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OPTIMAL LONG TERM PLANNING AT EL TENIENTE MINE

Authors:

Octavio Araneda Osés Sergio Gaete Becerra Francisco de la Huerta Luis Zenteno Yelpi

Codelco Chile, División El Teniente Rancagua, Chile

ABSTRACT

El Teniente Mine is the world’s largest underground copper Mine, and exploits a giant porphyry copper deposit. Since 1906 more than 1100 Mton have been mined out. The current daily production is close to 100.000 tpd, and is generated by the extraction of 7 mining sectors, at three different levels.

The planning process of this complex operation has to deal with a high stress environment with mining induced seismicity, subsidence between adjacent sectors and the management of hard primary rock.

This paper describes the implementation and validation in El Teniente of a new long term planning model, based on linear programming. The model was used in the formulation of the long term plan of El Teniente Mine. It shows the main results, including several runs, at different copper prices, the integration of Mine and Plant, and a discussion about the benefits obtained with the use of this tool.

INTRODUCTION

El Teniente Mine is located 80 km southeast of Santiago and 60 km northeast of Rancagua City in Central Chile. Figure 1 shows the location of all Codelco Chile Divisions and El Teniente Mine.

INTRODUCTION El Teniente Mine is located 80 km southeast of Santiago and 60 km northeast of

Fig 1 El Teniente Mine location

The mine is owned by Codelco-Chile and 1.100 million tons of ore have been mined out during almost 100 years of mining[1]. Its production has been mainly obtained by block- caving method with grizzlymen (secondary ore exploitation). In 1982, a mechanized panel caving method was introduced, with LHD equipment, in order to mine the primary ore. A currently production of 100.000 tonnes/day is achieved, with a projected production of 130.000 tonnes/day by year 2005, which would mean 450 Kt of fine copper yearly.

El Teniente is one of the largest known deposits of porphyry copper in the world. The main rock types of the deposit are: Andesite (73 per cent), Diorite (12 per cent), Dacite (nine per cent) and Breccia (six per cent). Its resources accounts for over 12 Billion tons of ore, with an average grade of 0,63 % of copper. The current 25 year mining plan includes 1,2 Billon tons of ore, with an average copper grade of 1.09 %.

THE MINE PLANNING PROBLEM

The business directive to the mine is to maximize the net present value through the exploitation of the large amounts of ore resources contained in the orebody. In order to achieve that, the mine planning process have to decide what is the best mining strategy so as to create the maximum value.

The first thing that has to be taken into account in order to understand the underground mining planning process, is the mining method. Conceptually the panel caving is a sequential method under a continuous process of development – undercuting of the base of the rock – extraction of the caved material – and closure of the depleted area, which is carried out through the life of a Panel, as shown in Figure 1.

THE MINE PLANNING PROBLEM The business directive to the mine is to maximize the net present
Undercuting Extraction Development Figure 1 Panel caving method
Undercuting
Extraction
Development
Figure 1 Panel caving method

The maximum capacity of a single panel section depends on three factors mainly, the height of the column, the undercuting and development rate, and the extraction rate. Under the conditions of El Teniente Mine, with block heights between 140 – 240 (m) and front face lengths between 100 – 800 (m), the maximum capacity of a single panel moves between 7.000 to 45.000 tpd. Another important fact to know is that the production ramp-up of a panel caving operation since the starting of the panel is relatively long, taking between 2 to 8 years to reach the maximum capacity.

According to that and given the size of El Teniente´s orebody, the Mine has to be mined using several panel caving sectors, each of them having one or two faces of advance. At present the mine has 7 sectors at three different levels, given a total production of 126.000 tpd. Figures 3 and 4 show the area distribution of the 7 mining sectors that accounts for the production of year 2003.

Figure 3 Mining sectors level Teniente 4, year 2003 Fig 4 Mining sectors level Teniente Sub5

Figure 3 Mining sectors level Teniente 4, year 2003

Figure 3 Mining sectors level Teniente 4, year 2003 Fig 4 Mining sectors level Teniente Sub5

Fig 4 Mining sectors level Teniente Sub5 – Sub6, year 2003

The planning process, has to deal with the definition of:

Reserves to be depleted in each sector

The production level of each sector, the starting up time, and the interaction with other sectors

The optimal mix of sectors in time

The allocation of process plants

mineral from different sectors to the transport systems and

The processing plants production strategy (capacity, recovery)

Investments decisions in infrastructure and in capacity expansions

That complex planning process has a huge potential of value creation, and has had a big evolution since the last 20 years.

EVOLUTION OF THE MINE PLANNING CRITERIA

Until the 80’s decade, the strategy was oriented towards production. The main effort was to maintain or expand the production capacity of the facilities, extending the life of the mining. The profit was addressed using marginal costs and cutoff grades.

Since the early 90’s the main focus has been competitiveness, turning the efforts to costs reduction and increasing the capital revenue. Maximizing the present value of the net benefits was explicitly stated as the corporate mission. The reserve selection criteria is the opportunity cost [2] [3] and since year 2001 it was extended to integrate mine and concentrator (PIMC)[4].

Since 2000 the main focus in planning is value creation . The economical principles used were extended to include risk and sustainability. The planning scope was enlarged to consider the whole resources available. The objective is to maximize the net present values constrained to a predefined risk level. These issues have increased dramatically the amount of alternatives to evaluate.

To accomplish this increasing demand, the selection among plans is formulated as an optimization problem, and solved by a mathematical model [5]. Mining is modeled as a multi-period capacitated network , the objective function is the present value of the net benefits. The problem is solved using a mixed programming approach.

The model includes several sectors and processing facilities as a whole. It also allows to use constrains on capacities and flows, that can be used, for example, to model environmental regulations or exploitation policies.

OPTIMIZING MODEL: APPLICATION CASES

El Teniente yearly develops 25 years plans. We present a comparison between the 2002 plans built with the former methodology (DET 2 ) and the new optimizing model (DET 1 ).

The 2002 plan included 18 mining sectors. The model requires the network process and the global capacities and constrains, additionally for each sector it requires costs, capacities and the block model. The general parameters used are shown in table 1.

Table I – General Parameters used in Planning

Copper Price

Molibdenum Price

Discount Rate

Planning Horizon

(US$/lb)

(US$/Kg)

(%)

(years)

0,98

6,6

10

25

The maximum production profile is the same in both cases (Figure 5), this is controlled by the plant capacity.

PRODUCTION PROFILE

140.000 135.000 Tpd 130.000 125.000 120.000 115.000 110.000 105.000 100.000 95.000 90.000 2002 2004 2006 2008
140.000
135.000
Tpd
130.000
125.000
120.000
115.000
110.000
105.000
100.000
95.000
90.000
2002
2004 2006
2008 2010
2012 2014 2016
2018 2020
2022 2024
2026

Figure 5 Total production level

In the new model (DET1) total copper grades are 2% greater than DET2 in average, moving the best grades to the first years of the plan.

2004 2008 2018 2002 2006 2016 2020 2010 2024 2014 2022 2012 2026 DET2 %CuT 0,80
2004
2008
2018
2002
2006
2016
2020
2010
2024
2014
2022
2012
2026
DET2
%CuT
0,80
0,85
0,90
0,95
1,00
1,05
1,10
1,15
1,20
1,25
DET1

Figure 6 Comparison between copper grades

The net present values obtained with DET1 are 10% greater than the NPV obtained with DET2. The increment is mainly due to the increasing in the grades of the first years, this is explained by the global optimization used by the new model compared with the individual optimization used in DET2.

In the next paragraph we present the results for the sectors representing 70% of the production during the first 10 years. In both methodologies the costs are the same, then the focus will be on the analysis on the grades and tonnages produced.

The grade increment is explained by two factors,

1)

Better mixing for individual sectors , trough the better extraction sequences

2)

Better global mixing, comparing blocks in different sectors

The next figures show that individual grades obtained with DET1 for sectors Esmeralda, Pilar, Reservas Norte and Diablo Regimiento are better than the ones obtained with

DET2.

0,80 2016 2026 2024 2014 2018 2020 2022 2008 2010 2012 2002 2004 2006 %CuT 0,60
0,80
2016
2026
2024
2014
2018 2020 2022
2008 2010 2012
2002 2004 2006
%CuT
0,60
0,70
DET 1
0,90
1,00
1,10
1,20
1,30
1,40
1,50
1,60
DET 2

Figure 7 Esmeralda Mine grades

2020 2008 2018 2016 2024 2012 2022 2002 2026 2006 2010 DET 1 2014 2004 %CuT
2020
2008
2018
2016
2024
2012
2022
2002
2026
2006
2010
DET 1
2014
2004
%CuT
0,80
1,00
1,20
1,40
1,60
1,80
DET 2

Figure 8 Pilar Mine grades

2014 2018 2008 2012 2002 2026 2020 2010 2004 2022 2016 2006 DET2 2024 % CuT
2014
2018
2008
2012
2002
2026
2020
2010
2004
2022
2016
2006
DET2
2024
% CuT
0,60
0,80
1,00
1,20
1,40
1,60
1,80
DET1

Figure 9 Reservas Norte Mine grades

2016 2010 2020 2002 2012 2004 2022 2026 2024 2014 DET1 2006 2018 2008 0,60 0,80
2016
2010
2020
2002
2012
2004
2022
2026
2024
2014
DET1
2006
2018
2008
0,60
0,80
%CuT
1,00
1,20
DET2

Figure 10 Diablo-Regimiento Mine grade

The global mixing grade is increased by decreasing the production of Esmeralda and Reservas Norte and increasing the production of Pilar and Diablo Regimiento during the firsts 10 years.

toneladas por día 2018 2008 2022 2004 2014 2012 2002 2026 2006 2016 2010 2020 2024
toneladas por día
2018
2008
2022
2004
2014
2012
2002
2026
2006
2016
2010
2020
2024
0
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
50.000
DET2
DET1
5.000

Figure 11 Esmeralda Mine production profile

10.000 2002 2026 2004 2006 2018 2020 2008 2010 2022 2024 2012 2014 2016 toneladas por
10.000
2002
2026
2004 2006
2018 2020
2008 2010
2022 2024
2012 2014 2016
toneladas por dí
DET 1
15.000
20.000
25.000
30.000
5.000
0
DET 2

Figure 12 Pilar Mine production profile

toneladas por dí 2018 2008 2012 2002 2016 2026 2020 2010 2014 2004 2022 2006 2024
toneladas por dí
2018
2008
2012
2002
2016
2026
2020
2010
2014
2004
2022
2006
2024
0
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
50.000
DET2
DET1
5.000

Figure 13 Reservas Norte Mine production profile

toneladas por día 2018 2008 2022 2002 2012 2006 2026 2016 2020 2010 2014 2024 2004
toneladas por día
2018
2008
2022
2002
2012
2006
2026
2016
2020
2010
2014
2024
2004
DET1
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
50.000
5.000
0
DET2

Figure 14 Diablo-Regimiento production profile

CONSTRAINS EFFECT

The model can include three general types of constrains: operational and rock mechanics constraints, capacity constraints and quality constraints. The idea of this section is to analyze the cost of some constrains used in the present mine planning process.

A smoothing constrain is used to obtain an extraction surface according to the operation policy of regularity. In practice the constrain limits the difference in extraction between heights of adjacent draw points. As any constrain, smoothing decreases the optimum value.

The effect of using a 40m difference compared with the unconstrained case is shown table II, and in Figure 15.

Table II Effect of regularity smoothing

 

NPV

Average

Total

Escenario

Grade

Copper

%

% Cu

KTMF

Smoothing 40m

-6

-0.02

-254

SMOOTH CONSTRAINT EFFECTS COPPER GRADE 0,06 0,05 0,04 0,03 0,02 0,01 0,00 1 2 3 4
SMOOTH CONSTRAINT EFFECTS
COPPER GRADE
0,06
0,05
0,04
0,03
0,02
0,01
0,00
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
-0,01
Period (2004-2028)
Copper Grade Differences (%Cu)

Figure 15 Smoothing constrain effect

The environmental regulation limits the total emission of arsenic per year at the smelter. Considering processing and quality requirements this results in a limit equal to 2000 ppm of Arsenic concentration in copper concentrate.

The effect of the constrain compared with the unconstrained case are shown in table III and in Figure 16.

Table III Effect of Arsenic constraint

 

NPV

Average

Total

Escenario

Grade

Copper

%

% Cu

KTMF

Contaminant

-1

-0.01

-10

ARSENIC CONSTRAIN EFFECTS As in CONCENTRATES 3000 2500 2000 As unconstrained 1500 As constrained 1000 500
ARSENIC CONSTRAIN EFFECTS
As in CONCENTRATES
3000
2500
2000
As unconstrained
1500
As constrained
1000
500
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
Period (2004-2028)
As in Concentrates(ppm)

Figure 16 Arsenic grade of Copper concentrates

PRICE VARIATION

The model was used to analyze the effect of copper price variations in the mining plan. The base scenario had a price a 0.8 US$/pound the first year and a log term price of 0.85 US$/pound. The problem was to determine what should be the best mining strategy if the price in the first year decreased to 0.75 US$/pound, the second year to 0.8 US$/pound and since year 3 to 25 was kept on the long term price (0,85 US$/pound).

25 Year Long Term Planning Annual Average Copper Grade

1,08 1,00 1,02 1,04 1,06 1,08 1,10 1,12 1,14 1,16 1,15 1,10 1,05 2006 1,08 P70_85
1,08
1,00
1,02
1,04
1,06
1,08
1,10
1,12
1,14
1,16
1,15
1,10
1,05
2006
1,08
P70_85
1,15
1,10
1,05
1,05
1,12
P80_85
2005
2008
2007
2004

Figure 17 Effect of copper price on average copper grades

The model decreases the grade in the first year and increases the grade the second year compared to the base scenario, maintaining the grades the rest of the planning horizon. The mining strategy suggested increases the NPV of the plan with the new price series in comparison with the original plan.

The result is explained comparing the price difference with the discount rate. If the price difference is greater than the discount rate, the grades are changed.

CONCLUSIONS

The optimizing model increases 10% the net present value of the plan. This is explained by the simultaneous optimization producing better individual and global grades. The model allows to explore multiple planning scenarios, giving more insight to the generation of scenarios and finally producing better results.

The results obtained are a good guide to build the final plans. During the planning process some of the increments may be slightly reduced due to operating conditions not modeled.

The opportunity cost of the constrains can be estimated with the help of the model, and it can give a guide to reduce the effects of the constrains in the net present value of business. The cost of the constrains can be very high, and in the case of one of the environmental restrictions it can account for over 10% of the future NPV .

The model can be a very useful tool to precise strategies in order to react at different price scenarios.

In order to obtain sound results, it is mandatory to have high quality costs and process information, and a well trained team of professionals with a good knowledge in mine planning, economics, computer systems and mathematical optimization.

REFERENCES

  • 1. W. Hustrulid, R. Bullock. Underground Mining Methods: Engineering Fundamentals And International Case Studies. Littleton, Colo., USA, SME; Society for Mining, Metallurgy, and Exploration. 2001.

The model decreases the grade in the first year and increases the grade the second year
  • 2. K.F. Lane, The Economic Definition of Ore. Mining Journal Books, London, 1988.

  • 3. F. de la Huerta, Aplicacion del Criterio de Costo De Oportunidad en la Planificacion de Producción de Minas Subterráneas. Universidad de Chile, Facultad de Ciencias Fisicas y Matemáticas, Departamento de Ingeniería de Minas. Memoria para optar al título de Ingeniero Civil de Minas. Santiago de Chile, Junio de 1994.

The model decreases the grade in the first year and increases the grade the second year
  • 4. P Crorkan, O Araneda. Planificación Integrada Mina Concentradora en la División El Teniente. Seminario Internacional sobre Innovación Tecnológica en Minería. IIMCH, Santiago, Chile, 8 al 10 de Mayo del 2002.

4. P Crorkan, O Araneda. Planificación Integrada Mina Concentradora en la División El Teniente . Seminario
  • 5. R. Epstein, F.

Caro, J. Catalán,

P. Santibáñez,

A. Weintraub and S. Gaete,

Optimizing long term planning for underground copper mines, to be presented at

Copper 2003, 2003.