You read a lot these days about the push for more optimization in mining. Ore grades are declining and high-grade, easy-to-process deposits are becoming scarcer, forcing new projects to face greater risk. To compensate for this, miners are told to optimize and innovate more. They are doing both; including making technological gains.
Mining has gotten better at squeezing more value from each tonne of ore. So why do see mining projects still stumbling and everyone being pushed to do even more optimization?
The answer may be that the industry is confusing optimization with resilience. A mine tuned to perform perfectly under one set of conditions may become fragile when those conditions shift. And in mining, things are always shifting. Maybe the head grades don’t meet expectations or metal prices collapse. Maybe there is a shift in community sentiment or a geotechnical surprise in the mine.
The pursuit of a single “optimal” outcome might leave projects well engineered, yet poorly equipped for reality. Flexibility (or resiliency) aren’t the enemy of efficiency; they may be the only way to make efficiency sustainable.
Which Aspects Should Be Optimized
Is the concept of optimization the most important factor in a project’s design? If so, which aspect is the most important to optimize? A danger is optimizing for a single criteria, for example NPV, at the expense of everything else. Selecting the optimal design for one aspect will likely result in being sub-optimal in some of the others.
Once one has selected the aspect to optimize, the next issue becomes what to base the optimization on. Optimization typically is founded on a specific set of inputs. When these change, the optimized design will likely require revision. This then forces a new optimization, which can create a never-ending optimization loop because things are always changing in mining.
The design aspects that I have seen recommended for optimization range from:
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optimize your drill hole locations
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optimize your pit size
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optimize your production schedule
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optimize your throughput and/or recovery
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optimize your water consumption
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optimize your carbon footprint
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optimize your project design
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optimize your labour productivity
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optimize either NPV, IRR, or payback
- optimize your metal production cash cost
There are a lot of suggestions and recommendations and people will have differing opinion on which are the most important optimizations. This opinion is typically driven by their own expertise or field of work, not necessarily by what is best for the project.
Optimal vs Resilient Design
Optimization of a mining project can yield meaningful cost and efficiency gains. However mines face inherent constraints, such as ore grade variability, geological surprises, equipment life cycles, and regulatory issues.
Company success is typically driven by a broader set of variables: commodity price cycles, capital availability, asset portfolio quality, ESG and social license, M&A timing, and balance sheet strength. A perfectly optimized mine in a declining commodity or in a politically unstable jurisdiction may underperform a less-optimized mine in the right location at the right time.
Chasing optimization can sometimes lead to over-investment in a single asset, reduced flexibility, or operational fragility. The system performs well only under the ideal conditions.
Hence flexibility is important. If the mine plan is so rigid that it cannot pivot when a new high-grade zone is discovered or a pit wall becomes unstable, then one has optimized for a single scenario rather than for long-term resilience. Rather than designing for the “best case,” design for resilience.
Flexibility builds in the ability to scale production up or down, switch mining sequences, or pivot processing approaches as conditions change. Resilience has real value in mining, where geology, markets, and costs are unpredictable.
Flexibility identifies and can mitigate technical, geopolitical, regulatory, environmental, and market risks. The mines that do run into trouble rarely do so because they weren’t optimized; they fail because key risks weren’t anticipated or managed.
Workforce capability, safety culture, and leadership quality are key predictors of operational success. Optimization alone may not be able to address high turnover, poor safety records, and weak supervisory capacity. These can erode profitability far more than sub-optimal scheduling.
In my experience, the best operations have systems for ongoing learning and improvement rather than seeking a one-time optimal design. However, there is still a place for full optimization in some situations.
When does a flexible project design win?
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Commodity prices are volatile up and down
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Geological uncertainty is high (low proportion of Measured Resource)
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Mining uncertainty (limited geotechnical investigations)
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Long mine life (10–30+ years), where conditions will certainly change
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Regulatory or social environments are unpredictable
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Capital markets may require staged investment rather than full financing
When does an optimal project design win?
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Shorter mine life where conditions are unlikely to change materially
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Commodity is stable, well-hedged, or under long term offtake contract pricing
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Geology and processability is well-understood (mature, well drilled-out deposit)
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Capital is constrained and upfront efficiency is critical (you need to get it right)
Unfortunately some might view flexibility as a weakness. If a company has to change a plan or pivot, some will view that as a sign that the company is poor at planning and they don’t know what they are doing. In some cases, this might be true. Conversely the company may simply be reacting to unforeseeable outside influences.
The Path to Resiliency
If one decides to pursue the path of operational flexibility, what are the things that help make it happen?
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Design for flexibility at the start: Build project components that can scale up or down as needed. This might include wider pit ramps, larger infrastructure, some modularization in the processing system and the mine. Building a single rigid optimal design can be a trap. Open pit mines may be inherently more flexible than underground mines.
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Maintain multiple ore sources: Maintain flexibility across different mining areas and ore zones with different metallurgy or head grades means one can blend ore as needed. Multiple mining areas provide flexibility in the case of geotechnical or weather events. Multiple stockpiling is also part of flexibility in design and operation.
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Be careful consuming all high grade ore: In order to boost NPV, often most of the high grade ore is consumed early in the schedule, meaning the back part of the schedule relies on low grade material. This reduces economic flexibility if prices decrease in the future and may also miss out on the benefits if prices rise.
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Real-time data collection and adaptive planning: Real time control systems let operations respond to actual conditions rather than following a fixed weekly plan. The idea is to shorten the time between observation and reaction, not to automate rigidly but enable the system to adapt rapidly.
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Keep a cross-trained workforce: Operational flexibility may be enhanced if people can fill multiple roles. Cross-training operators means one can redeploy people as needed when conditions change.
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Maintain financial health: A company with low debt, high cash assets, and easy credit access can keep a mine on basic functionality (or care-and-maintenance) rather than being forced to sell assets or close the doors during a downturn. Financial health will help ensure operational flexibility. The major miners already know this. The junior miners learn it the hard way.
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Build supplier and contractor relationships before needed: Much like access to credit, long-term supplier arrangements might mean one can find labor and materials faster than competitors scrambling during downturns or upturns.
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Scenario-plan continuously: Run multiple what-if commodity price, head grade, geotechnical & water management scenarios regularly during operations, not just at the feasibility or permitting stage. Operations change over time, and teams that have already pre-planned “what if this happens” respond better when it really happens.
Flexible mining operations may sacrifice a little efficiency at peak conditions and not meet the fully optimized vision. However this flexibility is a trade-off for the ability to stay profitable over a range of scenarios.
Conclusion
Rather than focus on constant optimization in design, it may be wiser to focus on a flexible design. Adaptability, flexibility, and resilience may be more important than being fully optimized.
I recently noticed a few new mining studies that relied on toll milling as their base case operation. This made me wonder if this is a trend and if there are more examples of where this is happening.
USER PROMPT: What are the risks of toll milling plan.
RESPONSE: The Qualified Person (QP) signing off on a technical study that uses toll milling as the base case carries significant professional and regulatory responsibility, particularly under NI 43-101 in Canada or JORC in Australia.
The results given by Claude are quite thorough and insightful. It’s hard to argue with its observations and conclusions. This research took all of 30 seconds, so I can see it is no longer difficult to become a blog writer. Writing isn’t the challenge; finding interesting topics is.
Recently I have been seeing more mining studies proposing to use the dry stack approach. In some cases, they no longer even do the typical tailings trade-off study that look at different options. The decision is made upfront that dry stack is the preferred route due to its environmental acceptability and positive perceptions.
The Guide covers several topics, including tailings characterization; site closure concepts; filtered tailings stack design; material transport, stacking systems; and tailings dewatering methods. The Guide covers all the basics very well. The one area that jumped out at me is the tailings characterization and testing aspect.
Major miners, such as BHP and Rio Tinto, typically spare no expense on material testing for metallurgical or geotechnical purposes. They have the funds available to test and engineer to a high level to adequately de-risk the project to meet their investment thresholds.
If an engineer understands that a Mine Builder’s project will move from PEA to PFS to FS in rapid succession, then there is more incentive to ensure each study is somewhat integrated.
The objective of the Mine Vendor is to make the project attractive to potential buyers. There is less urgency in fast tracking detailed engineering and permitting.
As an engineer, it is helpful to understand the objectives of the project owner and then tailor the technical studies to meet those objectives. This does not mean low balling costs to make the study a promotional tool. It means focusing on what is important. It means recognizing the path, and what doesn’t need to be engineered in detail at this time. This may save the client time, money, and improve credibility in the long run.
This post is just a brief discussion of mining project timelines. For those interested, there a few additional project timelines for curiosity purposes. Each path is unique because no two mining projects are the same. You can find these examples at this link “
This article is about the benefit of preparing (cutting) more geological cross-sections and the value they bring.
Long sections are aligned along the long axis of the deposit. They can be vertically oriented, although sometimes they may be tilted to follow the dip angle of an ore zone.
Cross-sections are generally the most popular geological sections seen in presentations. These are vertical slices aligned perpendicular to the strike of the orebody. They can show the ore zone interpretation, drill holes traces, assays, rock types, and/or color-coded resource block grades.
When looking at cross-sections, it is always important to look at multiple cross-sections across the orebody. Too often in reports one may be presented with the widest and juiciest ore zone, as if that was typical for the entire orebody. It likely is not typical.
Bench plans (or level plans) are horizontal slices across the ore body at various elevations. In these sections one is looking down on the orebody from above.
3D PDF files can be created by some of the geological software packages. They can export specific data of interest; for example topography, ore zone wireframes, underground workings, and block model information. These 3D files allows anyone to rotate an image, zoom in as needed and turn layers off and on.
The different types of geological sections all provide useful information. Don’t focus only on cross-sections, and don’t focus only on one typical section. Create more sections at different orientations to help everyone understand better.
When I am undertaking a due diligence review or working on a study, very early on I like to have a look at the grade-tonnage information. This could be for the entire deposit resource, within a resource constraining shell, or in the pit design.
However, if the tonnage curve profile resembled the light blue line in this image, with a concave shape, the ore tonnage is decreasing rapidly with increasing cutoff grade. This is generally not a favorable situation.
One complaint I have about reporting mineral resources inside a resource constraining shell is the lack of strip ratio information. This applies whether disclosing a single mineral resource estimate or variable grade-tonnage data.
Regarding mineral resources, one should be required to disclose the waste tonnage and strip ratio when reporting resources inside a constraining shell. The constraining shell and cutoff grade are both based on defined economic factors such as unit mining costs, processing cost, process recoveries, and metal prices. With respect to the mining cost component, the strip ratio is a key aspect of the total mining cost, yet it normally isn’t disclosed.
In 43-101 technical reports, the financial Chapter 22 normally presents the project sensitivities expressed in a spider diagram or a table format.
The primary question to be answered is whether one can mine safely and economically without creating significant impacts on the environment.
Lake Turbidity: Dike construction will need to be done through the water column. Works such as dredging or dumping rock fill will create sediment plumes that can extend far beyond the dike. Is the area particularly sensitive to such turbidity disturbances, is there water current flow to carry away sediments?
Pit wall setback: Given the size and depth of the open pit, how far must the dike be from the pit crest? Its nice to have 200 metre setback distance, but that may push the dike out into deeper water.
Once the approximate location of the dike has been identified, the next step is to examine the design of the dike itself. Most of the issues to be considered relate to the geotechnical site conditions.
Each mine site is different, and that is what makes mining into water bodies a unique challenge. However many mine operators have done this successfully using various approaches to tackle the challenge.
NPV One is targeting to replace the typical Excel based cashflow model with an online cloud model. It reminds me of personal income tax software, where one simply inputs the income and expense information, and then the software takes over doing all the calculations and outputting the result.
Pros
Like anything, nothing is perfect and NPV may have a few issues for me.
The NPV One software is an option for those wishing to standardize or simplify their financial modelling.
We likely have all heard the statement that increasing pit wall angles will result in significant cost savings to the mining operation.
The results of applying the increased inter-ramp angle to each of the four pits is shown in the Bar Chart. Note that the waste reduction is not necessarily the same for each pit. It depends on the specific topography around each pit.
In general one can typically see four positive outcomes from adopting steeper pit walls. They are as follows:
4. Pit Crest Location: The steeper wall angles result in a shift in the final pit crest location. The Image shows the impact that the 5 degree steepening had on the crest location for one of the pits in this scenario.
It is relatively easy to justify spending additional time and money on proper geotechnical investigations and geotechnical monitoring given the potential slope steepening benefits.
I remember in the late fall of that year, the company had a chance to bid on a larger project in Gros Morne National Park, Newfoundland. So our President, Frank Nolan (he was a brother to Fred Nolan, the infamous land-owner at Oak Island, by the way), decided he wanted to see the site and he chartered a Bell 106 helicopter to fly us there from Deer Lake. It was December (they say “December month” in that province) and when we got close to the Park, we ran into a sudden snow squall.
The QMM field office In Port Dauphin, Madagascar was located near the edge of town, and I typically walked from my lodging to the office each morning when I was there, about the time when school started for the children. Typically I passed dozens and dozens of tiny bamboo huts with corrugated metal roofs, and dirt floors each about 2 meters square.
It is one thing to briefly visit a remote project as part of a review team. It is another thing to be there as part of a design team trying to solve a problem and engineer a solution. I know of many engineers and geologists that would have similar work life experiences as part of their careers. However John has taken the initiative to write it all down.