Cutoff grade economic strategy for byproduct mineral commodity operation: rare earth case study

Abstract

In a byproduct mining operation, the optimal economic cutoff grade of the primary product is significantly impacted by the economic parameters of the byproduct. Economic indicators such as market price, mining and processing costs, metallurgical recovery, and tonnage grade distribution must be considered in order to maximise the total net present value (NPV) of the operation. In this paper, an NPV byproduct maximisation algorithm for a rare earth’s mining project is introduced, considering the extraction and processing of a byproduct. The algorithm is based on Lane’s using an equivalent factor to determine cutoff grade for each of the two mineral products. The extraction strategy, including optimum mine life, cutoff grade, and corresponding optimal NPV are determined by the algorithm. A rare earth case study is illustrated to confirm the model. The paper concludes that the price variability of byproduct (Dysprosium, Dy) significantly influences the cutoff grade of primary product (Neodymium, Nd).