and shear zones, infiltrated host rocks and deposit gold at 350 + 50¦C and 1-2 kb, largely in response to fluid-wallrock interaction. In many large deposits, gold precipitation was synchronous with sulphidation of Fe-rich host rocks, but the diversity and abundance of smaller deposits reflects the variety of reactions precipitating gold from ubiquitous, auriferous metamorphic fluids. Regional variations in abundance and size of deposits relate to factors such as tectonic setting, alteration styles and possibly source rocks.

Jan 1, 1986

By Siwiec A

The laboratory investigations which are necessary to evaluate the mineral processing effectiveness usually include density separation of narrow size fraction of the feed and one of the products. In each size - density fractions the content of valuable mineral has to be determined. These data and yield in each size - density fraction can be specified by a matrix of partition coefficients. They are counterparts of recoveries. These coefficients can be compared with the mean recoveries at each density or size fraction or the total recovery, to determine which density - size fractions are processed in the best or worst way. The basic categories are: vector of metal content l _i 1711, 7t2, òòò, ltM I ò vector of particle size distribution x = I d1, d2, ..., dN I ò matrix of partition coefficients P11, P12, Pi N P _ P21, P22, ..., P2 N PM1 PM2..., PMN These three conceptions allow one to determine all the basic metallurgical parameters of a mineral processing unit. Losses of valuable mineral are connected with: ò mineralogical composition of the ore (types of minerals, their properties, dissemination, crystallochemical affinity, type and properties of gangue minerals), ò applied technology and technical equipment (beneficiation as a stochastic process, processing methods, process control, intergrowth liberation, water quality). Examples of application of the analytical method proposed are given for zinc - lead and coal processing plants.

Jan 1, 1993

When studying minerals degrees at university, all the emphasis is towards sending the graduates into the bush to work at a remote mine; however, that is not the only option available to new graduates. There are positions in equipment supply companies, commercial laboratories, research organisations, engineering companies and contractors of many types. The aim of this paper is to show metallurgy graduates that there are non-mine site based career options available to them that offer outstanding career development. This is illustrated by outlining the research being undertaken by Magotteaux Australia and by telling the story of a graduate metallurgist working in MagotteauxÆs small research group. Magotteaux is an international supplier of grinding media and wear resistant components for the mining industry. The Australian research group is focused on determining the effects that the choice of grinding media has on subsequent processing, for example flotation and leaching, by using newly developed tools and techniques.

Jan 1, 2006

By R Araya, G Harbort, D R. Seaman, L Huynh, P D. Munro

In today’s operating environment many conventional cleaner circuits struggle to produce final grade concentrate with acceptable levels of non-sulfide gangue and/or penalty elements. This is primarily due to poor selectivity and the entrainment of gangue, and is further exacerbated by the processing of lower grade ores with more complex mineralogy that require finer grinding for liberation. In new concentrators, the standard approach to cleaner circuit design is to define the number of stages of mechanical cells required to achieve the desired concentrate grade. Residence time is the primary factor to size cells and to determine the number of cells required to attain target recovery. While it is required for recovery, a bank of mechanical cells is not the ideal solution to maximise concentrate grade. Relatively coarse bubble size means slow flotation of fines, requiring long residence times. The combination of long residence times and no froth washing means higher entrainment as the pulp becomes more barren and froth stability decreases down a bank.In recent years, the Jameson Cell technology has been retrofitted into a number of concentrators around the world to solve both cleaner circuit capacity and concentrate grade issues. Jameson Cells have been installed at the head of conventional cleaner circuits to produce final grade concentrate in a single step of flotation using a single cell (referred to here as ‘cleaner scalping’ duty). The experience gained from these installations has provided the platform for the design of improved and simpler cleaner circuits that will perform better and be more robust to operate. This paper analyses traditional cleaner circuit designs and explains the philosophy behind new hybrid cleaner circuits, which use Jameson Cells to produce final concentrate and mechanical cells for a ‘cleaner scavenger’ duty. The advantages of the new cleaner circuit design are demonstrated by a case study from an operating plant. Engineering studies show that the better metallurgical performance can be achieved with less equipment than conventional cleaning designs, reducing capital cost, operating cost, and with more than 30 per cent energy savings.Finally, the paper describes simple modifications to the standard laboratory flotation test procedures which accurately simulate this new cleaner circuit using routine equipment.CITATION:Huynh, L, Araya, R, Seaman, D R, Harbort, G and Munro, P D, 2014. Improved cleaner circuit design for better performance using the Jameson Cell, in Proceedings 12th AusIMM Mill Operators’ Conference 2014 , pp 141–152 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Sep 1, 2014

By A D. Campbell

The Homer Tunnel is located in a remote area of the South Island of New Zealand and carries large numbers of tourists to Milford Sound through an avalanche prone area. The tunnel is 1280 m long with a steep ten per cent unidirectional grade descending to the west. Construction of the tunnel began in the 1930s and was completed to a nominal 6 m width in 1954. In 1996, two passing bays were stripped-out to accommodate bi-directional flow of tourist coaches. During all phases of construction and widening there have been episodes of strain bursting.The condition of the tunnel and standard of internal services is below current international practice, principally in terms of; in-tunnel air quality, fire life safety, ground support, and road safety. A number of near-miss events have occurred involving coach fires on the approaches and inside the tunnel. The national road authority, NZTA, is considering a substantial investment to improve amenity and safety of the tunnel.This paper describes the rationale for the proposed upgrade works and the investigations undertaken to enable that design. A holistic approach to road tunnel safety has been adopted that balances the key interrelated safety drivers, namely; tunnel lining, traffic operations, ventilation, power supply and egress while ensuring continuity of safe access to Milford Sound.

Mar 8, 2011

By H J. Ross, R K. Beatson, T J, W R. Fright

Traditional method of explicitly defining three-dimensional (3D) ore-waste and geological boundaries relies heavily on a time-consuming process of manual digitisation. This method of modelling can be best described as surface modelling, as complex surface geometry is built up by digitising points that lie on the surface. With the advent of fast 3D interpolation methods, however, construction of geological surfaces using volume functions is now a practical alternative to explicit modelling of surfaces. Unlike explicit modelling, surfaces contained in volume functions are not explicitly defined or digitised. Instead the existence of surfaces in the volume function is implicit, thus the process of modelling surfaces from volume function is called æimplicit modellingÆ. Based on recent advances in fast scattered data interpolation methods, implicit modelling first defines a continuous three-dimensional function that describes the grade or rock distribution. This volumetric function is interrogated for a grade value, or a geological surface, thus allowing the extraction of the 3D object to be automated and eliminating the need to manually digitise surfaces. Since the function is continuous throughout space and does not depend on a mesh or grid for its definition, the extracted geological or grade wireframes can be constructed at any desired resolution in the specific volume of interest. The volume modelling method can work on scattered drillhole data of any data density, including processing combined information from dense grade control data as well as sparse resource drilling. It offers distinct advantages over surface modelling, including: being able to wireframe geological objects that may take days to digitise in tens of minutes; substantial improvement in modelling accuracy; and the ability to generate conditional models rapidly allowing mining risks inherent in geological modelling to be examined.

Jan 1, 2003

By Hinde J. S

The Fitzpatrick Orebody is a three and a half million tonne fault bounded portion of the early-middle Proterozoic Broken Hill Orebody.The Fitzpatrick Orebody was discovered in 1975 by diamond drilling from the 36 Level Exploratory Drive. This followed persistent geologically oriented exploration and a courageous decision by mine management to deepen No. 3 Shaft to provide exploratory development across the Globe Vauxhall Shear and allow effective drilling of the target area.The stratiforrn oebody consists of three lenses, the lead rich No. 2 and 3 Lenses and smaller zinc lode. They represent a down plunge extension and boudinaged, fault-bounded portion of the main Broken Hill ore lenses. The surrounding host rocks are extensively faulted and jointed due to complex history of movement on the bounding shears. This results in extremely poor ground conditions during mining. The ore was delineated for mining development using three dimensional fan drilling from exploratory and hanging wall drive drill sites.

Jan 1, 1990

In seeking to improve the economic performance of mines, the management or human aspects are usually seen to be quite seperate from, and more significant than, the technical aspects. There are obvious aspects of industrial relations, man-management, skills training and supervision that are currently the focus of efforts to improve the productivity and quality of the mining process. However technology also has a lot to offer. Analysis of the costs involved suggests that innovations leading to improvement in the productivity of the excavation and transport of overburden and the recovery of coal (both in the mine and preperation plant) can lead to improvements in the economic performance of a mine that may outstrip the obvious non-technical or management opportunities for improvement. While there are some innovations currently being investigated within the industry that relate to the design of mining equipment, the type of machinery being used in open cut mines has not changed dramatically over the last twenty five years. It is also likely that mining equipment will remain essentially of the same form in the forseeable future. If significant improvements to mining performance are to be achieved other than by futher increases in the scale of machinery, then we need to seek ways to operate these same types of machines in a more productive and controlled manner. This paper discusses the identification of mining processes the improvement of which is likely to have a significant effect on mining costs and performance. Some areas of current research are discussed and potentially fruitful areas for future development are identified.

Jan 1, 1991

By Sharmil Markar M

Ballarat Goldfields Limited is currently re-opening the old workings of the East Ballarat Goldfield which contain an estimated 1800 ML of groundwater. The disposal of this 'minewater' was of concern: the minewater is of moderate salinity; increased salinity levels have interfered with agriculture and water use at a number of locations downstream from Ballarat. Extensive numerical studies indicated that treated minewater could be discharged into the Ballarat Creek system for dilution by sewage effluent and by surface runoff after rainfall events. An automatic real-time salinity management system has been developed to enable the disposal of saline minewater in this fashion. A desk top computer operates the system: discharge and salinity readings are taken automatically each hour and filed away; the maximum allowable rate of discharge of treated minewater is calculated; pumps are switched on and off. The system readily enables daily, weekly and monthly data reports together with floppy disks of 'raw' data to be prepared in formats suitable for direct submission to the Victorian Environmental Protection Authority.

Jan 1, 1990

Mine planning typically involves designing an operation to uncover coal with the minimum initial costs with reclamation planning and earthworks being done as an "add on" task. The landform is too steep to remain stable, has no drainage and frequently has areas of excessive acidity or alkalinity. Extensive earthworks are required to reduce grades to an acceptable level and create a drainage system. The flexibility available to the mining engineer to alter the post mining landscape clearly depends on the mining methods. Straight dragline stripping provides virtually no flexibility. However most mining operations over the term of current ten year plans have a substantial pre-strip component. It is this pre-strip material which has the potential to reduce the final reshaping earthworks. The reshaping operation itself is subject to some flexibility with various options being available to re-grade and provide drainage. The full utilisation of this flexibility to minimise earthworks cost should be the aim of reclamation design. ACIRL's current thrust in reclamation is aimed at the integration of mine planning and reclamation earthworks. This involves gathering all environment and agricultural criteria and designing the earth works necessary to produce an acceptable final landform. A key component of our work is the use of computer aided design (CADD) for the design of spoil piles, pre-strip dumps and spoil re-shaping. This approach has been applied to a number of mine sites with earthworks operations covering hundreds of hectares and hundreds of millions of cubic metres volume. We are continuing to provide that consultancy service and at the same time are involved in the development of more sophisticated software tools to apply to reclamation design.

Jan 1, 1991

Esso-BHP have installed a Production Supervisory Control System that is presently controlling the offshore oil and gas facilities on the Barracouta and Marlin platforms from an onshore master station. This control is achieved with a computerized master station onshore which uses a UHF radio system for telemetry and control. The system is designed to control, monitor, and gather data from a large number of oil and gas production platforms and has flexability to handle future variations in operating conditions. Thn -etom ..ill kn nvt,,ndnd to thn I-lalihn+ rJ,+f, rr , Into +hie -- -A +n the lei...,fieh .,lo+fnrmc A.,;- 1071

Jan 1, 1970

By M Chen, G H. Wang, J R. Zhou, P Yan, W B. Lu

Blast vibration analysis is one of the important topics in the control technology of blast vibration damage. Nowadays, blasting vibration safety standards are based on both the particle velocity and the frequency of vibration and they have been adopted widely and internationally. However, the analysis on vibration frequencies is less studied compared to investigations of peak particle velocity. For the vibration induced by a spherical charge in a viscoelasticly infinite rock mass, an expression of vibration spectrum taking into account the damping effect of rock mass is inferred. Then the attenuation laws of dominant frequencies and centroid frequencies are compared theoretically. For the case of cylindrical charge, dynamic finite element method (DFEM) software of LS-DYNA is employed to analyse the attenuation laws of characteristic frequencies. The research demonstrates that, no matter whether it is a spherical charge or a cylindrical charge, there is a local mutation or fluctuation at some distance when the blast proceeds, while the centroid frequencies conform to a smooth attenuation law. Both the multipeaks structures of vibration spectra and the decay rate difference between high- and low-frequency components contribute to the mutation or fluctuation investigated in this study. Additionally, an increase in longitudinally sonic velocity or the quality factor of rock mass produces an increase in the vibration frequencies, whereas an increase in blast source diameter or the rise time of blast load produces a decrease in vibration frequencies from a spherical charge. In borehole blasting, there is a positive correlation between the vibration frequencies and charge diameter, whereas there is a negative correlation with charge length. And altering the initiation plan will change vibration frequencies to various degrees. Finally, theoretical analysis results were validated by the empirical data from field experiments of Fengning pumped storage power station.CITATION:Zhou, J R, Lu, W B, Chen, M, Yan, P and Wang, G H, 2015. A further study on the attenuation laws of blasting vibration frequency, in Proceedings 11th International Symposium on Rock Fragmentation by Blasting, pp 673–682 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Aug 24, 2015

By Taylor GP

Mt Kasi in Fiji is a high sulphidation style of gold deposit exposed at a high crustal level. Individual alteration centres are localised at the intersection of cross structures within a through-going structural corridor, the Mt Kasi Fault System. A two stage alteration/ mineralisation model suggests that much of the high sulphidation alteration is derived from the initial rapidly moving gas-rich portion of the hydrothermal fluid. The gradual cooling and neut-ralisation of hot acid fluids by mixing with oxygenated ground waters forms the characteristic zoned alteration assem-blages which grade from cores of residual silica through silica-alunite to peripheral clays. The liquid-dominated phase of the hydrothermal fluid brecciates the competent, altered rocks and deposits sulphide mineralise-ation within the breccia matrix. High gold grades occur in the matrix-rich breccias and decline from the hydro-thermal fluid upflow to outflow zones.CSAMT (controlled-source audio magneto-tellurics) geophysics has been used to define the geometry of the alteration centres while strike slip movement on the major structures accounts for the dilational structural environment in which the ore hosting breccias form.

Jan 1, 1994

By M BSckstr÷m

Acid rock drainage (ARD), commonly found in vicinities of sulfidic mines, possess properties capable of widely affecting the surrounding environment by acidification and heavy metal pollution. In most ARD treatments, various alkaline sources are used to neutralise the acid produced. Utilisation of highly alkaline fly ashes instead of raw materials is a cost-effective alternative, which lately have become increasingly popular. In laboratory batch experiments, neutralising capacity of fly ash was studied during 20 days. ARD was added to the fly ash once a day, for each increment the liquid to solid ratio (L/S ratio) was increased. At an early stage of the experiment (day 6, L/S ratio 12), the concentration of barium in solution unexpectedly increased by a factor of 50 (from 200 to 10 000 ¦g+l-1). This high concentration also sustained the following two days (L/S ratios 14 and 16) before dropping to the original level. pH showed a slight increase during these observations (pH 12.4 - 12.7). The phenomenon was also observed in a parallel and identical series. In addition to barium, aluminium and strontium clearly increased in the same manner, however not as much as barium. Furthermore, concentrations of chromium and molybdenum noticeably decreased at these distinct L/S ratios (12, 14 and 16). The behaviour of barium and subsequently strontium, aluminium, chromium and molybdenum is only partially understood. The decrease of chromium and molybdenum is suggested to be due to incorporation into the interlayer regions of hydrocalumite (Ca4Al2(OH)12(OH)2+6H2O), replacing the hydroxide groups, which also explains the increase in pH. Moreover, the increase of barium, strontium and aluminium could be attributable to dissolution of the silicate mineral celsian (Ba,Sr(Al2Si2O8)). Alternatively, barium and strontium increase could be explained by dissolution of a Ba,Sr(SO4)-solid solution and aluminium increase by dissolution of hydrocalumite or ettringite.

Jan 1, 2008

The movements of the major continental cratons and the distribution of the principal tectonostratigraphic terranes are reviewed in the Circum-Pacific region during Phanerozoic time. It is concluded that major periods of orogeny and consolidation of accreted terranes in the Circum-Pacific region is best correlated with periods of advance of cratonic blocks over the Pacific Ocean basin combined with relative convergent to transpressive motions between the cratons and the Pacific Ocean plates. Continental collisions and collision of terranes with continental margins has not been a significant geodynamic process in Circum-Pacific tectonic evolution. The permanency of the Pacific Ocean basin throughout 500 MA is remarkable. It appears no continental block or large continental fragment has ever entered or crossed the Pacific Ocean basin since early Paleozoic time. This area where no continent has entered for 500 MA is almost coincident with the present Pacific Ocean basin and seems associated with the 25 to 100 meter geoid high which dominates the present-day figure of the Earth.

Jan 1, 1990

Since gold was first discovered, mining development in the West Australian goldfields has been heavily dependent on the location of groundwater both for potable and mineral processing supplies . The location of adequate and economic sources of water has been a constant challenge to both explorers and developers throughout the history of the goldfields. The provision of a piped supply from Mundaring in 1903 greatly alleviated pressure on scarce resources, lowered mining costs and permitted the orderly development of infrastructure. However, increases in the demand for water resulting from new mineral discoveries over the past three decades has led to renewed pressures for more local supplies to be established. Wide-ranging groundwater exploration took place in the late 1960's and early 1970's, also, more recently, in support of intensified gold exploration. The collation and interpretation of the hydrogeological data from the whole goldfields region indicates that despite a low mean annual rainfall of between 180 and 350 mm, quite marked differences exist between the rates of groundwater recharge in different parts of the area, In general, these can be shown to diminish in a southerly direction contrary to a trend towards increases in annual rainfall. Recharge rates are related mainly to differences in rock weathering pattern, geological structure and physiography. The same differences have controlled the pattern of groundwater salinity and the magnitude of groundwater storages associated with the palaeodrainages. In the vicinity of the northern and western watersheds with the Gascoyne, the superficial sediments tend to be thin, may have calcrete in the section and contain moderate storages of brackish or even fresh water. This contrasts with the lower regions of the palaeodrainages where calcrete is absent and deeper erosion has permitted the accumulation of relatively large thicknesses of fine-grained sediments which are saturated with hypersaline water and constitute substantial storages. Account must be taken of these characteristics if water supply sources are to be optimised to meet the growing demands for groundwater in the region.

Jan 1, 1988

By R Razanatsimba, A Galli

A mining company has entered into contractual commitments to supply certain quantities of its product to clients in each time period. Failure to fulfil its obligations would damage its reputation as a reliable supplier. The planned production would normally be sufficient unless major problems such as highwall failures, roof falls, natural disaster, or strikes that interrupt production or delays in obtaining environmental permits, occur. To overcome these difficulties, the company may be able to obtain more of the commodity: from its strategic stockpile (if there is sufficient there); by buying it on the spot market; or for some commodities such as gold and uranium, by leasing it. Two sources of uncertainty, the spot price of the commodity and the occurrence of serious incidents that interrupt production, are considered. For simplicity it is assumed that the commodity price follows a geometric Brownian motion, that productions incidents have a binomial distribution, that they are independent from one time period to another and that they do not affect prices. A branching tree structure is used to model the joint evolution of prices and production incidents. The aim of this research project was to evaluate the companyÆs options for fulfilling its contractual commitments. When evaluating these options, multi-stage stochastic programming with recourse was used to solve this problem because in addition to providing the dollar value of the project, it gives decision-makers the æroadmapÆ to reach the optimal value. That is, how much material should be bought/sold on the spot market, how much to add to/subtract from the stockpile, how much to lease and in the worst case what the shortfall would be, for each time period as a function of the current spot price and breakdown status. A case-study over a five-year period is used to illustrate the proposed procedure. In this study the production would be sufficient to cover the companyÆs contractual commitments unless production incidents occur. Focus is on evaluating the impact of the quantity initially in the stockpile on the value of the project when the commodity market is tight, that is, when only small quantities can be bought on the spot market or by leasing.

Sep 26, 2011