A simulation-based risk management approach to locating facilities in open-pit mines under price and grade uncertainties

Facility location is one main decision has to be taken at the primary stages of open pit mine design. The location mainly depends on ultimate pit limits and haulage costs. Undesired technical and economic conditions, such as rising fuel, tire and labor costs in line with extracting the ore from the deeper ground by open pit mining have forced mine designers more than ever to minimize the truck haulage distances by bringing the facilities closer to the pit. The ultimate pit limit is highly subject to the commodity market and geological uncertainties. An overestimation of the pit limit increases the haulage costs, while pit limit underestimation will impose relocation/rehandling cost or leaving tied up ore. Hence, this requires a risk management approach to evaluate different facility locations. In this paper, a generic quantitative simulation-based approach was developed to manage the risk associated with the facility locations in open-pit mining because of price and grade uncertainties. The methodology was described by using a hypothetical 2D geological block model. The concept of probable pits was used to calculate the probabilities of conceivable situations that exist. These probable pits define which part of the ground might be inside the pit limit with a specific probability of occurrence. To validate the methodology, it was applied in a real case study in Iran to evaluate the location of the existing primary crusher. The results showed that the existing crusher location involves the highest risk level. It must be placed about 300 m closer to the planned pit in order to mitigate the risk about 10 times. The robustness of the results was also shown using a sensitivity analysis in the presence of 20% increase or decrease in the parameters truck haulage and crusher relocation costs. The simulation-based approach provided here also would be a helpful tool to plan a more reliable pit limit at the outset of the project given to risk-taking or risk aversion of the mine designers.