Uncertainty assessment in the supply function of lignite deposits

A decision model for the assessment of uncertainty in the supply function of a lignite deposit is presented. A supply function providing the quantities of lignite recoverable from a deposit at different cost levels is defined in terms of the size of the deposit and its volumetric density in lignite. These physical characteristics of the deposit are simulated by random processes describing the variability of physical parameters such as the depth of the geological floor, and the thicknesses of lignite seams and scrap layers over the extent of the lignite deposit. Lack of knowledge about the size and content of a deposit is expressed as lack of knowledge about the parameters of the stochastic model. The latter are considered as random variables distributed according to prior probability distributions expressing the available information about the deposit coupled with expert judgement. This model supports the general decision making framework where a decision can be made on the basis of the existing information or on the basis of additional information about the nature of the deposit and its characteristics that can be obtained through exploratory bore. This information is then used to update the distributions of the unknown parameters. The methodology is demonstrated through an application to a lignite deposit in Southern Greece. A large amount of information (large number of exploratory bores) is available for this deposit and the variation of the uncertainty with the amount of available information is demonstrated. A very good agreement of the results of the proposed model with the official lignite "measurements" is observed.