A Stochastic Optimization Formulation for the Transition from Open-Pit to Underground Mining Within the Context of a Mining Complex

Abstract

As open-pit mining of a deposit deepens, the cost of extraction may increase up to a threshold where transitioning to mining through underground methods is more profitable. This paper provides an approach to identify an optimal depth at which a mine should transition from open-pit to underground mining. The value of a set of candidate transition depths is investigated by optimizing the production schedules for each depth’s unique open-pit and underground operations. By considering the sum of the open-pit and underground mining portion’s value along with the cost of transitioning corresponding to each candidate transition depth, the optimal transition depth can be identified. The optimization model presented is based on a stochastic integer program that integrates geological uncertainty. As an input, the stochastic integer program utilizes a set of several stochastic simulations that represent equally probable scenarios of the mineral resource. This group of simulations describes the uncertainty in the deposit while the optimizer aims to maximize value based on discounted profits of both the open-pit and underground components of the deposit.