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Transition from Open-Pit to Underground as a New Optimization Challenge in Mining

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Article  in  Journal of Mining Science · September 2009

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Journal of Mining Science, Vol. 45, No. 5, 2009

TRANSITION FROM OPEN-PIT TO UNDERGROUND

AS A NEW OPTIMIZATION CHALLENGE IN MINING ENGINEERING

E. Bakhtavar, K. Shahriar*, and K. Oraee** UDC 622.27.326

There are many deposits that have the potential to be mined by a combined method of open-pit and
underground. In this manner, the most sensitive problem is the determination of the optimal transition
depth from open-pit to underground or vice versa. To calculate this depth, a model based on block
economic values of open-pit and underground methods together with the Net Present Value (NPV)
attained through mining is first presented. During the model, NPV of open-pit is compared to the value of
underground for the similar levels. A hypothetical example is used in order to analyze the model in detail.
Based on the assumptions made such as: a discount rate of 15 %, each pair of contiguous level-cuts have
to mine during one year, and one level as the height of crown pillar, the optimal transition depth was
determined to be equal to 62.5 m. Then, level 6 was considered as the suitable crown pillar. Finally,
maximum total NPV of the combined mining was calculated to be 25.54 units of currency.

Transition depth, optimization challenge, open-pit, underground, discount rate, NPV

INTRODUCTION
There are essentially two methods for mining: surface mining and underground mining. Open-pit
being one of the surface mining methods is by and large regarded to be advantageous over underground
methods, especially as regards recovery, production capacity, mechanizeability, grade control and cut
off grade, ore loss and dilution, economics, and safety. Underground mining however can be
considered as being more acceptable than surface mining from environmental and social perspectives.
In addition, underground mining will often have a smaller footprint than an open-pit of comparable
capacity. Many deposits can be mined entirely with the open-pit method; others must be worked
underground from the very beginning. In addition, there are the near surface deposits with considerable
vertical extent. Although they are initially exploited by open-pit method, there is often a point where
decision has to be made whether to continue deepening the mine or changing to underground methods.
The point at which economic considerations dictate the change of method from open-pit to
underground methods is called “transition depth”. Accurate determination of the depth in mines where
both methods are used is of utmost importance.
Some of the biggest open-pit mines worldwide will reach their final pit limits in the next 10 to
15 years [1]. Furthermore, there are many mines planning to change from open-pit to underground
mining due to increasing the extraction depths and environmental requirements [2]. In this way, it is
likely that block and/or panel caving will enable the operations as an underground method to continue
achieving a high production rate at low costs [3]. To date, and particularly in the past decade, limited
research has been undertaken in order to determine the transition depth from open-pit to underground
mining. The projects were conducted to solve the transition problem of some mines with combined

Division of Mining Engineering, Urmia University of Technology, E-mail: ebakhtavar@gmail.com, Urmia,

Iran. *Department of Mining & Metallurgy Engineering, Amirkabir University of Technology,
E-mail: k.shahriar@aut.ac.ir, Tehran, Iran. **Department of Management, University of Stirling,
E-mail: sko1@stir.ac.uk, Stirling, UK. Translated from Fiziko-Tekhnicheskie Problemy Razrabotki Poleznykh
Iskopaemykh, No. 5, pp. 86-94, September-October, 2009. Original article submitted February 11, 2009.
1062-7391/09/4505-0485 ©2009 Springer Science + Business Media, Inc.
485

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potential. In this regard, a few number of them led to what seemed to be an optimal basic method.
Chuquicamata, for example is an open-pit mine located in Northern Chile. The present mine plan is for
open-pit operations and is to cease operating in 2013 at a depth of 1100m and the remained deposit
must be economically exploited by block caving [4, 5]. Grasberg copper-gold mine in Indonesia is
known as a combined mine of open-pit and underground. Mining by open-pit method will finish by
2015 [6, 7]. Diavik diamond mine which uses open-pit method is expected to cease by 2012 and it will
become totally underground thereafter [8]. Kanowna Belle gold mine in Australia is the other mine is
another example where the transition to underground mining was done by early 1995 [9]. Current
schedules in the Argyle diamond mine located in the eastern Kimberley region of Western Australia
show the open-pit finishing production by the end of 2007, having reached its economic depth [10, 11].
Nearly all of the diamond production of the Ekati Diamond mines in the Northwest Territories of
Canada has been from open-pit mining of multiple pipes. However, as some mines deepen, it is
planned to be converted to underground such as the Koala North combined mine [12]. The Meng-Yin
diamond mine consists of two ore deposits that one of them must be potentially mined being a
combined mining. In order to exploit the deposit, Cut & Fill can be considered as the proper underground
method [13]. At the Palabora mine, the transition to caving 400m below the bottom of the 800m deep
open-pit resulted in a slope failure of the North wall that began in 2003, and is still mobile [14].
There are several other examples of completed open-pit mines, or those in the process of implementing
a transition to underground mining; these are: Bingham Canyon in USA, Mansa Mina in Chile, Venetia
in South Africa, Mount Keith and Telfer in Australia, and Kiruna mine in Sweden [15].
The first method for determining transition depth from open-pit to underground was the
“Allowable Stripping Ratio”, which is a relation between the exploitation cost of 1 ton of ore in
underground (and in open-pit) and the removal cost of waste in relation to 1 ton of ore extracting by
open-pit [16, 17]. In 1982 an algorithm by Nilsson based upon cash flow and Net Present Value (NPV)
was presented [18]. In 1992 however, in order to consider the transition depth as an important issue
with respect to deposits with combinational extraction, the previous algorithm (1982) was again
represented and reviewed [19]. Furthermore, in 1997 to state the transition depth problem, Nilsson
underlined discount rate as the most sensitive parameter in the process [20].
In 1992 Camus introduced another algorithm for this target. This algorithm was presented on the
basis of block models and considering net economic values of blocks for open-pit and underground
exploitation. The approach consists basically in running the open-pit algorithm taking into account an
alternative cost due to the underground exploitation [21]. In 1998, Whittle programming (4-x) which
has been developed to assist in the interfacing of open-pit and underground mining methods was argued
and studied. Due to the applied method in the programming, management can make decisions based on
quantified operational scenarios of the open-pit to underground transition [22]. In 2001 and 2003, an
approach with “Allowable Stripping Ratio” method was based and a mathematical form for the
objective was introduced. Volumes of ore and waste within the open-pit limit were assumed as a function
of constant (ultimate open-pit) depth [23, 24]. In order to determine the optimal transition depth from
open-pit to underground mining a software on the basis of a heuristic algorithm was prepared by Visser
and Ding in 2007 [25]. In the same year Bakhtavar and Shahriar introduced a simple heuristic method
on the foundation of economical block models with open-pit and underground block values. The main
process in the algorithm is a comparison between total values of open-pit and underground [26].
Attempting to solve the transition problem, a research by Bakhtavar and others was carried out
recently. During the research a heuristic model established upon a two-dimensional block model with
the values of open-pit and underground was presented [27]. The present study is conducted through
improving and developing this version of research. In a different manner, a method with an economical
block model base was introduced so that the transition problem might be solved. Some necessary
486
modifications were performed on the algorithm which was originally derived from Nilsson’s algorithm.
The target of the method can be achieved by a comparison between the obtained values of various
alternatives of combined mining [28]. Various researches through an analytical procedure were
conducted in order to determine open-pit to underground transition depth of tabulate deposits. In this
way, in relation to various states some formulae were concluded by using the allowable and overall
stripping ratios. The contemplated states were variously combined from the deposits with outcrops or
overburden and including maximum or minimum possible pit floor width [29].
Recently there have been many mines with a potential of combined mining that focused on the
determination problem of optimal transition depth as a new challenge. It seems that accurate
determination of the optimal transition depth will become an issue of utmost importance in the near
future. Until now due to the researches and studies in this nature only some of the represented methods
are able to solve the problem, but not carefully. In addition, because of the disadvantages of the few
methods (algorithms) and their shortages in finding of transition depth optimally, it is essential for it to be
a new effective model. To calculate this optimal depth, a more accurate heuristic model based on block
economic values of open-pit and underground methods together with the NPV achieved by their mining
is presented. The presented model is established upon the prior algorithm by Bakhtavar and others [27].
It is notable that the model can optimally solve the transition problem only on the basis of technical
and economical considerations, without considering social effects, requirements of the working forces in
relation to open-pit mining lifetime, equipments considerations after open-pit mining closure and so on.
MODEL EXPLANATION
The methodology is established through a heuristic algorithm. It is founded on the basis of
economical block models and consequently block economic values of open-pit and underground
methods together. The authors seek to find an optimal transition depth including the maximum NPV
achieved through open-pit and underground. If an ore deposit has exploitation potential initially by the
open-pit method, and if it proves to greater depths the open-pit mine will economically transfer to a
suitable underground mining method. On the other hand, it is essential to exploit the ore deposit in the
initial levels by open-pit, where in the middle levels the transition problem should be considered. In
some cases ore deposits are potentially mined by open-pit or underground separately. The present
model also will distinguish these cases. The main idea in the model has been taken from the previous
methodology which was introduced by Bakhtavar and others based on comparing block economical
values gained by both open-pit and underground. The present model principally highlights the
difference between the economical consideration and evaluation, and in its algorithm structure and
framework. Unlike the prior methodology the economical evaluation in the present model is founded
on the basis of a certain discount rate and NPVs achieved by both open-pit and underground methods.
The following assumptions were made for this model:
— In both open-pit and underground economical block models, dimensions of the blocks are
12.5×12.5 (as more conventional open-pit bench height and bench slope of 45 degree which is more
common in open-pit optimization algorithms, also the dimensions are applicable being a multiple of
underground working stopes dimensions);
— A level can be mined at most once and through at most one method (open-pit or underground)
with regard to sequencing constraints;
— Definition of at most one uniform crown pillar with constant height being a multiple of level
height considering the selected underground mining method and geotechnical investigations;
— At most one underground stoping method known can be used;
— All open-pit and underground levels are contiguous.
487
 A general schematic of algorithm of the model is shown in Fig. 1. First, both open-pit and
underground block models must be separately generated. Then, it is necessary to establish a long range
mining plan for the deposit. Thus a new terminology, so-called “level-cut”, is introduced which assigns
both open-pit and underground minable blocks in each level. The open-pit minable blocks in each level
(open-pit level-cuts) and consequently optimal final pit limit can be determined using the optimization
algorithms such as Lerchs & Grossmann [30] and Korobov [31]. Furthermore, it is essential to find
underground level-cuts and as a result the optimum underground layout. Hence, the related
optimization algorithms such as Floating Stope Optimizer [32] must be employed. With relation to
open-pit level-cuts, besides the minable blocks in the dependent levels, some minable blocks in the
upper levels may take place, similar to push backs. Nevertheless underground level-cuts are included in
only underground minable blocks in the related levels.
According to Fig. 1 the next step in the algorithm of the model is called “main process” which
marks “A”. As it shown in Fig. 2, the main process dictates to make a comparison between NPVs
achieved by open-pit and underground mining in each level. The beginning of this economical
comparison is level 1 and it continues to level m which is identified as the optimal final level of open-
pit mining without considering any underground alternative.
Figure 2 illustrates the structure and framework of the main process algorithm in detail. If Net
Present Value obtaining from open-pit level-cut 1 were more than or equal to the similar value of
underground level-cut 1, level 1 will be selected for mining by open-pit method and the evaluation
process in the next step must be focused on level 2. Otherwise, it is essential to evaluate levels 1 and 2
together in this manner. In other words, if only open-pit total value achieving from level-cuts 1 and 2
together be more than or equal to the underground total value for these two level-cuts, both levels 1 and
2 will be chosen for open-pit; this will necessitate focusing on level 3. Otherwise, the evaluation in this
manner must be considered in level 1, 2 and 3 together.

Fig. 1. A general schematic chart of the algorithm

488
 Fig. 2. A schematic chart of the main process in the model

The evaluation from level 1 to level m is followed so that a certain level is assigned as an optimal
transition depth (level). Now, among the remaining levels below the optimal transition level, one or
more level / levels from m − y1 to m + y 2 can be assigned (where y1 ∈ {1, 2, ..., M } and
y 2 ∈ {− M , ..., − 1, 0, 1, ..., M } ) even though they may be profitable by underground mining. Then the
remaining levels below the crown pillar are emphasized and attended to extract but only utilize the
underground stoping method (from level m + y 2 to n as final minable level).
Once the optimal transition depth and crown pillar are allocated, the total NPV gained by combined
mining van is calculated using relation (1):
m − y1 n
NPVt = ∑ ( NPVopi ) + ∑ ( NPVui ) , y1 ∈ (0,1, 2, ..., M ) , y 2 ∈ (− M ..., −1, 0,1, ..., M ) , (1)
i =1 i =m + y2

where NPVt is the total NPV the level-cuts (1 to n) extracted by both open-pit and underground
mining; NPVopi is total NPV achieving from the level-cuts (1 to m − y1 ) using open-pit; NPVui is the
total NPV getting from the level-cuts ( m + y2 to n) extracted only using underground.
It is notable that NPV analysis is sensitive to the reliability of future cash inflows that an
investment or project will yield. According to this kind of project (transition problem based on block
economic values) if we assume that income comes or goes in annual bursts and that the discount rate
will be constant in the future, then relation (2) is suitable to calculate NPV:
T
It
NPV = ∑ t , (2)
t =1 (1 + r )

where I is income amounts for each year; r is constant discount rate value; t is number of years the
investment lasts.
489
 Fig. 3. Open-pit economical bock model Fig. 4. Underground economical bock model

HYPOTHETICAL CASE EXAMPLE

In order to analyze the model in detail a hypothetical case example is used. This case embodies 154
blocks of 12.5x12.5m in 11 levels and 14 columns. The economical block models and the block economic
values achieved by open-pit and underground are separately demonstrated in Figs. 3 and 4, respectively.
Based on the economical block model of open-pit and using the Korsakov’s algorithm [31], open-
pit level-cuts and the optimal final limit are determined (Fig. 5). Figure 5 implies the condition that
only the open-pit method is considered as a possible mining alternative for the deposit, level 7 will
assign being optimal final depth (level).
In next step, the optimum underground layout and consequently the underground level-cuts are
determined through floating stope optimizer [32]. To optimally find the underground (stope) layout,
minimum length and height of stope are selected as 2 contiguous blocks, with no limitation for their
maximum amount (Fig. 6).
Table 1 summarizes the profit gained by both open-pit and underground level-cuts without any
discount rate included. Using the model, initial five levels should be profitably mined by open-pit
method. Also, without any crown pillar considered, levels 6 to 11 can be more beneficial by
underground. We shall assume that the height of the crown pillar is one level (12.5 m) on the basis of
geotechnical considerations and the kind of mining method (during the hypothetical example).

Fig. 5. Open-pit level-cuts, optimal final pit limit and final working depth
490
 Fig. 6. Underground block values, optimum underground layout and final working depth

Table 1 takes into consideration that 0.87, 0.76, 0.66, 0.57, 0.5, 0.43 are single present value
factors for a discount rate of 15% and 1, 2, …, 6 years. It is assumed that each two contiguous level-
cuts have to mine during one-year. Thus it is essential to assign the single present value of 0.87, 0.76,
and so on, to the blocks take place in the level-cuts of 1 and 2, 2 and 3, etc., respectively. In this case
and using the discount rate of 15%, the NPVs of the level-cuts achieved by both open-pit and
underground are calculated and summarized in Table 2.
Through the main process on the basis of NPV, the initial five levels are optimally assigned for
mining by open-pit (Table 2 and Fig. 7). That is the optimal transition depth which is determined to be
equal to 62.5 m. In the next step level 6 is allocated as the immediate level below the optimal final open
pit level for crown pillar (Table 2 and Fig. 7). Remaining levels below the crown pillar, are considered
for extracting by underground mining (Fig. 7). All components of transition problem and the results
achieved by the new model for the hypothetical case are shown in Fig. 7.
Finally, the maximum total NPV gained by both open-pit and underground method in combined
mining is calculated to be 25.54 units of currency.

TABLE 1. The Economical Results without Any Discount Rate due to the Hypothetical Example

Profit from
Level-cuts Selected method
Open pit mining Underground mining
1 0 +2 Open-pit
2 +5 +4 Open-pit
3 +4 +3 Open-pit
4 +7 +4 Open-pit
5 +6 +2 Open-pit
6 +2 +5 Underground
7 +2 +3 Underground
8 — +6 Underground
9 — +2 Underground
10 — +4 Underground
11 — +3 Underground
491
 TABLE 2. The Economical Results Utilizing the Present Model due to the Hypothetical Example

Present NPV
Selected option NPV from
Level-cut Year value Open Underground using the algorithm combined mining
factor mining mining
1 0 + 1.74 Open-pit 0
1-й 0.87
2 + 4.35 + 3.48 Open-pit + 4.35
3 + 2.93 + 2.28 Open-pit + 2.93
2-й 0.76
4 + 4.88 + 3.04 Open-pit + 4.88
5 + 3.96 + 1.32 Open-pit + 3.96
3-й 0.66
6 – 0.73 + 3.3 Crown pillar Crown pillar
7 +1.14 + 1.71 Underground + 1.71
4-й 0.57
8 — + 3.42 Underground + 3.42
9 — +1 Underground +1
5-й 0.5
10 — +2 Underground +2
11 6-й 0.43 — + 1.29 Underground + 1.29
Total profit — — + 16.53 + 24.58 25.54

Fig. 7. The components of optimal transition from open-pit to underground mining for the
hypothetical case

CONCLUSIONS
Due to the importance of optimizing transition from open-pit to underground mining as a new
challenge in mining engineering, a model based on block economic values of open-pit and underground
methods together with NPVs achieved by their mining is initially presented. In order to analyze the
model in detail, a hypothetical example is used. During the example the assumptions were: discount
rate to be equal to 15 %; extracting each pair of contiguous level-cuts during one-year; and one level as
the height of crown pillar. After the model is used for the hypothetical ore deposit, the optimal
transition depth from open-pit to underground mining is determined to be 62.5 m (level 5). Then level 6
is considered as the proper crown pillar. Finally, the maximum total NPV gained by combined mining
is calculated to be equal to 25.54 units of currency.
492
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