Production scheduling of a lignite mine under quality and reserves uncertainty

The effect of uncertainty sources to the stochastic optimization of the combined project of a new surface lignite mine exploitation and power plant operation for electricity generation is investigated. Major sources of uncertainty that were considered are the reserves and the quality of the lignite. Since probability distribution functions for these uncertainties were estimated during the detailed exploration phase of the deposit, the overall goal is then to determine the optimal capacity of the power plant and consequently the optimal production rate of the mine over the time. The optimization objective that was selected is the maximization of the net present value of the project. Emphasis is placed on the sensitivity analysis for the investigation of the effect of quality and reserves uncertainty on project optimization, on the mathematical formulation of risk attitude strategy and on increasing the efficiency of the optimization process by creating a limited set of feasible solutions applying empirical rules. The developed methodology was applied for the determination of the optimal annual production rate of a new surface lignite mine in the area of Ptolemais–Amynteon in Northern Greece.

► Quality and reserves uncertainty affects considerably the production scheduling.
► Stochastic optimization is greatly accelerated by incorporating Taylor's rule.
► Decisions can be made considering different risk level attitudes.