Discrete-Event Simulation Modeling Unlocks Value for the Jansen Potash Project

Abstract

BHP plans to enter the bulk fertilizer market by developing its first potash operation, the Jansen Potash Mine, in Saskatchewan, Canada. In conjunction with Amec Foster Wheeler, the Jansen project team developed a model of the Jansen production and logistics chain to understand the drivers of production capacity. The Detailed Integrated Capacity Estimate model (DICE) is a comprehensive discrete-event simulation model of Jansen’s upstream production (mining, hoisting, and ore processing) and downstream logistics (rail, port, and marketing). DICE provides an unprecedented combination of complexity, granularity, and scalability, which informs ore storage capacities, product sizing infrastructure, critical-equipment redundancies, bypasses, and operational practices. The team used DICE during the prefeasibility study of the Jansen project. The model provided the justification for the removal of about $300 million in capital expenses to equip the second of two hoisting shafts, the reduction of planned maintenance, and the increase of the degree of mining automation. Throughout the prefeasibility study, Jansen’s annual production in stage 1 of operations was estimated to increase by 15–20 percent, with two-thirds of this gain credited to DICE. This potential additional production added $500 million to the net present value of Jansen stage 1. In consideration of this, among other factors, the BHP board of directors approved the transition of the Jansen project from a prefeasibility to a feasibility study.