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Manuscript number IJMST_2016_66

Title A Comparison of Strategic Mine Planning Approaches for In-Pit Crushing and
Conveying, and Truck/Shovel Systems

Abstract
In a global environment where energy and labour are becoming increasingly expensive, continuous mining systems
such as In-Pit Crushing and Conveying (IPCC) systems have been advanced as offering a real alternative to
conventional truck haulage systems. The implementation of IPCC systems in hard rock operations in open pit mines
however requires different and more comprehensive planning approaches in order to adequately reflect the practical
aspects associated with this. This paper investigates the impact that these approaches may have on the
implementation of IPCC systems on a basic metalliferous deposit amenable to open pit exploitation. A strategic life of
mine plan to provide numerous economic indicators for each approach is analysed and compared to traditional truck
haulage systems. The mine planning and evaluation process highlights the increased overall resource recovery that
may accompany the use of IPCC systems. This investigation also provides insights into the issues associated with
IPCC and the scale and type of operation and orebody that is likely to provide a feasible alternative to truck haulage.

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A Comparison of Strategic Mine Planning Approaches for In-Pit Crushing
and Conveying, and Truck/Shovel Systems

Abstract
In a global environment where energy and labour are becoming increasingly expensive,
continuous mining systems such as In-Pit Crushing and Conveying (IPCC) systems have been
advanced as offering a real alternative to conventional truck haulage systems. The
implementation of IPCC systems in hard rock operations in open pit mines however requires
different and more comprehensive planning approaches in order to adequately reflect the
practical aspects associated with this. This paper investigates the impact that these approaches
may have on the implementation of IPCC systems on a basic metalliferous deposit amenable
to open pit exploitation. A strategic life of mine plan to provide numerous economic
indicators for each approach is analysed and compared to traditional truck haulage systems.
The mine planning and evaluation process highlights the increased overall resource recovery
that may accompany the use of IPCC systems. This investigation also provides insights into
the issues associated with IPCC and the scale and type of operation and orebody that is likely
to provide a feasible alternative to truck haulage.

Keywords: In pit crusher conveyor systems, Strategic mine planning, Resource recovery,
Surface metalliferous mining, Mine optimisation, Truck and Shovel.

*Corresponding author. Email:


Introduction
The prolonged downturn in international commodity prices has forced major changes in the
resources sector. Cost reductions for the purpose of improving productivity have become a
central focus for most resource producers in order to remain competitive. In looking beyond
current cost cutting initiatives, the next phase in the push to improve productivity will come
from new innovations that transform the way traditional processes are carried out. Surface
mining operations have historically been able to rely on increasing economies of scale using
traditional discontinuous truck and shovel techniques. However, the scope to continue
introducing larger and higher capacity trucks and equipment into mining operations in order
to improve productivity is limited. Truck haulage is a highly energy, labour and water
intensive operation. It is also associated with significant occupational health and safety risks,
as well as impacting the environment through the production of dust and noise.

Mining operations are thus increasingly looking to more efficient, less energy and labour
intensive, and safer methods to carry out the daily operations of a mine. Adopting continuous
mining systems into the mining industry has been heralded as a means of providing the large
scale productivity improvements that are so desperately needed. Continuous In-Pit Crushing
and Conveying (IPCC) systems are gaining increasing attention in the recognition that these
have the ability to offer numerous advantages over traditional truck haulage systems (Moore,
2010).

As the remaining easy to reach near surface mineral deposits are exhausted and the
approvals and financing process for new operations become increasingly difficult, mines of
the future will become deeper, more remote, and more hostile. This will result in an
increasing trend toward larger, higher capacity, bulk movement operations that will have to
include material well outside previous breakeven economic cut-off grade boundaries. As
such, overall resource recovery will need to significantly improve. Some countries, such as
Russia, have legislative incentives that oblige companies to demonstrate maximum resource
utilisation. Future mining operations will have to deal with less favourable ground conditions
with a drive toward consuming less energy whilst generating fewer greenhouse gas
emissions. While these conditions present huge challenges in themselves, all this will be
against a backdrop of more intensive public scrutiny over environmental awareness and
community relations.

The aim of this paper is to highlight the fundamental mine planning aspects for the
implementation of two main types of IPCC systems and how these differ from traditional
truck and shovel operations. In doing so, a conceptual two dimensional metalliferous case
study will illustrate the economic differences resulting from the unique strategic mine
planning and sequencing requirements of each system in comparison to truck and shovel.
This paper highlights the resource recovery associated with each scenario.
The IPCC opportunity
Future resource extraction will inevitably be deeper and at lower grades compared to standard
practise today. In order for this to occur under present circumstances, truck fleet numbers will
need to significantly increase due to the longer haulage distances and consequently higher
cycle times associated with deeper pits. With this increase in truck numbers, there is an
associated increase in the workforce required to operate, and an increase in fuel consumption.
These factors contribute to higher Operating Expenditure (OPEX) for mines utilising truck
haulage. These negative effects are further exaggerated by increased noise, dust and CO2
emission levels generated by additional trucks, leading to a larger environmental footprint.
IPCC systems offer several opportunities to substantially reduce the impacts of expanded
truck fleets.

According to McCarthy (2011) and Turnbull (2011), in order for IPCC systems to be an
appropriate alternative haulage system, some key design parameters must be considered.
These parameters range from fundamental requirements, to practicalities, and preferences,
including:
Material movement of over 4 Mtpa is desirable in order to justify the initial CAPEX,
though upwards of 10 Mtpa is better.
A mine life greater than 10 years in order for the lower OPEX to pay back the higher
initial CAPEX.
Electricity costs ($/kWh) less than 25% of diesel cost ($/L).

Depending on the type of IPCC system used, labour requirements can be as low as 80 people,
including operators and maintenance personnel (McCarthy and Cenisio, 2013). Exact
numbers will vary depending on the selected system, and the number and length of installed
conveyors. It is estimated that one truck requires staffing of approximately seven people to
operate. In a two 12-hr-shift-day roster, this consists of 4.4 operators (0.4 to account for
covering vacations and absences), and 2.7 maintenance workers (Dean et al., 2015). From a
labour and safety perspective, if an IPCC system is able to replace enough trucks to reduce
the total number of workers, they become a more attractive option.

IPCC systems are typically run on electrical power, which reduces a mines dependency on
diesel fuel. Diesel fuel is a major contributor to the cost of truck haulage. If the volume of
fuel consumption can thus be reduced, operating expenses of a mine will also be reduced. An
example of this in practise is an iron ore mine in Brazil with two installed Fully Mobile IPCC
systems with a combined capacity of 7,800 t/h, resulting in an estimated reduction in diesel
consumption of 60 Million litres per annum (MLpa) (Raaz and Mentges, 2011).

With savings opportunities arising from reduced labour requirements and reduced diesel
consumption, IPCC OPEX can be significantly reduced when compared to truck haulage
OPEX (Tutton and Streck, 2009). In addition, conveyor haulage is inherently more weight
effective than trucks, requiring less energy per unit weight of material transported. Another
important aspect is that, conveyors use more (81%) of the consumed energy for transportation
of the payload in comparison to trucks (39%) (ThyssenKrupp, 2004). It is estimated that
OPEX of conveyor haulage can be as low as one-third of a comparable truck haulage system
(Dean et al., 2015).

Though the OPEX of IPCC systems can be reduced significantly below that of a truck
haulage method, the Capital Expenditure (CAPEX) required in order to use an IPCC system
is often higher. Figure 1 shows that although the IPCC system has a larger initial CAPEX,
due to the reduced OPEX, after six years the mine breaks even, and the NPV of the IPCC
case becomes significantly higher than the trucking case.

Figure 1. Cumulative NPV comparing IPCC and truck haulage (Szalanski, 2010)

An additional benefit of lower diesel consumption is a reduction in CO2 emissions. The 60


MLpa reduction in diesel consumption previously mentioned equates to a reduction of
approximately 130,000 tonnes per annum (tpa) of CO2 emissions (Raaz and Mentges, 2011).
This is approximately equivalent to the removal of 36,000 average passenger vehicles off the
road each year (Commonwealth of Australia, 2012). In addition to the reduction of emissions,
the reduced reliance on diesel fuel also means that less fuel trucks will be on the roads,
reducing logistical demand on local road networks.

IPCC operations can also reduce the amount of dust that is released as an airborne
contaminant. As there is less traffic on haul roads, due to the reduced truck fleet, less dust
will be generated by the operations and less need for spraying haul roads which will result in
a saving of water consumption. Conveyors not only reduce the number of trucks required, but
have also been stated as reducing overall auxiliary equipment requirements by 25-30%
(International Mining, 2009).

IPCC systems can also reduce noise pollution as a result of conveyors operating at a lower
decibel level than haul trucks. Typically, haul trucks emit at a volume of 90 dB at a distance
of 10 m, whereas conveyors emit at a volume of 70 dB at a distance of 5 m. For comparison,
a conversation between two people 2 m apart requires a volume of approximately 60 dB
(DRET, 2009). This noise reduction can make them a useful system in areas where mines are
located close to townships, or in areas where neighbouring properties are noise sensitive.

The combination of each of these financial, environmental and social advantages provides a
clear justification for the more extensive use of IPCC systems now.

IPCC Systems
Though there are many manufacturers of the equipment associated with IPCC systems, there
are no off the shelf solutions as each site will require a system that is uniquely tailored for its
specific requirements. As such there is a range of available options regarding IPCC systems.
Broadly speaking, there are three types of IPCC systems, with each setup having its own set
of advantages and disadvantages for specific operating conditions and deposit type. The three
broad categories are: Fixed, Semi-mobile, and Fully-mobile systems.

Fixed In-Pit Crushing and Conveying (FIPCC) systems are characterised by the crushing unit
being situated in one location for an extended period of time. This location is usually located
at some point near the crest of the pit, near the haul road exit point. Conventional truck
haulage is used within the pit to move material from the working face to the crushing unit.
Once the material has been crushed, it is fed onto a conveying network which transports it to
either a spreader (waste) or stacker (mineralised material). Fixed systems have their best
application in deep, pre-existing pits, with low vertical advance rates, where a single crusher
location can service the operation for an extended period of time, usually greater than five
years.

Semi-Mobile In-Pit Crushing and Conveying (SMIPCC) systems are similar to fixed systems
in that the crushing unit remains in one location for a period of time with conventional truck
haulage feeding it. The differences occur in the length of time in which the crusher remains in
each location, and the locations that the crusher is situated. As the mine deepens, the crusher
is relocated deeper into the pit which typically occurs every two to five benches (depending
on the vertical advance rate) to maintain a short haul for the truck portion of the system, and
maximise the use of conveying that can be reasonably used. SMIPCC systems are the most
flexible, and most readily adaptable to existing operations due to their continued use of trucks
and the ability to install the crusher at suitable locations.

Fully-Mobile In-Pit Crushing and Conveying (FMIPCC) systems remove the requirement for
truck haulage during steady state operation. It is suggested by Dean et al. (2015) that truck
haulage may still be required during each sinking phase of a mine, though haul distance may
be minimised by using the trucks to dump into the fully-mobile crusher near the sinking
activity. These systems are characterised by the loading unit dumping directly into the hopper
of a fully-mobile crushing unit that follows it. Once crushed, the material is passed onto a
network of conveyors to be hauled to its final destination. Due to the significant difference in
mine design and layout of FMIPCC systems, they are best suited to greenfield operations. For
many decades the flexibility of truck and shovel mining systems allowed the mining system
to be suited to the pit, however, as FMIPCC is significantly less flexible, the mine design
must cater to the requirements of the system. As such, one research area requiring significant
further attention is that of ultimate pit limit (UPL) optimisation taking into account the
geometric requirements associated with the installation of FMIPCC systems. Hay et al.
(2016) extensively discuss these requirements and also propose a new first step to solving this
problem. As pointed out by various authors, existing open pit optimisation algorithms
including the Floating Cone Algorithm (Carlson et al., 1966) together with the improved
versions by Koenigsberg (1982), Hochbaum (1998) and Elahi Zenyi (2011), and the Lerchs-
Grossman Algorithm (Lerchs and Grossman, 1965) generate UPLs that align to the shape of
the orebody (which is fine for traditional truck and shovel mining) but are completely
inappropriate for FMIPCC. This aspect is also highlighted as part of the case study contained
in this paper. In looking at the next step down the mining value chain, the open pit production
scheduling problem remains one of the largest and most complex industrial scheduling
problems in existence today and has been the research topic of numerous authors including
Boland et al. (2009), Chicoisne et al. (2012), Lambert and Newman (2014) and Samavati et
al. (2016). The open pit scheduling problem that caters for FMIPCC is another area requiring
significantly more attention if FMIPCC is to be become a mainstream option.

Case Study
A two dimensional case study of a copper bearing orebody amenable to open pit exploitation
is used for the purpose of comparing Truck, SMIPCC and FMIPCC haulage systems against
various financial metrics as well as overall resource recovery. As FIPCC haulage is
essentially truck haulage in the pit, there would be minimal difference to the sequencing, and
has thus been left out of the case study. While data for this particular case study is conceptual
in nature, it is, however, based on real operational scenarios with tonnages, grades, resource
limitations and sequencing interactions reflective of the various haulage methods, thus
making it useful for investigation purposes. Since the case study is two dimensional, some
aspects that are three dimensional in nature are not possible to incorporate. However, all main
sequencing issues (which is the focus in this case study) of each haulage scenarios are able to
be adequately reflected. The setting of this mine is a typical remote mining region within
Australia. As such, all figures are quoted in Australian Dollars (AUD).

The orebody is contained within a two dimensional vertical cross-section, 25 blocks wide and
8 blocks deep, of equal size containing 5 Mt of material each (250m x 250m x 30m mining
blocks). As shown in Figure 2, a total of 140 blocks contain copper mineralisation ranging in
grade from 0.08% Cu to 0.64% Cu for a total resource of 700Mt at an average grade of
0.33% Cu for 2.34Mt Cu. Copper mineralisation (indicated by shaded blocks) starts in the
second level with the first level consisting of waste that would need to be removed before
accessing the mineralised material below. While mineralisation extends to the eighth level,
the orebody can be considered as being horizontally extensive with the highest grade material
located on its eastern side (right-hand side). Grades tend to gradually diminish when moving
in a westerly direction (from right to left) through the orebody.
Figure 2. 2D block model of copper bearing orebody

Planning will take place using open pit mining at a pit wall slope angle of 45 degrees. Typical
open pit mining constraints are therefore applicable with the main constraint being that each
block can be mined only once the three blocks above have been removed. No other
geotechnical issues are assumed to be present to thus allow a fully open sequencing scheme
to be used across all haulage systems.

A metallurgical recovery of 90%, process plant capacity of 15Mtpa (3 blocks per year),
processing cost of $10.00/t of ore, copper price of $5,000t and a discount rate of 5% are
applicable. After treating all blocks within the dataset that are below breakeven processing
cut-off grade ($10.00/t /($5,000/t x 0.9) = 0.22% Cu) as waste, this reduces the resource to a
total of 119 blocks containing copper mineralisation ranging in grade from 0.25% Cu to
0.74% Cu for a total resource of 595Mt grading 0.37% Cu for 2.175Mt Cu. The initial
CAPEX of constructing the process plant is $350M which is incurred in the year prior to the
commencement of processing. Once ore processing has commenced the processing rate must
be maintained at 15Mtpa (with the exception of the first and final year). Ore blocks must be
mined and processed in the same year. No stockpiling is to take place.

While it is commonly acknowledged that IPCC systems generally require a higher upfront
capital expenditure, total CAPEX requirements across mine life often work out to be similar
for traditional truck haulage for a given scale of operation. For the purpose of comparing all
three scenarios on a similar basis, total CAPEX, processing capacity and mining capacity will
be the same across each case. Mining capacity across the three systems will be limited to
20Mtpa (4 blocks per year). A total CAPEX of $200M is required to implement each of the
three haulage systems; however, the timing of this expenditure varies. For the SMIPCC and
the FMIPCC systems the full $200M CAPEX will be incurred in the year that mining
activities commence. For Truck haulage system, $90M will be incurred in the year that
mining commences. This will be followed by a further $45M and $65M in the third and
seventh year of mining respectively, as additional trucking capacity is brought online to cater
for longer haul distances. This reflects the high up-front CAPEX associated with IPCC
systems and the more staggered capital requirements for truck haulage system, which
generally require additional trucking capacity as the operation deepens and cycle times
increase. The OPEX of each system for this case study is shown in Table 1. These costs are
assumed to remain constant over the life of the operation. The operating costs used in this
case study comply with the general notion that Semi-Mobile IPCC and Fully-Mobile IPCC
are about 15%-20% and 30%-35% lower than that of Truck and Shovel.

Table 1
OPEX of each haulage system
System OPEX ($/t)
Truck $3.00/t level 1 +$0.45/t (15% increase) for each lower level
Semi-Mobile IPCC $2.50/t level 1 +$0.25/t (10% increase) for each lower level
Fully-Mobile IPCC $2.00/t level 1 +$0.10/t (5% increase) for each lower level

It is assumed that each system will be used to haul both ore and waste. As such, there will be
no change in the equipment when mining and hauling ore or waste. While shovels will be
used for digging and loading into trucks or the crusher for all three cases, the way in which
the material is mined requires a unique extraction sequence. Recent work by Dzakpata et al.
(2016) suggests that the productivity of shovels operating in conjunction with FMIPCC
systems can be significantly enhanced, however for the purposes of this study no shovel
productivity difference is assumed between the three methods under investigation.

Truck Haulage System Sequence


Truck haulage is the most common method for bring material out of an open pit mine and to
the process plant, stockpile or waste dump. As the mine life matures, the pit becomes deeper
and waste dumps become bigger, resulting in increased truck haul cycles which requires
additional trucks to maintain production rates. Depending on distance and elevation, truck
haulage is typically considered to be costlier in comparison to IPCC systems. However, it is
often favoured due to being the most flexible of the three haulage methods in terms of
manoeuvrability, scalability (ability to add or subtract mining capacity) as well as being more
resilient to complete system failure as individual trucks are replaceable. Furthermore, truck
haulage does not require extensive conveyor networks within the pit. The flexibility
associated with truck manoeuvrability is able to be carried through the sequencing and
scheduling process whereby the highest grade ore is highly amenable to be accessed and
mined as soon as traditional open pit mining will allow. In developing a pushback sequence
for an open pit mining operation, the aim is to allow the operation to gain access to the next
available highest value parcel of material for as little cost (waste stripping) as possible. As
such, a typical pushback sequence will see the surface footprint of the pit expand in all
directions as progressive extraction of each pushback takes place and the pit progressively
deepens to access the next subsequent parcel of ore. Depending on the dip and horizontal
extensiveness of the orebody, progressive pushback extraction may result in the pit
expanding in only one direction as the sequence follows the orebody down-dip. In such cases,
where geotechnical circumstances permit, major haul roads maybe placed into the fixed pit
wall in a switchback arrangement to keep haul roads from impeding on main production
areas. In cases where the pit expands in all directions a more constrained extraction sequence
on the bench is required in order to re-route haul roads to maintain access and cause least
disruption.
Figure 3 illustrates the sequence that would be adopted if traditional truck haulage system is
to be used. As shown, mining would start on the eastern side (right-hand side) of the orebody
and sequentially move toward the west (left-hand side) in following the highest value and
easiest to reach ore. The footprint of the pit in this case would expand in only a single
direction allowing major haul roads to switchback in the eastern pit wall.

Figure 3. Truck haulage system sequence for exploiting orebody

As shown, a total of 23 phases (pushbacks) are required to achieve full extraction of the
orebody using traditional truck haulage system. In commencing with the first pushback, each
subsequent pushback deepens the pit until the full depth of the orebody is reached on the
eighth level. While pit depth is maintained from the 13th pushback onwards, the orebodys
horizontal extensiveness requires a further 10 pushbacks of equal size to achieve full
extraction to the final (twenty-third) pushback.

SMIPCC Sequence
SMIPCC systems rely on a crusher being located at some point within the pit. Instead of
hauling material all the way out of the pit, trucks dump into the crusher and are thereby able
to significantly reduce their travel distance and thus overall cycle time. The crusher is
typically modular in design and able to be relocated closer to the main production area every
2 - 5 years. From the crusher, material is then hauled via a conveyor belt out of the pit to the
process plant, stockpile or waste dump. Since high capacity troughed conveyors are generally
operated at angles up to 18o in order to prevent material roll-back (Alspaugh, 2004),
sequencing and scheduling within the pit therefore need to take into consideration the need
for a fixed conveyor slot or a conveyor line that can be staggered up the side of a fixed pit
wall. The requirement for a fixed pit conveyor wall or slot means that pit expansion cannot
take place where these are installed. As such, a typical pushback sequence for a SMIPCC
system will see the surface footprint of the pit expand in only one direction.

The main advantage of SMIPCC systems is that they still maintain some of the flexibility and
manoeuvrability of truck haulage with reduced cycle times while benefiting from the reduced
costs associated with conveyor haulage. The system however is slightly more restrictive due
to the conveyor requirement and unlike truck haulage it is not as amenable to gaining access
to the next available highest value parcel of material for as little cost (waste stripping) as
possible. OPEX for a SMIPCC system is typically between truck and FMIPCC haulage.

Figure 4 illustrates the sequence that would be adopted if a SMIPCC system is to be used for
the orebody under consideration. Mining would again start on the eastern side of the orebody
and sequentially move toward the west in initially following the highest value and easiest to
reach ore. However, in maintaining a limited truck haulage distance to an in-pit crusher, the
initial pit depth is limited. A series of 13 pushbacks to level 4 are extracted before a crusher
relocation takes place enabling the removal of pushbacks 14 - 19 in order to complete
extraction of moderate-high grade ore to full depth. Due to the horizontally extensive nature
of the orebody a further series of pushbacks (19 - 22) expand out the surface footprint of the
pit to extract moderate grade ore, which again corresponds to another crusher relocation. The
next crusher relocation revolves around the removal of pushbacks 23 - 26 at depth. This
follows another expansion of the surface footprint of the pit and subsequent crusher
relocation by the removal of low grade pushbacks 27 - 32. The final crusher relocation in the
sequence completes the extraction of the remaining low grade pushbacks (33 - 36) at depth.

Figure 4. SMIPCC sequence for exploiting orebody (crusher relocations corresponding to each main
group of pushbacks are represented by the large bold numbers)

FMIPCC Sequence
FMIPCC systems remove the need for truck haulage completely as the digging unit dumps
directly into a mobile crusher that follows the working face, making this a continuous system.
This system requires extensive conveyor networks. Once a conveyor has been established and
configured on a bench it is most productive to keep until the full length of the pit has been
removed before progressing deeper. The bench conveyor, which may source ore or waste
material from up to three working benches/faces, will feed a main trunk conveyor. The trunk
conveyor is ideally one continuous conveyor line that takes material out of the pit to the
process plant, stockpile or waste dump. As such, a fixed conveyor slot or a conveyor line up
the side of a fixed pit wall is required. Due to extensive conveyor networks the sequencing
for FMIPCC is very rigid with expansion limited to a single direction with little or no
flexibility and limited ability to access deeper high grade material sooner. FMIPCC systems
tend to have the lowest OPEX when compared to truck haulage and SMIPCC systems.
Figure 5 illustrates the sequence that would be adopted if a FMIPCC system is to be used for
the orebody under consideration. Mining would start on the eastern side of the orebody and
sequentially move toward the west initially following the highest value and easiest to reach
ore. Due to the efficiencies that are derived from long horizontal production sequences, the
initial depth is again limited. A series of 23 pushbacks to level three across the entire length
of the orebody are extracted from three working benches feeding into a bench conveyor. This
encompasses the extraction of high grade ore through to the lowest grade ore present within
the orebody and exposes the entire surface footprint of the final pit. Once this has been
completed no further waste removal is required for the case study under consideration. A new
bench conveyor is than established to extract material from the lower three benches (levels 4
- 6) across the length of the orebody (pushbacks 24 - 40). Material within the final two levels
(7 - 8) are then sequentially extracted (pushbacks 41 - 51) using the FMIPCC system.

Figure 5. FMIPCC sequence for exploiting orebody (major vertical belt moves corresponding to each
main group of pushbacks are represented by the large bold numbers)

Results
It is evident that even though the same orebody using the same total CAPEX and mining and
processing capacities, significant sequencing implications yield vastly different mine plans
which is reflected in the financial metrics of each haulage scenario.

Truck haulage
From the pushback sequence presented in Figure 3 for the truck haulage scenario it is now
possible to determine the breakeven pit limit by analysing the value of each pushback for an
unconstrained mining and milling capacity. In order to do this an economic block model
based on the block grades shown in Figure 2 together with the cost data and market
parameters presented earlier, an economic block model was generated as shown in Figure 6.
Block values ($M) are computed by subtracting the mining and processing cost from the
revenue obtained from selling the metal contained within each block.
Figure 6. Economic block model for truck haulage scenario ($M) (note: blocks below breakeven cut-
off treated as waste)

The value of each block is then used to compute the value of each pushback. As shown in
Figure 7, the highest cumulative pushback value of $1,058.3M is generated at pushback 13. If
open pit mining continued to include pushback 14 this would destroy total value since the
cost of accessing pushback 14 exceeds the revenue that would be obtained from processing
and selling the copper contained within its ore. The undiscounted breakeven pit limit will
therefore occur at pushback 13 for the truck haulage scenario. After taking into account the
total CAPEX requirement of $550M, this produces a final undiscounted value for the
operation of $508.3M.

1,500.0 140.0
120.0
100.0
Cumulative Value ($M)

1,000.0
80.0

Value ($M)
60.0
500.0
40.0
20.0
0.0
0.0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
-20.0
-500.0 -40.0
-60.0
-1,000.0 -80.0
Pushback#

Value($M) Cumulative Value($M)

Figure 7. Unscheduled pushback values for truck haulage scenario

Based on the capacity constraints outlined earlier (maximum mining and processing of
20Mtpa and 15Mtpa respectively), a yearly production and processing schedule which
follows the pre-determined pushback sequence for the truck haulage scenario, as illustrated in
Figure 2, for all material contained within the breakeven pit limit (to pushback 13), can be
generated. The objective in this case is to maintain maximum mill feed in each year. This
results in the schedule as illustrated in Figure 8. The number within each block represents the
year in which the block has been scheduled for mining. Since no stockpiling is available, ore
blocks that are mined must be processed in the same year. As such, any ore blocks (shaded
grey) containing a number corresponding to the year that it is mined is also processed in that
year.

Figure 8. Optimum yearly production schedule (mine plan) for truck haulage scenario

Using the discount rate of 5%, a discounted value for the mine plan is computed as shown in
Figure 9. Figure 9 also contains the discounted capital costs for both process plant and mine
infrastructure ($350 M + $90 M in year 0, $45 M in year 3 and $65 M in year 7) required for
the truck haulage scenario.

400.0 400.0

300.0 300.0
Cumulative Value ($M)

200.0 200.0

100.0 100.0

0.0 0.0 Value ($M)


0 1 2 3 4 5 6 7 8 9 10 11 12 13
-100.0 -100.0

-200.0 -200.0

-300.0 -300.0

-400.0 -400.0

-500.0 -500.0

-600.0 -600.0
Pushback#

Value($M) Cumulative Value($M)

Figure 9. Scheduled pushback values for truck haulage scenario

As shown, the discounted value for an open pit operation using truck haulage based on the
mine plan contained in Figure 6 would yield an NPV of $293.9M. A further investigation to
eliminate late-stage pushbacks (reduce pit size) in order to re-prioritise waste removal does
not add an additional value in this case. As such, it can thus be determined that a mine plan
with a pit limit to pushback 13 generates the highest cumulative discounted value.
As indicated by the mine plan contained in Figure 8, mining for the truck haulage scenario
occurs across 18 years (including one year of pre-stripping in year 0) moving a total of 320Mt
of material, comprising 75Mt of waste and 245Mt of ore. The final ore block will be
processed in year 17 for a total processing life of 17 years. Throughout the 17 year processing
life, an average ore grade of 0.47% Cu produces a total of 1.043Mt Cu (after accounting for a
metallurgical recovery of 90%).

SMIPCC haulage
A similar process to the truck haulage scenario is used to finding and evaluating the value of
the optimal mine plan for the SMIPCC system haulage scenario. The first step again was to
generate an economic block model as shown in Figure 10.

Figure 10. Economic block model for SMIPCC haulage scenario ($M)

The economic block model made it possible to determine the breakeven pit limit for the
pushback sequence presented in Figure 4 by analysing the value of each pushback for an
unconstrained mining and milling capacity. As shown in Figure 11, the highest cumulative
pushback value of $1,380.3M is generated at pushback 26. Since no further value can be
added by enlarging the pit the undiscounted breakeven pit limit will therefore occur at
pushback 26 for the SMIPCC haulage scenario. After taking into account the total capital
expenditure requirement of $550M, this produces a final undiscounted value for the operation
of $830.3M.
1,600.0 160.0
Cumulative Value ($M) 1,400.0 140.0
1,200.0 120.0
1,000.0

Value ($M)
100.0
800.0
80.0
600.0
60.0
400.0
40.0
200.0
0.0 20.0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 0.0
-200.0
-400.0 -20.0
Pushback#

Value($M) Cumulative Value($M)

Figure 11. Unscheduled pushback values for SMIPCC haulage scenario

The same capacity constraints (maximum mining and processing of 20Mtpa and 15Mtpa
respectively) apply to the SMIPCC haulage scenario for the purpose of production
scheduling. A yearly production schedule which follows the pre-determined pushback
sequence for the SMIPCC scenario illustrated in Figure 4 for all material contained within the
breakeven pit limit (to pushback 26) is generated. The objective once again is to maintain
maximum mill feed in each year. This results in the schedule illustrated in Figure 12. The
number within each block once again represents the year in which the block has been
scheduled for mining/processing.

Figure 12. Optimum yearly production schedule (mine plan) for SMIPCC haulage scenario

Using the discount rate of 5%, a discounted value for the mine plan is computed as shown in
Figure 13, which also includes the capital costs for both process plant and mine infrastructure
($200M + $350M in year 0) required for the SMIPCC haulage scenario.
500.0 600.0
400.0 500.0
300.0 400.0
Cumulative Value ($M)

200.0 300.0

Value ($M)
200.0
100.0
100.0
0.0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 0.0
-100.0
-100.0
-200.0
-200.0
-300.0 -300.0
-400.0 -400.0
-500.0 -500.0
-600.0 -600.0
Pushback#

Value($M) Cumulative Value($M)

Figure 13. Scheduled pushback values for SMIPCC haulage scenario

As shown in Figure 13, the discounted value for an open pit operation using SMIPCC
haulage based on the mine plan contained in Figure 12 would yield an NPV of $453.1M.
Further investigations to eliminate late-stage pushbacks (reduce pit size) in order to re-
prioritise waste removal also does not add an additional value in this case. As such, it can
thus be determined that a mine plan with a pit limit to pushback 26 generates the highest
cumulative discounted value.

As indicated by the mine plan contained in Figure 12, mining for the SMIPCC haulage
scenario occurs across 27 years (including one year of pre-stripping in year 0) moving a total
of 480Mt of material, comprising 95Mt of waste and 385Mt of ore. The final ore blocks are
processed in year 26 for a total processing life of 26 years. Throughout the 26 year processing
life, an average ore grade of 0.42% Cu produces a total of 1.445Mt Cu (after accounting for a
metallurgical recovery of 90%).

FMIPCC haulage
An economic block model for the FMIPCC haulage scenario based on block grades contained
in Figure 2 as well as market parameters and cost data presented earlier was again generated
as shown in Figure 14.
Figure 14. Economic block model for FMIPCC haulage scenario ($M)

Based on the pushback sequence presented in Figure 5 and the FMIPCC block values shown
in Figure 14, a pushback analysis for an unconstrained mining and milling capacity can take
place. As shown in Figure 15, the highest cumulative pushback value of $2,011.8M is
generated at pushback 51. This represents the final pushback for this sequence and thus
indicates that the entire resource should be recovered. After taking into account the total
capital expenditure requirement of $550M, this produces a final undiscounted value for the
operation of $1,461.8M.

2,500.0 200.0
180.0
2,000.0 160.0
Cumulative Value ($M)

140.0

Value ($M)
1,500.0
120.0
100.0
1,000.0
80.0
60.0
500.0
40.0

0.0 20.0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 0.0
-500.0 -20.0
Pushback#

Value($M) Cumulative Value($M)

Figure 15. Unscheduled pushback values for FMIPCC haulage scenario

A yearly production schedule which follows the pre-determined pushback sequence for the
FMIPCC haulage scenario for all material contained within the breakeven pit limit using the
mine and process capacity constraints is generated. Maintaining maximum mill feed in each
year was again the main objective. This results in the schedule illustrated in Figure 16. The
number within each block once again represents the year in which the block has been
scheduled for mining/processing.
Figure 16. Optimum yearly production schedule (mine plan) for FMIPCC haulage scenario

Using the discount rate of 5%, a discounted value for the mine plan is computed as shown in
Figure 17, which also includes the capital costs for both process plant and mine infrastructure
($200M in year 0 and $350M in year 1) required for the FMIPCC haulage scenario.

500.0 500.0
400.0 400.0
300.0 300.0
Cumulative Value ($M)

200.0 200.0

Value ($M)
100.0 100.0
0.0 0.0
-100.0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 -100.0
-200.0 -200.0
-300.0 -300.0
-400.0 -400.0
-500.0 -500.0
-600.0 -600.0
Pushback#

Value($M) Cumulative Value($M)

Figure 17. Scheduled pushback values for FMIPCC haulage scenario

As shown in Figure 17, the discounted value for an open pit operation using FMIPCC
haulage based on the mine plan contained in Figure 16 would yield an NPV of $467.2M. As
indicated by the mine plan contained in Figure 16, mining for the FMIPCC haulage scenario
occurs across 43 years (including two years of pre-stripping in years 0 and 1) moving a total
of 720Mt of material, comprising 125Mt of waste and 595Mt of ore. The final ore blocks are
processed in year 42 for a total processing life of 41 years. Throughout the 41 year processing
life, an average ore grade of 0.36% Cu produces a total of 1.957Mt Cu (after accounting for a
metallurgical recovery of 90%).
Discussion
It is evident that substantially more of the resource is able to be economically recovered using
the IPCC haulage systems. A total of 245Mt of ore is mined and processed when using truck
haulage while the SMIPCC and FMIPCC systems mine and process 385Mt and 720Mt of ore
respectively. This is no doubt significantly influenced by the grade distribution of the
orebody used in this case study. The reason more ore is able to be economically exploited is
due to the lower OPEX of the IPCC systems (in particular the FMIPCC system).

For the orebody being exploited, there exists 390Mt of mineralised material that is
economical exploitable when using the FMIPCC system and its associated OPEX in
comparison to the truck haulage system with its associated OPEX. This 390Mt of mineralised
material equates to 65.50% of the 595Mt of total mineralised material within the deposit.
Large halos of mineralisation that decrease in grade from a central zone are common in large
porphyry type deposits, indicating that even a slight reduction in OPEX may render large
sections of the deposit economically exploitable that were not previously, thus significantly
lifting the overall resource recovery.

Some of the key metrics that are commonly used to compare resource projects are
summarized in Figure 18 and Table 2. From this it is evident that the time value of money
aspect plays a significant role in determining overall value, particularly the longer the mine
life. In this case, the truck haulage scenario yields an NPV of $293.9M over an 18 year
operating life whereas the FMIPCC haulage scenario yields an NPV of $467.2M over a 43
year operating life for the same orebody using the same total CAPEX and mining and
processing capacities. While ore grades and sequencing constraints also have a large impact,
the NPV of the FMIPCC haulage scenario is 58.90% greater than the NPV of the truck
haulage scenario, while the operating life is 138.90% greater. For this reason, the IRR
provides a better understanding of the return across project life being achieved for each dollar
invested. On this basis the SMIPCC scenario yields a superior IRR of 18.70% in comparison
with the truck haulage and FMIPCC haulage scenarios of 18.10% and 12.70% respectively.
500.0 45

450.0 43
40

400.0
35

350.0
30
Cumulative Value ($M)

Operation Life (years)


300.0
27 25
250.0
20
200.0
18
15
150.0

10
100.0
4.8
3.7 3.8
50.0 5

0.0 0
Truck SMIPCC FMIPCC
NPV Operation life Payback

Figure 18. Summary of production and financial metrics for haulage scenarios

Table 2
Summary of production and financial metrics for haulage scenarios
Truck SMIPCC FMIPCC
Mining capacity 20Mtpa 20Mtpa 20Mtpa
Processing capacity 15Mtpa 15Mtpa 15Mtpa
CAPEX $550M $550M $550M
Material moved 320Mt 480Mt 720Mt
Ore processed 245Mt 385Mt 595Mt
LOM average grade 0.47% Cu 0.42% Cu 0.37% Cu

The discounted cumulative cash flow graph across operation life comparing the truck,
SMIPCC and FMIPCC haulage systems is shown in Figure 19. The distinct zones where
crusher relocation or a deepening in the pit for the SMIPCC and FMIPCC systems is
observed is clearly reflected in the cash flow.
600.0

400.0

200.0
Cash flow ($)

0.0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

-200.0

-400.0

-600.0

-800.0
Years

Truck SMIPCC FMIPCC

Figure 19. Discounted cumulative cash flow comparison for haulage scenarios

Conclusion
It is evident from the case study presented that the planning of open pit operations utilising
IPCC systems cannot simply be based upon truck and shovel designs. A completely different
approach to planning and design must be followed. This is principally due to the unique
shape and sequencing constraints associated with the introduction of conveyors into the pit
for haulage purposes. The requirement of a fixed pit wall to accommodate a conveyor is just
one example of this. A secondary effect of replacing truck haulage with conveyor haulage is
the loss flexibility affecting manoeuvrability, scalability and resilience to system failure. As a
result of this, sound operational performance can often hide the detrimental effects of a bad
mine plan in truck and shovel mining. However, a bad mine plan when using IPCC systems
will become apparent very quickly with relatively little ability to being able to change and
modify the plan once its execution has been set in motion. While low operating costs may be
attractive for IPCC systems, the unique sequencing restrictions associated with them must be
meticulously planned and designed for.

The flexibility associated with truck and shovel mining generally allows a plan and schedule
that will give the operation access to the next available highest value parcel of material for as
little cost (waste stripping) as possible in a relatively straightforward manner. Depending on
orebody shape and grade distribution, the unique restrictions associated with IPCC systems,
are such that it is often not conducive to accessing the highest value material up-front. The
highest productivities with FMIPCC are achieved when mining across large horizontal
horizons. As such, mining reduced high value material is often substituted for mining larger
volumes of waste, particularly in the earlier years of an operation. This significantly affects
cash flows and thus works against maximisation of NPV. As the mine life matures and the
operation deepens, the pit floor generally narrows which in turn reduces the high
productivities experienced by FMIPCC systems due to the increased frequency of conveyor
moves.

Not only is the horizontal extensiveness of the orebody an important factor in the success of
IPCC systems, so too is the grade distribution. The reduced OPEX generally associated with
IPCC systems, will often render larger volumes of material to be economical to mine in
comparison to the truck haulage system. What may seem like a small reduction in OPEX can
often significantly add to the amount of material moved. For the case study investigated, a
65.5% increase in exploitable mineralised material results in a significantly longer mine life
and greater resource recovery. This is an important consideration to bear in mind as each
orebody and its respective grade distribution will differ.

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