A Hybrid Model for Risk-Based Strategic Planning in Open-Pit Mining: Integrating Deterministic, Stochastic, and ISO 31000 Approaches
The strategic planning of open-pit mining projects is highly influenced by geological variability, economic fluctuations, and operational uncertainties. Traditional deterministic optimization models often fail to account for these uncertainties, leading to potentially misleading economic evaluations...
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MDPI AG
2025-02-01
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| Series: | Applied Sciences |
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| Online Access: | https://www.mdpi.com/2076-3417/15/5/2500 |
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| author | Petar Markovic Dejan Stevanovic Bozo Kolonja Dragana Slavkovic Daniel Krzanovic |
| author_facet | Petar Markovic Dejan Stevanovic Bozo Kolonja Dragana Slavkovic Daniel Krzanovic |
| author_sort | Petar Markovic |
| collection | DOAJ |
| description | The strategic planning of open-pit mining projects is highly influenced by geological variability, economic fluctuations, and operational uncertainties. Traditional deterministic optimization models often fail to account for these uncertainties, leading to potentially misleading economic evaluations. This paper proposes a hybrid model that integrates deterministic and stochastic optimization methods, following the principles of the ISO 31000 risk management framework, to comprehensively quantify uncertainty through key parameters affecting strategic mine planning. Monte Carlo simulations were applied to generate probability distributions of input parameters, including metal prices, mining and processing costs, and ore grade variability, allowing for a more robust financial assessment. The results demonstrate that while the deterministic approach estimates an NPV of USD 130.8 million, the stochastic model yields an average NPV of USD 155.5 million with a standard deviation of USD 76.5 million, highlighting the significant variability in financial outcomes. Risk assessment using Value at Risk (VaR) and Conditional Value at Risk (CVaR) further quantifies potential financial losses, revealing a 3% probability of project unprofitability. The developed methodology provides a structured approach to integrating uncertainty into mine planning, enabling more reliable economic evaluations and improving decision-making in strategic mining operations. |
| format | Article |
| id | doaj-art-a71e7524a35644479c8f641fabf9a0d0 |
| institution | DOAJ |
| issn | 2076-3417 |
| language | English |
| publishDate | 2025-02-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Applied Sciences |
| spelling | doaj-art-a71e7524a35644479c8f641fabf9a0d02025-08-20T02:53:19ZengMDPI AGApplied Sciences2076-34172025-02-01155250010.3390/app15052500A Hybrid Model for Risk-Based Strategic Planning in Open-Pit Mining: Integrating Deterministic, Stochastic, and ISO 31000 ApproachesPetar Markovic0Dejan Stevanovic1Bozo Kolonja2Dragana Slavkovic3Daniel Krzanovic4Faculty of Mining and Geology, University of Belgrade, 11000 Belgrade, SerbiaFaculty of Mining and Geology, University of Belgrade, 11000 Belgrade, SerbiaFaculty of Mining and Geology, University of Belgrade, 11000 Belgrade, SerbiaInstitute of Transportation CIP Ltd., Nemanjina 6/IV, 11000 Belgrade, SerbiaMining and Metallurgy Institute Bor, 19210 Bor, SerbiaThe strategic planning of open-pit mining projects is highly influenced by geological variability, economic fluctuations, and operational uncertainties. Traditional deterministic optimization models often fail to account for these uncertainties, leading to potentially misleading economic evaluations. This paper proposes a hybrid model that integrates deterministic and stochastic optimization methods, following the principles of the ISO 31000 risk management framework, to comprehensively quantify uncertainty through key parameters affecting strategic mine planning. Monte Carlo simulations were applied to generate probability distributions of input parameters, including metal prices, mining and processing costs, and ore grade variability, allowing for a more robust financial assessment. The results demonstrate that while the deterministic approach estimates an NPV of USD 130.8 million, the stochastic model yields an average NPV of USD 155.5 million with a standard deviation of USD 76.5 million, highlighting the significant variability in financial outcomes. Risk assessment using Value at Risk (VaR) and Conditional Value at Risk (CVaR) further quantifies potential financial losses, revealing a 3% probability of project unprofitability. The developed methodology provides a structured approach to integrating uncertainty into mine planning, enabling more reliable economic evaluations and improving decision-making in strategic mining operations.https://www.mdpi.com/2076-3417/15/5/2500hybrid risk managementpit limit optimizationMonte Carlo simulationsdecision support in mininguncertainty modelingeconomic risk analysis |
| spellingShingle | Petar Markovic Dejan Stevanovic Bozo Kolonja Dragana Slavkovic Daniel Krzanovic A Hybrid Model for Risk-Based Strategic Planning in Open-Pit Mining: Integrating Deterministic, Stochastic, and ISO 31000 Approaches Applied Sciences hybrid risk management pit limit optimization Monte Carlo simulations decision support in mining uncertainty modeling economic risk analysis |
| title | A Hybrid Model for Risk-Based Strategic Planning in Open-Pit Mining: Integrating Deterministic, Stochastic, and ISO 31000 Approaches |
| title_full | A Hybrid Model for Risk-Based Strategic Planning in Open-Pit Mining: Integrating Deterministic, Stochastic, and ISO 31000 Approaches |
| title_fullStr | A Hybrid Model for Risk-Based Strategic Planning in Open-Pit Mining: Integrating Deterministic, Stochastic, and ISO 31000 Approaches |
| title_full_unstemmed | A Hybrid Model for Risk-Based Strategic Planning in Open-Pit Mining: Integrating Deterministic, Stochastic, and ISO 31000 Approaches |
| title_short | A Hybrid Model for Risk-Based Strategic Planning in Open-Pit Mining: Integrating Deterministic, Stochastic, and ISO 31000 Approaches |
| title_sort | hybrid model for risk based strategic planning in open pit mining integrating deterministic stochastic and iso 31000 approaches |
| topic | hybrid risk management pit limit optimization Monte Carlo simulations decision support in mining uncertainty modeling economic risk analysis |
| url | https://www.mdpi.com/2076-3417/15/5/2500 |
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