In an ever changing world, where the velocity of information flow can have an immediate effect on the economics of mining concerns, the lack of management decision tools may be disastrous for both the mining company and its stakeholders.
In the open pit mining environment, there has been substantial development of optimisation tools. However, this has been lacking in the underground mining environment. To this end, an alliance was formed between Gold Fields Limited (Gold Fields) and Cyest Corporation (Cyest); Cyest has developod an Economic Optimisation Model (EOM) for each of Gold Fields’ deep level operations in South Africa.
Cyest Corporation was contracted by Gold Fields Limited in 2003 to assist in the development of a prototype Economic Optimization Model (EOM) using Microsoft Excel™. The rationale for the exercise was to develop a strategic planning tool to improve decision making. The success of this initiative resulted in Gold Fields commissioning a prototype ‘Mini EOM’ for all the South African operations to test economic viability and optimise the NPV of the life of mine reserve plans and projects.
Cyest Corporation has been involved in economic modelling and optimisation with
various mining clients within South Africa, and internationally, for the past 5 years.
In the mining industry in particular, the relationships between variables that are
controllable, and those that are not, and the physical and economic outcomes are
complex and often non-linear.These relationships constitute an economic system. In
the mining context, although many of the relationships can be accurately quantified on
a ‘single variable to single variable’ basis, such simplistic relationships will not
suffice in order to understand the dynamics of an entire mine.
In an environment of constant to declining real metal price, working costs that are escalating at a rate greater than inflation and declining grades, decisions are being made to rationalise production through the closure of working sections and/or shafts. This rationalization tends to be guised as an optimisation process aimed at
enhancing overall value and/or short-term profitability. The closure of working sections however ultimately impacts both variable and fixed working cost structures across the section, shaft, mining complex and in large corporations, the Group. Should a shaft be closed when it can no longer carry its direct and overhead costs or are direct costs the only factor?
Mining executives often have a difficult task determining what the strategic objective of the business should be as this can be impacted by the prevailing market conditions. In addition, they have no mechanism to quantitatively ‘test’ the impact of this strategic decision on the business and understand underlying dynamics.
Gary, one of the founding directors of the company, has been with Cyest Corporation since its inception in 2000. He has a BSc (Eng) and MBA and has worked in various engineering and project management...
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