Modeling and Pricing of Flexibility in Construction of Block Caving Operations

Building block cave operations involves significant commitments to capital and time before arriving at completion or full scale production. The focus of the mine planners is habitually to minimize the upfront capital and achieve target development rates and construction dates. However, management of the construction of block cave projects requires understanding of the strategic/tactical decisions that the project planners can take to increase the value of the project and cope with schedule risks. As block cave projects involve development of vertical and lateral access to the underground footprint and ore body, more attention to uncertainties is required as most of those projects need to confront delays leading to a decrease in value. The standard process of development and construction scheduling is often not planned with provisions to realise uncertainties in the construction phase. Uncertainties and risks such as poor ground conditions and equipment breakdowns are the primary reasons for schedule slippage. As a result most of these projects experience delays. In order to mitigate risk to the project schedule, we centre our attention on increasing the value of the project by spending more money upfront and improving the schedule rather than focus on minimizing the upfront capital. Scenario-based simulations along with project appraisal methods hold great promise to address those challenges and enable mine planners to make better decision and enhancing project value. This paper will present a hybrid simulation based approach to model the process of development and construction based on discrete event (DES) and continuous based simulations (CBS). Such simulations will be conducted for scheduling multiple development headings (Apex, undercut, extraction, and haulage levels). Two scenarios are utilized to investigate the impact of risks on schedule and how flexibility in construction can be incorporated to minimize delays: (1) The bench mark scenario is created based on actual data from an existing case study. (2) The flexible scenario is an alternative way to use primary production infrastructure (Ore Handling System) including conveyer drifts, conveyer belt, and a gyratory crusher in the construction process and that requires the system to be in place before starting lateral development in the footprint. As a result, a truck-load system versus a conveying system will be studied to observe the gain in construction speed and to estimate the premium cost for mucking rock from headings and drawbells and transporting it to surface. Such strategic flexibility would be part of the original budget to make the tactical flexibility available during construction. Continuous cash flow models are used to evaluate and compare the scenarios. This study is an example of how new techniques in planning can be used to support decision-making processes in block cave design.