RISK MANAGEMENT IN MINING AND MINERALS ECONOMICS AS WELL AS MINERALS RESOURCE MANAGEMENT

The field of risk management has been growing in popularity over thelast few years. Risk management is not a new concept but isbecoming more important since the release of the Turnbull report.This research reviews all the risk management systems currentlyavailable in the mining industry. The focus of this research is from aMining Economics as well as a Minerals Resource Managementperspective.It is the Mineral Resource Managers primary task to ensure that theorebody is extracted in the most optimum method to ensure themaximum return for the shareholder. In order to do that, theResource Manager needs a good understanding of the ore body aswell as the extraction methods and the cost of mining. Recently ithas become important to understand the risks around the miningprocess as well.It was found that the principal risk associated with mining isextracting the orebody sub economically and hence the researchfocus was on optimisation. Three tools have been designed tofacilitate the determination of optimisation. The above three toolshave been tested in practice.The first section of research focuses on how risk is defined in theindustry. There is also an analysis what a Mining Economist and AMineral Resource Manager will encounter in terms of risk.The second section covers the Basic Mining Equation (BME) and itsuses. The research looks at using stochastic methods to improveoptimisation and identifying risk. The @Risk software was used toanalyse 5 years of historical data from an existing mine andpredicting the future, using the distributions identified in the history.The third section is based on the use of the Cigarette Box Optimiser(CBO), where the cost volume curve and the orebody signature areused to determine optimality in returns. It also looks at various formsof the BME and how it can be used to identify risk. The section alsocovers quantification of risk from a probability perspective usingsystems reliability logic.The fourth section centres on the Macro Grid Optimiser (MGO),which considers the spatial differentiation of the orebody anddetermining the optimality through, an iterative process.The last section analyses risk from a Mining Economics perspective.It considers the use of the ‘S-curve’ to determine risk. The sectionalso includes a high-level shaft infrastructure optimisation exercise.As an overall conclusion, it was found that the biggest risk associatedwith mining could be to extract the orebody sub economically. Someore bodies could yield double the return that they intend to extract. Inorder for that to happen, the extraction program should undergosome form of optimisation. This will ensure that the optimal volume,cut-off, selectivity and efficiencies are met. There is no greater risk than to mine an ore body out without making an optimal profit.We are in mining to make money! Cash is king!