A practical approach to open-pit mine planning under price uncertainty using information gap decision theory

In the context of open-pit mine planning, uncertainties including commodity price would significantly affect the technical and financial aspects of mining projects. A mine planning that takes place regardless of the uncertainty in price just develops an optimized plan at the starting time of the mining operation. Given the price change over the life of mine, which is quite certain, optimality of the proposed plan will be eliminated. This paper presents a risk-averse decision-making tool to help mine planners in mining activities under price uncertainty. The objective is to propose mine planning in a way that a target Net Present Value (NPV) is guaranteed. In order to reach this goal, Information Gap Decision Theory (IGDT) is developed to hedge the mining project against the risk imposed by the information gap between the forecasted and actual price. The proposed approach is of low sensitivity to the price change over the life of mine, and can use the estimated prices with uncertainty. A case study at an existing iron mine demonstrates the performance of the proposed approach. The results obtained showed that the proposed method could provide a robust solution to mine planning under price uncertainty. Moreover, it was concluded that the method could present more reliable mine plans under condition of price uncertainty.