Stochastic Mining Supply Chain Optimization: A Study of Integrated Capacity Decisions


Mr Iain Farmer

The mining value chain comprises many inter-related components, from mines to transportation, to customers. When the individual components are optimized separately the value that can be generated from the enterprise suffers. Optimization of the mining value chain requires a shift away from conventional methods of optimization and towards the simultaneous optimization of all related aspects, including: the mine’s extraction sequence, material destination decisions, material transport decisions, and equipment capacities. Further, if these decisions are to be robust, they must be made while considering sources of uncertainty and managing the related technical risk. The contributions included in this paper are meant to help industry practitioners plan and evaluate mining projects under uncertainty. Specifically, the simultaneous integration of capacity decisions in long-term scheduling is meant to provide a tool that generates a NPV-optimal mine sequence and destination policy that is also synchronized with the equipment capacities. At the same time the mine plan must be robust when tested under geological uncertainty and metal price uncertainty.