Haulage Impact on Mine Cut-Off Grade Strategy at

Freeport-McMoRan Sierrita
A. Ashok Parmar1*, 59LYDV2, A. Kaveh2
1
Freeport-McMoRan Sierrita, United States; 2Hexagon Mining, United States
*Corresponding author: aashokpa@fmi.com

Freeport-McMoRan is a leading international natural resources company that operates large, long-
lived geographically diverse assets with significant proven and probable reserves of copper, gold,
and molybdenum. The Sierrita mine is an open-pit truck and shovel operation from which copper
and molybdenum are produced and is located approximately 20 miles southwest of Tucson,
$UL]RQD7KLVSDSHUGLVFXVVHVWKe haulage impact on mine cut-off grade strategy in the context of
long range planning at the Sierrita mine.

Introduction
Much has been written about estimating the cut-off grade strategy for open-pit mines. However, the haulage impact
on the cut-off grade is often overlooked, underestimated and in some cases not considered at all. At the same time, it
is ZHOOUHFRJQL]HGLQWKHPLQLQJLQGXVWU\WKDWKDXODJHFRVWVUHSUHVHQWDVLJQLILFDQWDPRXQWRISURMHFWYDOXHIRUDQ\
open-pit truck and shovel operation. Further to this, the mine cut-off grade effectively dictates the material routing.
Therefore, understanding and accounting for all mining costs in detail (e.g. haulage costs) when estimating the mine
cutoff LVNH\WRDYRLGFRVWO\PLVURXWHVDQGUHDOL]HPD[LPXPSURMHFWYDOXH7UDGLWLRQDOO\HVWLPDWLQJWKHKDXODJH
costs in detail and its impact on cut-off grade has been challenging to do. For starters, some of the conventional
methods for generating a production schedule involve determining the dig plan, the haul plan and the
dumpVWRFNSLOH plan separately. In some cases, these components are prepared by different teams and sometimes
with different tools. Under the conventional siloed approach finding the optimum mine cutoff grade strategy would
require endless iterations and mine planners usually only have time to evaluate a few alternatives. However, modern
commercial mine planning and scheduling tools such as Mine6LJKW6FKHGXOH2SWLPL]HU0662allow for
LQWHJUDWLQJDQGRSWLPL]LQJWKHGLJSODQWKHKDXOSODQDQGWKHVWRFNSLOHGXPSSODQWRDFKLHYHWKHEHVWIHDVLEOH
solution.

Project Overview
7KH6LHUULWDPLQLQJFRPSOH[LVORFDWHGLQ3LPD&RXQW\DSSUR[LPDWHO\PLOHVVRXWKZHVWRI7XFVRQ$UL]RQDDV
shown in Figure 1. The development of the open pit operations began more than 50 years ago. The ore deposit
contains oxide and sulfide miQHUDOL]DWLRQIURPZKLFKFRSSHUDQGPRO\EGHQXPDUHSURGXFHG7KHR[LGHRUHLV
delivered to the leach process while the sulfide ore is routed to the crusher and mill circuit.

Figure 1: Location Map

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The Sierrita operations employed approximately 1,090 people in 2015 and generated an estimated $344 million in 7
HFRQRPLFEHQHILWVIRUWKHVWDWHRI$UL]RQDLQthe same year.

Haulage Impact on Mine Cut-off Grade at the Pit Optimization Stage

The cut-RIIJUDGHVWUDWHJ\FDQEHDQDO\]HGDWGLIIHUHQWVWDJHVRIWKHevaluation process. During the initial stages, the
first step consists of GHWHUPLQLQJWKHHFRQRPLFSLWOLPLWV)RUWKLVSXUSRVHSLWRSWLPL]DWLRQWRROVVXFKDV0LQH6LJKW
Economic Planner (MSEP) use the floating cone, or the Lerchs-Grossman, or the Pseudo-flow algorithm to
determine the economic pit limits based on the value of the block and other considerations such as the slope
parameters based on the geotechnical recommendations. MSEP can also calculate the value of the block based on
the given economic parameters such as price, costs, grade and recovery. At this time, the program calculates the
economic value for any possible destination and selects the best economic destination. During the program setup,
the user has the option to do a mill cutoff or mine cutoff evaluation. For the mill cutoff, the mining costs are
H[FOXGHGDQGLIDEORFNFDQSD\IRULWVSURFHVVLQJDWDSURILWWKHQLWFDQJRWRWKHPLOO2QWKHRWKHUKDQGLIDPLQH
cutoff strategy is selected, then a block would have to be able to pay for both mining and processing costs to go to
the mill. At this stage, there is not a lot of detail yet on the haulage costs since the first objective is to determine the
economic pit limits. However, an incremental mining cost by bench can be assigned to simulate the added haulage
costs as you go deeper into the pit. When comparing the results of the economic pit limits derived from the mine
cutoff vs. the mill cutoff evaluation, the results tend to show that the pit outline is reduced when the mining and the
associated haulage costs are included as shown in Figure 2 below.

)LJXUH3LW2XWOLQHV

7KHSLWRXWOLQHGHULYHGIURPWKHSLWRSWLPL]DWLRQVWXG\ZLOOJXLGHWKHGHWDLOHGSLWGHVLJQVLQFOXGLQJWKHSLWUDPSVSLW
toes and pit FUHVWV2QFHWKHSLWGHVLJQVDUHFRPSOHWHGPRUHGHWDLOHGproduction schedules can be produced which
can consider more accurate cycle times from each source to each destination.

Haulage Impact on Mine Cut-off Grade at the Scheduling Stage

The impact of haulage on mine cut-off grade can be better understood at the scheduling stage once there is a defined
road network connecting each source with each destination. Thus, more accurate cycle times and haulage costs can
be reflected at this stage. MineSight ScKHGXOH2SWLPL]HU0662uses Mixed Integer Linear Programming (MILP)
WRVROYHWKHVFKHGXOLQJSUREOHPWKDWPD[LPL]HV139ZKLOHVDWLVI\LQJDYDULHW\RIFRQVWUDLQWV7KHVHFRQVWUDLQWVFDQ
be due to resource constraints, grade constraints, production rate constraints, precedence constraints, etc. MILP is

mathematically guaranteed to produce the optimal solution to the scheduling problem within the defined precision.

The task at hand remains to construct a proper formulation to solve the mine cut-off grade strategy with and without
KDXODJH2QFHIRUPXODWHG0662 uses a third party commercial solver such as IBM CPLEX or Lindo to provide the
solution. In this paper, we will briefly outline the formulation without delving into details in the interest of
intellectual property.

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 7KHXQLWRIWLPHLQ0662LVDSHULRG(DFKSHULRGLQWKHSURMHFWFDQEHGLIIHUHQWDVVRPHSHULRGVUHIHUWRDQQXDO
plan, monthly plan or five-\HDUSODQ$OWKRXJK0662FDQGRPLQHFXW-off strategy with multi-period looking
forward, for the sake of simplicity we will discuss the single period set-up without looking forward. The following is
a simple set-up to illustrate the algorithm.

1. We are formulating for the first period.

2. There are blocks in the mine.
3. (DFKEORFNLVHLWKHUPLQHGRr not mined at all.
4. There are two destinations: mill and waste.
5. We know the precedence relationship between the blocks. A block may have preceding blocks directly
above it that need to be mined before getting access to the current block. There may be different types of
precedence, such as phase precedence, etc. Suppose that block is the immediate precedence of block .
We will denote this by .
6. The profit of block is denoted by if sent to mill, and if sent to waste. It is a constant value
driven by economics, haulage, etc. This is where we can include or exclude haulage cost.
7. The tonnage of block is denoted by and is a constant value.
8. :HDUHLQWHUHVWHGLQPD[LPL]LQJWKHSURILWREWDLQHG in the period.
9. There is a lower limit tonnage constraint and an upper limit tonnage constraint for the mill and waste,
denoted by , , , and respectively.

We will define the following variables in our MILP. Let if cut is mined, and otherwise. Let
denote the portion of cut that is sent to mill, and denote the portion of cut that is sent to waste. The full
problem formulation is as follows.

   










   
 
  
  
  



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Figure 3 shows material going to the crusher from two different sources. Pushback 61 (PB61) has the shortest haul,
while Pushback 81 (PB81) has the longer hauls to the crusher.

Figure 3: Long vs. Short Hauls to the Crusher

At the scheduling stage, the detailed haul profile and its associated mining cost to each possible destination can be
reflected in the opWLPL]DWLRQSURFHVVWRREWDLQWKHRSWLPXPPLQHFXWRIIJUDGHVWUDWHJ\,WLVSRVVLEOHWKDWPDWHULDOV
ZLWKWKHVDPHJURVVUHYHQXHEXWGLIIHUHQWKDXODJHFRVWVEHURXWHGGLIIHUHQWO\WKURXJKRXWWKHVFKHGXOHWRPD[LPL]H
WKH139
,
Interpreting mine cutoff-grade at the scheduling stage involves other factors aside from haulage costs. For example,
geologic grade distributions and schedule constraints may have a significant impact as well. Figure 4 below shows a
relative comparison of the mine cut-off grade for PB61 and PB81. Similarly, the tons per truck hours are indicated to
reflect the different rates for each pushback.

Figure 4: Mine Cut-off Grade to Crusher by Pushback

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 Even within each pushback, the mine cut-off grade is impacted by many factors including the haulage. Figure 5
shows the relative mine cut-off grades and the tons per truck hour for PB61 by bench.

Figure 5: Mine Cut-off Grade by Bench for Pushback 61

,IRQHFRPSDUHVWKHUHVXOWVRIUXQQLQJWKHVFKHGXOHLQ0662ZLWKDQGZLWKRXWWKHKDXODJHWKHUHDUHVRPH
additional insights that we could obtain. Figure 6 shows the relative tons mined by period by pushback without
haulage.

Figure 6: Relative tons mined by period by pushback without haulage.

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2QWKHRWKHUKDQG)LJXUH below shows the relative tons mined by period by pushback when considering haulage
mining costs.

Figure 7: Relative tons mined by period by pushback with haulage.

Based on Figures 6 and 7 above, WKHRSWLPL]DWLRQUHVXOWVLQGLFDWHWKDWZKHQKDXODJHLVQRWFRQVLGHUed, mining on

PB81 is accelerated. 2QWKHFRQWUDU\ZKHQGHWDLOHGKDXODJHFRVWVDUHFRQVLGHUHGPLQLQJLQ PB81 is extended by
almost 2 years.

So, if we follow the conventional siloed approach, the dig plan will mine PB81 faster. $IWHUWKHVKRYHOGLJSODQLV
determined, the corresponding equipment and destinations are assigned to move the material from each source to
each destination across the road network. Alternatively, if we solve the dig, haul and dump plan combined as one
problem, the schedule slows down the mining on PB81 since it is considering the haulage costs. This change on
mining sequence directly impacts the mine cut-off in the schedule. Similarly, evaluating the haulage impact on mine
cut-RIIJUDGHVWUDWHJ\UHTXLUHVPXOWLSHULRGVFKHGXOLQJ)LJXUHVKRZVWKHFXPXODWLYH139IRUVFKHGXOLQJZLWKDQG
ZLWKRXWPXOWLSHULRG7KHUHVXOWVLQGLFDWHWKDWPXOWLSHULRGVFKHGXOLQJFDSWXUHVDQDGGLWLRQDORIproject value.

Figure 8: 6LQJOH3HULRGYV0XOWLSHULRG6FKHGXOLQJ&XPXODWLYH139.

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 The corresponding mine cut-off grade strategy for scheduling with single period and multiperiod is shown below in
Figure 9.

Figure 9: Single Period vs. Multiperiod Cut-2IIJUDGHVWUDWHJ\

Conclusion

There have been numerous studies and research FRQGXFWHGRQRSWLPL]LQJWKHFXWRIIJUDGHWRPD[LPL]HWKHQHW

present value. This paper focused on understanding the haulage impact on mine cut-off grade strategy and mining
sequence. The results showed that the closer the source to the destination, the higher the tons per truck hour and the
more economic it is to operate at a lower mine cut-off grade2QWKHRWKHUKDQGVRXUFHVORFDWHGfar away from the
mill reflected lower ton per truck hour rates and the increased haulage costs associated with the increased haul
distances were offset by higher mine cutoff grades to make it economical. When the schedule did not account for
haulage costs, material from PB81 was mined 2 years faster than when including the haulage. Therefore, solving the
shovel plan first in isolation and then calculating the equipment needed to move the material may be misleading.
Similarly, when evaluating the impact of haulage on mine cut-off it is important to use multiperiod scheduling as the
difference on net present value can be significant. 7KHSODQVSUHSDUHGZLWK0662UHIOHFWRSHUDWLQJGHWDLOV which
makes the forecast more achievable. This in turn helps close the gap between planning and execution. Similarly, the
integrated plans GLJKDXOGXPSRSWLPL]HGZLWKPXOWLSHULRGVFKHGXOLQJWHQGWRUHIOHFWKLJKHU139VLQFHWKH
iterations are performed by the computer while the engineers have more time tRDQDO\]HWKHSODQDQGORRNIRU
opportunities to improve it.

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