Embracing optimization is your key to

survival
by Brian Lambert, part of a series on Unearthing Best Practice for Mine Optimization
We all know that in todays competitive global economy, businesses must deliver better results
using fewer resources in order to survive. Fortunately, mine scheduling is one area where better
results can be achieved with existing technology. This climate appears to be accelerating, not
abating, and so most of us accept it as a significant part of our job. We must figure out how to do
more with less, and simultaneously enhance our competitiveness. Mining organizations are not
immune to this challenge; we must find higher project net present values (NPVs) in tighter
planning horizons as compared to days gone by.

Challenges to Finding the Best Schedule

The objective in mine scheduling is to find the best possible schedule, sometimes in the presence
of complex, conflicting requirements. Best can be anything that lines up with an organizations
business objective. Normally it is Net Present Value (NPV). Optimization technology is capable
of addressing the challenges of finding higher NPV schedules with less planning effort. A
challenge is to find better quality (higher NPV) schedules with less planning effort. We assume
that identifying and evaluating more schedules increases the likelihood of finding a better
schedule, yet it requires more of our time. So should we take time from other tasks to find better
schedules, or should we settle for any suitable schedule and then move on to our other tasks? Either
way, once we determine the final schedule, we still have a lingering concern that we havent found
the best schedule.

What is optimal?
The terms optimal and optimization are often used but not always correctly understood or
applied. Lets clarify the real meaning of these terms before proceeding. Optimization is the
approach for finding the optimal solution and providing us with the guarantee that no better
schedule exists. In general, both words focus on problem solutions mine schedules in the context
of this article. Optimal means the best solution, while optimization is the approach taken to
find the optimal solution. We know that optimal means best, but how can we be certain that our
schedule is optimal? To know that a schedule is truly optimal, we must prove that no other better
schedule exists. We can do this by evaluating every possible schedule that satisfies the operational
requirements. However, the large number of potential schedules makes this task impossible
without the use of a computer-based mathematical modelling approach. Optimization is this
approach, intelligently searching through all feasible schedules, and providing us with the
guarantee that no better schedule exists.

Approaches to Finding the Best Schedule

Without optimization, what does searching for the best schedule look like?

The Manual Approach

When we search for the best schedule manually, we typically use spreadsheets and follow these
steps:

We create schedules that we believe should produce good results

We evaluate those schedules by calculating a value (e.g., NPV) for each of them
We choose the schedule with the highest value.

Drawbacks of the Manual Approach

This process can be laborious, as satisfying competing constraints can be difficult,

especially when meeting blending requirements or developing multiple material-routing
scenarios
There is a risk that we will miss out on evaluating many potential schedules
Our solution is limited to the possible schedules created in the first step; we can only
evaluate those that have been created
Evaluating large numbers of schedules takes a lot of time

The Automated (Heuristic) Approach

A better method is to search for the best schedule using an automated computer-based approach
for generating and evaluating schedules. This is typically a heuristic method employing these
steps:

We create a set of rules and logic which characterize what a best schedule should look
like
The heuristic generates and evaluates schedules based on our rules and logic
Our computer quickly produces schedules that we may not have even considered,
reducing the chance that the best schedule is overlooked

Drawbacks of the Heuristic Approach

There is no guarantee that the schedule will satisfy complex constraints (e.g., blending)
There is a risk that the truly optimal schedule has not been found
We still may have to manually envision different sets of rules and logic to create and
solve different model variations, in order to ensure the heuristic evaluates a sufficient
number of potential schedules.

The Preferred Approach to Finding the Optimal Schedule

If our aim is to find the provably best schedule and minimize the hours required to find it,
schedule optimization is the preferred approach to take.
Why optimization is the best approach

We input model parameters and requirements for our project, and the modelling software
builds a mathematical model
The optimizer uses this model to sort through all feasible schedules
The optimizer chooses the optimal schedule with a guarantee that no better schedule
exists

Tying it together using a mining analogy

We can think of manual, heuristic and optimized scheduling approaches in terms of physical
mining operations.
Manual scheduling is like excavating your entire pit with a single miner digging with a spade.
The engineer searches for the best schedule, one schedule at a time.
Heuristic scheduling is similar to excavating with a modern shovel, but without knowing the
limits of the deposit. The engineers heuristic searches through many schedules, but there is no
guarantee that the best schedule wont remain unexamined.
Optimized scheduling is analogous to how modern, efficient mining operations are executed,
utilizing the best equipment within the defined limits of the deposit. The optimizer searches
through all possible schedules, with the guarantee that no potentially valuable schedule will
remain unevaluated.

Embracing optimization is the key to your mining

organizations survival
Knowing that optimization finds the truly optimal solution, you can use your time on other
important tasks such as thinking, planning and analyzing the results.
As margins decrease and competition increases, mining companies are looking for a lifeline.
Those who successfully embrace and leverage technologies will survive and thrive, and those
who dont will be left behind.
For decades successful miners have enjoyed a competitive advantage by using optimization.
Today, that advantage has become a necessity, and is why the top performing mining companies
include optimized scheduling along with other cutting-edge technologies.
Will optimization be your lifeline to surviving in todays economy, enabling you to do more with
less, while simultaneously enhancing your competitiveness?

Why mine planning is all about collaboration

by John Battista, part of a series on Strategy For Better-aligned Mine Plans
Over many years working as a mine planner I have had the opportunity to participate in the
preparation, presentation and implementation of mine plans at various levels and locations. A
question that I have often heard asked is What does a good mine planning process look like?
Mine planning is a hierarchical process which requires a collaborative approach, involving a
wide range of stakeholders, both internal and external to the organization. It must be driven by
the companys senior management and appropriately governed at Board level.
Here are the steps I would typically follow to set up a best practice mine planning process.

1. The Base Plan

To start, every mining business should produce a Base Plan. This represents an optimized,
strategic, sustainable base case position. It is sometimes referred to as a stay in business case
and represents the best life-of-mine plan that can be produced without any significant capital
being spent on bringing additional resources/reserves on line, and without any growth or
expansions to production capacity.
This plan just runs out to the natural end of reserve life using sustaining capital to maintain what
you have in terms of deposit reserves, infrastructure, plant and equipment. It must also take into
account mine closure and rehabilitation costs.
The Base Plan is an optimal strategic mine plan that sustainably delivers best value to its
stakeholders as a minimum stay-in-business case.
So, what makes the best base plan? Well, since any mining business should focus on sustainably
delivering value to its shareholders/owners, the best base plan will generally be the one that does
just that, subject to the constraints mentioned above.
But this strategic plan must be practically achievable as well and this is often where strategic
planning falls short of the mark. Feedback from mine operations management and mine planners
who typically have the most up-to-date practical knowledge of the mines operating conditions is
critical. As a strategic mine planner, you must seek their feedback, understand it and incorporate
it into the strategic mine plans.

2. The Recommended Growth Plan

The next vital step, whether youre in boom time or struggle town, is to evaluate a wide range of
options to determine the Recommended Growth Plan. Once again the objective is to sustainably
deliver maximum value.

This recommended growth plan will typically include some investment in growth via several
means, such as exploration, acquisition and/or capital expenditure.
The Recommended Growth Plan elaborates the base plan further to account for possible
investments for project growth.
There will also be some constraints to growth. These could be imposed by your companys
Board or senior management, infrastructure- or market-related, due to environmental or social
factors, or some combination of these.
But strategic planners must always challenge these constraints to make sure that they really are
hard constraints, rather than just assumptions that have been imposed without any justification.
Challenging these constraints is key to identifying the best path to value for your business. As a
strategic mine/business planner, part of your job is to help your senior management and Board do
just that. The fewer constraints you start with, the better the opportunity you have to find the
truly optimal strategic schedule for your mine.

3. The Strategic Business Plan

Together, the base plan and the recommended growth plan form the basis of the Strategic
Business Plan which is typically prepared by a strategic mine planner and submitted to the
companys senior management for approval.
Once prepared and approved, the strategic business plan must be effectively communicated to all
key stakeholders, both within your organisation and externally. The best plan in the world is no
good to anybody if all it does is sit in a report on a shelf gathering dust.

The strategic plan needs to be regularly updated to ensure it remains workable. Often, this is an
annual cycle, but the frequency of updates is really a matter for your own business to decide.
The Strategic Business Plan is derived from the base and recommended growth plans and must
be regularly updated and communicated to stakeholders.
The important thing to remember here is that the strategic plan needs to be updated according to
the actual state and the current knowledge of your business and not the superseded information
that made up your original feasibility study.
Feasibility studies are completed at a given point in time and generally serve a particular
purpose, e.g. to prove the feasibility to invest in a particular mining project and to assist with
obtaining funding to do so.
Things like the changing needs of the business, increased knowledge/understanding of ore bodies
and hard-earned experience gained during operations will inevitably mean that a feasibility
studys mine plan will very quickly become out-of-date.

4. Medium-term Plans
The strategic business plan then drives the direction of your Medium-term Mine Plans. Typically
these are 2-5 year timeframes, but again, the parameters are up to your business to decide.
The Medium-term Plan is typically 2-5 years long and it must be aligned with the objectives set
in your strategic business plan.
The medium-term plan may be simply the first 2-5 years of the strategic plan, with a bit more
added granularity to allow for more detailed budget planning, or it may be a separate plan put
together by a different group of mine planners.
Whatever the case, it must focus on efficiently delivering the objectives and milestones that have
been set in the strategic plan. This ensures that the maximum value that has been identified in the
strategic business plan is delivered.
Of course, situations will arise where the two planning horizons will be in conflict. Thats where
constant collaboration and feedback between those responsible for the medium-term planning
and strategic planning functions is essential.

5. Short-term Plans
Short-term Mine Plans are then developed on a rolling basis. Typically these have time frames
ranging from three-month forecasts to monthly, weekly and daily equipment-based production
plans.

The Short-term Plan is typically developed on a monthly or weekly rolling basis and must be
both aligned with the medium-term plan, and flexible enough to deal with operational variability.
At the shortest time frame, these plans form a clear, concise set of instructions for mine
operations to execute in the field; for example, where to prepare the next bench or drill pattern,
which shot is being fired next, where the shovels are digging and where the dirt is being hauled.
Once again, alignment between the short-term and medium-term plans is essential.
However, the short-term plan should still retain adequate flexibility and agility to deal with
variability in key operating factors such as grades, short-term stockpile levels, equipment
downtime, weather conditions and other environmental factors.

Aligning the Different Planning Levels

In my experience, for a mine planning process to be considered best practice, all mine planning
levels and horizons need to be aligned towards the primary objective, which is to sustainably
deliver maximum value to the shareholders of the business.
Each planning level must adjust to uncertainties and still remain aligned with the next level to
deliver maximum value to the business stakeholders.
All planning levels must be allowed, within an acceptable tolerance, to deviate from the next
level plan, in order to account for uncertainties that can arise in the short term.
The key is that each planning horizon is able to adjust its planning to account for these
uncertainties and still maintain alignment with the next level of plan, whilst all the time
providing feedback to the next level of plan to facilitate continuous improvement. This kind of
collaboration ensures that each level of the planning hierarchy remains aligned with the primary
business objective.
What does a best practice mine planning process look like to you? Lets discuss it send me
your comments using the form below.

Geologic risk: What you dont know can hurt

you
by Joe Kraft, part of a series on Strategy For Better-aligned Mine Plans
Regardless of how much of an all-star your geologist may be, its pretty hard to get around the fact
that there is never 100% confidence in grade or tonnage estimates. This is often hard to stomach
for those that rely on this information, particularly when the business focus is to meet key
performance indicators (KPIs) which are highly sensitive to reserve variation. Without a doubt,
the first line of defense in managing risk associated with geologic uncertainty is a better
understanding of your position.

What is the typical approach?

Most mining schedules are based on point estimates for material quantities and qualities. This
information is handily supplied by your local geostatistician in a block model format. Often times,
these point estimates are generated from a more comprehensive conditional simulation method,
however they are eventually translated into an average grade model in order to be used in typical
planning processes. Your mine planner then grabs ahold of this beast and begins generating mining
schedules to either set KPIs for strategic or budget level planning, or follow KPIs for tactical level
planning.
When the reality hits you in the face and the grade isnt quite what you had planned for, what
happens then? A lot can happen. And it happens every day.

What is the typical result?

The specific conditions or style of the local management will often result in an operationally
appropriate response for handling the actual grades. However, some simply continue mining
despite this discrepancy, and attempt to manage the variation later through some type of

downstream blending or stockpiling buffer. Other operations shift the mining focus to another
available area in order to deliver the KPIs of ore tonnage or grade.
Yet in nearly every case, overcoming this unforeseen obstacle means a deviation from the original
plan, and this registers as a mark against mine plan compliance. Further, these deviations cause
ripple effects for the remainder of the operational schedule which then must be re-configured to
maintain feasibility.
This often results in increased costs, an increased risk to the future plan, and additional grey hairs
on mining engineers heads.
So what is the core of the problem?

Lets spill the beans

Lets face it: in mining, were not a manufacturing facility producing cans of beans in a controlled
environment. No offense to our bean-packing friends here, but in mining we are dealing with
something much more dynamic and complicated. We have many unknowns, and whether we like
it or not, the few knowns are actually not-that-well known either.
This uncertainty begins with our incomplete assessment of what is in the ground. Further,
limitations in data, tools, and/or local processes often force mining businesses to make numerous
assumptions in order to make planning and managing their operations more digestible. Without
understanding where our original point estimates stand in relation to the range of possible
realizations, our operation is walking a tenuously fine line.

What we can do about it

While the ultimate goal is to generate a robust mine plan with an optimal schedule given a range
of possible future conditions, we should analyze our existing mine plan first to know where we
stand. To do this, we can run a series of simulations on our existing schedule using an informed
variation of the critical grade elements in the base data.
We can then compare the current KPIs of the mine plan with the possible solutions (simulations)
and draw information from this analysis to indicate its level of robustness with respect to that
statistical representation. This topic is discussed in more detail here.
So how does all this relate to mine plan compliance?

Understanding your position

The first line of defence in managing this type of risk is to be better informed about geologic
uncertainly when generating (and approving) our mine schedule.

If we know that our mine plan is based on an average grade model that predicts only a 10%
probability for some key parameter (ore quantity produced, metal produced, net present value,
etc.), its quite likely that management will go back and revise the plan before establishing
operational KPIs on it.
This then will fundamentally increase the likelihood that the plan will be followed, and overall
compliance (not to mention stakeholder confidence in the plan) will be maintained. A good result
for all involved.
What is your first step in increasing your mine plan compliance? Developing a process for aligning
the different levels of your mine plan? Or maybe managing the geological uncertainty within your
mine plan?

Solve one scenario, youve solved them all

by Joe Kraft, part of a series on Protecting Strategic Mine Value through Scenario Planning
Boss:
Bob,
I
need
another
mine
Bob: No problem. Thats what I do, Boss.

plan

for

the

iron

ore

complex.

Boss: This just came down from above. They want a bunch of scenarios run on different crushing
rates. They also want scenarios on the timing of commencement of those satellite pits.
Bob:
I
thought
I
just
Boss: Different this time. New parameters. Crushing to vary between 26 and 35mtpa on 1mtpa
increments with specific costing for each. We also want to evaluate the satellite pits commencing
on each of the years in the schedule for contribution to the blend.
Bob: So if I understand what youre saying, Boss, thats 10 possible crushing rates with further
evaluation of the 3 satellite pits in each possible period over a 10 year mine plan?
Boss: You got it.
Bob: Ah, Boss, thats 300 scenarios. Using our excel-based mine scheduling tool that will take
me, hmm, lets see, with an hour per scenarioabout a month. Bear in mind, Im a guru at this
thing. A ninja. The best. Of course, thats a month if I sleep. However, if I only sleep 4 hours per
night I could get it done in about two weeks. Youll have to feed me at my desk.
Boss: There has to be a better way.
Well, Boss, there is. And its called Alternative Process Optimization.

What is Alternative Process Optimization?

In basic terms, Alternative Process Optimization is a technique that solves for the best possible
arrangement given simultaneous consideration of all other available arrangements. In mine
scheduling, this best arrangement means finding an optimal schedule which goes beyond the
problem of the simple block extraction sequence. It encompasses modelling alternative paths for
downstream components, and uses all this to represent the spectrum of operating options.

What can it do for us?

We can employ Alternative Process Optimization in a number of ways to assist us in mine
scheduling, from determining cut-off grades and material destination policies to choosing the best
possible mill configuration from a range of choices. It can also provide a framework for our
equipment selection.

How can it reduce our workload?

This technique can significantly reduce our planning workload as it effectively decomposes the
traditional approach of scenario evaluation into a single optimization problem. For Bobs classic
example above, taking the traditional route would involve creating a large scenario matrix by hardcoding specific parameters, one permutation per scenario, to represent a solution for each possible
option. It only takes a few parameter variations and a few scheduling periods before the matrix
becomes enormous. It would take a major effort to individually solve and compare each scenario.
If we use alternative process optimization, we will need to invest an incrementally larger set-up
time in the beginning. However, this will be more than offset by the fact that we only have to run
a single optimization to get the answer. And, as it employs a mathematical model to optimize our
unique problem, we can be guaranteed there is no better solution.

How can we access this technology?

Alternative Process Optimization is embedded in Minemax Scheduler and has been successfully
used to solve these types of problems for many years. The technique uses a split decision link
framework to define alternatives for our real operating options. We can then map input information
to these definitions called alternative processes. During optimization, this will provide logic for
making optimal decisions regarding which blocks contribute to which alternative processes.