Stochastic Long-Term Production Scheduling of Iron Ore Deposits: Integrating Joint Multi-element Geological Uncertainty and Ore Quality Control

Abstract

Meeting production targets in terms of ore quantity and quality is critical for a successful mining operation. In situ grade variability and uncertainty about the spatial distribution of ore and quality parameter cause both deviations from production targets and general financial deficits. A stochastic integer programming formulation (SIP) is developed herein to integrate geological uncertainty described by sets of equally possible scenarios of the unknown orebody. The SIP formulation accounts not only for discounted cashflows and deviations from production targets, discounts geological risk, while accounting for practical mining. Application at an iron ore deposit in Western Australia shows the ability of the approach to control risk of deviating from production targets over time. Comparison shows that the stochastically generated mine plan exhibits less risk in deviating from quality targets that the traditional mine planning approach based on a single interpolated orebody model.