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By David A. Brence, Andrew D. Marti, Richard P. Stahura, Ronald J. Valentine

The development of an effective belt-cleaning system for a new conveyor system seemed a fairly conventional assignment. But a closer examination of the project showed a number of “fine print” details: •High altitude location (with resulting cold weather and low humidity conditions). •Long conveyor length. •Troublesome material (very sticky and capable of hardening like concrete). •Limited water. These difficulties are spelled out the challenge of developing a cleaning system for the production conveyor2 (PC2) belt at Climax Molybdenum’s Henderson Mine.

Jan 1, 2005

By Ewan Wingate, Ranjit Prasad, Yanjun Liu

The phosphorus journey begins with the extraction of primary phosphorus in the form of phosphate in apatite through openpit mining and, in some rare cases, underground mining methods. The ores are processed in beneficiation plants to remove impurities before the phosphate rock concentrate is either sold on the open market or converted into phosphoric acid in downstream chemical production facilities by the wet acid process or thermal phosphorus routes. These can in turn be converted into fertilizers, as well as used in the food and electronic industries. The advent of the EV battery has given rise to a new use for purified phosphoric acid in the production of lithium ferro phosphorus (LFP) cathode material for EV battery cathode assemblies. The production of LFP relies on raw materials such as lithium carbonate, lithium hydroxides, iron salts and purified phosphoric acid.

Feb 1, 2024

By Mark P. Juzli

During the 1980s, a revolution has been taking place in industrial minerals marketing. Transportation deregulation and a handful of creative marketing and distribution managers have completely changed the rules for marketing many industrial minerals. Minerals are being transported much farther than in prior decades and at much less cost. Bulk and package terminals are becoming increasingly common as a means to take advantage of freight rate savings and to provide enhanced service to faraway customers. Water and rail transportation are being used increasingly to penetrate markets considered unreachable just a few years ago. No longer do the textbook rules of thumb for industrial minerals marketing apply. This author recalls three of those rules he was taught in mineral economics graduate school in the 1970s. As recorded in class notes: • construction aggregates are seldom shipped more than 32 km (20 miles) from the quarry; • cement is sold within 240 km (150 miles) of the mill; and • industrial sand is sold regionally - it is freight constrained to a market radius of no more than 320 to 400 km (200 to 250 miles) from the plant. And yet, the author looks up in 1989 and observes overland movements of aggregates of many hundred miles, overland movements of cement and industrial sand of 1600 km (1000 miles) or more, and water movements of both aggregates and cement into the United States from sources halfway around the world. Truly, industrial minerals are in the midst of a marketing revolution. The companies that have led this revolution have enjoyed considerable financial success in the 1980s. They have enhanced their profitability by increasing market share, capacity utilization, and average selling prices by taking product to remote markets where premium prices are available. They have consistently outperformed their competition, many of whom remain unaware that the marketing revolution going on around them is actually a transportation/distribution revolution. The successful industrial minerals company of the next 10 to 15 years must participate in the transportation revolution as it continues to evolve. Additional human and capital resources must be committed to maximize the effectiveness of a company's transportation and

Jan 1, 1989

By J. A. Rusnak, K. M. Mohamed, M. A. Van Dyke, M. M. Sears, G. Rashed

"Researchers from the National Institute for Occupational Safety and Health (NIOSH) recently developed a coal-mass model to realistically simulate the deformation and loading behaviors of the ribs of coal pillars in underground coal mines. The scale-dependent properties (stiffness and strength) of coal material were considered in the coal-mass model. In this paper the orientation of face cleat with respect to driving direction was integrated in the coal-mass model. The controlling parameters (dimensionless coal-mass scale and fracture strains) of the modified coal-mass model were calibrated using a published case study of coal pillar strength. Numerical models with wide ranges of controlling parameters were conducted to simulate the test pillar. The best match between the numerical modeling results and the measured stresses and deformations was achieved by using a coal-mass scale of 30 and fracture plastic shear and tensile strains of 3.25% and 0.325 %, respectively. INTRODUCTION The failure of coal pillar ribs by itself are a major hazard in underground coal mines. Furthermore, failing ribs can indirectly contribute to roof and floor instability by increasing opening widths across intersections and entryways. Over the past decade, rib failures have resulted in 12 fatalities, representing 28% of the ground-fall fatalities in U.S. underground coal mines. Mining depth has always played a very important role in assessing rib stability. Gauna and Mark (2010) completed an analysis of rib fatalities that occurred between 1996 and 2010. One of their most prominent and influential findings was the identification of a relationship among fatalities, depth, and mining height. Therefore, Coal rib stability will continue to be a challenge for future deeper mines in U.S. coal basins. In the past several decades, research efforts have focused on roof support. The current rib control practice in U.S. coal mines is to select rib bolts through a trial-and-error approach (Mohamed et al., 2015a). Rib failure incidents can be can be substantially reduced or even eliminated by adopting an engineering-based coal rib design approach. The factors affecting rib stability in coal mines are numerous and mutually dependent. These factors include but not limited to mining height and overburden depth, interburden thickness for multiple-seam mining, coal strength, cleat density, entry direction with respect to cleat orientation, existence or absence of partings in the coal, percentage of extracted roof and/or floor rock, density of rib bolt support (Mohamed et al., 2015a). Moreover, it is difficult to isolate the particular effect of a specific factor on the overall rib stability. Therefore, a reliable empirical rib design approach is not achievable because it requires a significant number of case histories to be collected in order to have a reasonable range of all of the critical parameters. However, numerical modeling can be a practical tool to assist with rib support design if the modeling is realistic, which can only be achieved through calibration and validation of the numerical model against field data."

Jan 1, 2018

By T. Hudaverdi

Several studies have been conducted on blastability and prediction of fragmentation. The term blastability is used to refer the susceptibility of the rock to blasting and is closely related to fragmentation. Parameters that determine fragmentation by blasting may be divided into two groups. The first group consists of blasting design parameters. The blast design parameters are controllable parameters and determined by the explosive engineers. The burden, spacing between holes, bench height, drillhole diameter, stemming height and explosive density are all design parameters. The second group consists of rock mass parameters that are referred to as uncontrollable parameters. The uncontrollable parameters are physical and mechanical properties of rock and rock mass structure. The strength, modulus of elasticity, density of rock, number of joint sets, joint orientation and joint spacing are among uncontrollable parameters. The rock mass parameters and blast design parameters should be considered together to explain fragmentation process. In this study, a blast database was accumulated to use for multivariate analysis. The blast database contains the blasts performed near Istanbul region quarries and the blasts that were preformed in various mines in the world by the blasting researchers. The cluster analysis was used to separate the blast data into different similarity groups. Group memberships were analyzed and checked by the discriminant analysis. Then, the multivariate regression analysis was used to develop a prediction equation for blast fragmentation for each group. Finally, a validation of the suggested models was performed for various mines. The model comprises blast design parameters, mechanical properties of rock and rock mass structure.

Jan 1, 2011

By James M. Barker

Industrial minerals are critical to most aspects of modern society. They are pervasive in both industry and in everyone's lives (McVey, 1989; Barsotti, 1993). They are also the dominant class of minerals produced in the United States but this fact is little known outside the industry. For example, in 1993 (U.S. Bureau of Mines, 1995, table 1) industrial mineral dollar value was double that of metals ($20.86 billion vs. $10.88 billion) and employment levels were nearly so (74,000 vs. 40,000). A further difference is that transportation tends to dominate production costs (FOB end user) whereas they are much less significant in other mining ventures or other industries. Finally, metal mines are more concentrated west of the Mississippi; industrial mineral operations are more prevalent to the east (U.S. Bureau of Mines, 1995, p. 16-17). The significance of transport cost is discussed in Part 2, which is essentially Barker and Austin, 1995. Part 1 will update and expand portions of Barker and Austin (1995) and provide a more detailed discussion of import/export relationships using a China/United States reference point because of China's dramatic influence on some industrial mineral markets since the mid-1980s (barite, etc.).

Jan 1, 1996

By H. P. Cole

A team of researchers at the University of Kentucky, working under a USBM contract, developed over 65 simulation exercises for teaching and testing problem-solving and decision-making skills to miners and mining engineers. These skills involve both improving judgment and decision making in mine emergencies and enhancing the learning of real-world engineering design principles. The exercises are ideally suited for either latent image format or for computer-aided instruction. Exercise features are summarized, the structure and field testing of typical exercises described, and sample frames of individual exercises presented. Empirical data are summarized that describe the effectiveness of using these short, time-efficient performance tasks that simulate real problems and that provide immediate corrective feedback for teaching and testing critical skills. I

Jan 1, 1991

By E. A. Schmidt

In 1962, while investigating the tungsten potential in the Thompson Creek area for Union Carbide Corp., Henry T. Eyrich obtained anomalous concentrations of molybdenum (up to 19 ppm Mo) from stream sediment samples collected along Pat Hughes Creek, a tributary to Thompson Creek. Follow-up investigations by Eyrich during the same year disclosed the presence of a hydrothermally altered and molybdenite-bearing granitic exposure in the headwaters of Pat Hughes Creek about 2.4 km (1.5 miles) upstream from the sample point. The altered outcrop measured about 549 by 305 m (1800 by 1000 ft), contained abundant northwest-trending quartz veins locally with molybdenite, and was overlain and surrounded by the Challis volcanic extrusive sequence of mid-Tertiary age. Eyrich's subsequent soil and rock chip geochemical sampling program over the altered outcrop area showed a general increase in the molybdenum content to the northwest toward the postmineral Challis volcanic cover. Over a distance of about 305 m (1000 ft), values in the altered intrusive rock increased from less than 5 ppm Mo to over 600 ppm Mo, with aconcomitant intensity of the hydrothermal alteration pattern. Based on these geochemical results and on preliminar; megascopic hydrothermal alteration studies, Eyrich correctly concluded that the altered outcrop is an erosional window and that molybdenum mineralization of sufficient grade could exist beneath the Challis volcanic cover some distance further to the northwest. His recommendation to test the area of potential molybdenum mineralization with several drill holes was, however, declined by Union Carbide in 1962. The property remained unclaimed until 1967, when Eyrich joined Cyprus Mines Corp. Acting on Eyrich's recommendation, Cyprus immediately staked 26 lode mining claims to cover not only the altered intrusive outcrop, but also the northwest trend of mineralization where it projected beneath Challis volcanic rocks. Eleven of these claims are now patented.

Jan 1, 1991

By Vince Luongo

PROJECT DESCRIPTION The York Durham Sanitary System (YDSS) Interceptor in the Town of Richmond Hill located just north of Toronto, Ontario, Canada will see the construction of a tunnel extending along 19th Avenue for a length of approximately 3.8 Km from Yonge Street, east to Leslie Street and will have a minimum internal diameter of 2.1 m. t to Leslie Street and will have a minimum internal diameter of 2.1 m. The tunnel will connect into four shafts, for which two of the shafts will be constructed using the slurry wall construction method given the high water table and difficult ground conditions encountered at these locations. The two shafts noted as Access Shaft No. 2 and No. 3 were designed and constructed to meet regulatory conditions, which required a sealed shaft construction method. GEOGRAPHICAL PROFILE The ground conditions in the Toronto region consist predominately of glacial till, glaciolacustrine and glaciofluvial sand, silt and clay deposits, and beach sands and gravels. The shallow geological formation found in the project area consists of four types of deposits: Oak Ridge Morain deposits, Halton Till, Glacial lake deposits and Organic soils. The Oak Ridge Morain is the dominant deposit encountered along the tunnel alignment. This formation consists of three deposits: The Upper Till, Middle Sand and the Lower Till. Standard penetration tests (SPT) carried out in these deposits measured N-values ranging from 2 to more than 100 blows/300mm which indicate very loose to very dense soil conditions. The Middle Sand deposit will be the dominant feature within the slurry wall construction at access shafts 2 and 3. Access Shaft 3 The base of the slurry wall will be 20.5 M below the ground surface. Slurry wall excavation will be within peat and organic soils found at the upper 3 M, followed by 5 M of the Upper Till. The remainder of the excavation will be within the Middle Sand. The piezometric head elevation is found at the ground surface. Access Shaft 2 The base of the slurry wall will be 22.5 M below the ground surface. Slurry wall excavation will be entirely within the Middle Sand 2.The piezometric head elevation is found at 7 M below the ground surface.

Jan 1, 2007

By D. Malhotra

The economic viability of a mining operation depends on continuous process improvements. Diagnostic testing and plant auditing are essential useful tools to improve performance and reduce operating costs. Case studies are discussed to illustrate benefits of these techniques to improve plant efficiency.

Jan 1, 2001

By Ray Brainard, Adriana Ventimiglia, Amanda Kerr

Preliminary design is underway for a new Southern Nevada Water Authority (SNWA) project that will ensure one of America’s most reliable water systems by providing continued, reliable water service to existing and future customers. The Horizon Lateral is a $1.6 billion water transmission pipeline that includes 7–10 miles of 108-inch finished diameter rock and soft-ground tunnels. The tunnels will traverse volcanic rock in or around the McCullough Mountain Range and the surrounding alluvial basin. The tunneling community will find relevance in hearing about this critical infrastructure project from a leading wholesale water utility owner with a proven track record for on-time, collaborative projects.

Dec 1, 2022

By C. Y. Haas

Of all the industrial clay minerals, attapulgite probably enjoys the widest variety of applications. A review published over three years ago by Haden and Schwint (18) cited some 80 individual uses, a list which continues to grow. In its near half-century of commercial life, attapulgite has received a generous share of research study and patent development effort, both on the part of producers as well as consumers. This work has been divided between understanding the mineral's structure or properties and applying it to specific end-uses. Naturally, information gained from the former has pointed toward opportunities in the latter. References of particular significance are cited throughout the text. Attapulgite's variety of uses derives from the unique three-dimensional structure and needle-shaped particle form of this crystalline hydrated magnesium aluminum silicate. Its inherent colloidal and sorptive properties are well known, and distinguish it from its sister clay minerals. Attapulgite is characterized by its high surface area, porosity, sorptivity, and decolorizing power. Its slips or slurries are viscous and thixotropic, however, unlike bentonite are not flocculated by electrolytes. In Table I are compared the general properties of attapulgite, bentonite, and kaolin. The properties in Table I are documented in greater detail by the wealth of scientific literature which has been published on the composition (14)(15), structure (6)(16), surface (16)(4)(22)(24), adsorption (31)(4)(5)(25), rheology (10-11)(12)(13)(26)(27)(32), plasticity (30) (31), and chemistry (23)(3)(7) of attapulgite. Attapulgite is the principal mineral constituent (70 to 80%) of attapulgite clay as it is commercially produced in the Georgia-Florida area of the United States. As mined, this clay also contains 10 to 1S% montmorillonite, sepiolite, and other clays; 4 to 8% quartz, and 1 to 5% calcite or dolomite. (18) During processing, non-clay fractions are removed so that commercial products are enriched to 85 to 90% attapulgite. By wet processing (such as practiced in the

Jan 1, 1971

By R. Oler

The mining industry?s traditional preference for protective coatings in corrosive environments, due to cost considerations, has been to apply galvanized and epoxy coatings. As a result of extreme pH levels and the limitations of current products, a new coating has been developed to withstand severe conditions. Harsh chemicals and corrosive groundwater pose added challenges to mines in maintaining long term ground support which demands continuous rehabilitation. This paper highlights the challenges and identifies a solution by applying a new economic coating to DSI?s Omega Bolt? that withstands the most corrosive of conditions. [ ]

Jan 1, 2012

By Muhammad I. Kabir

The streamline method of recovery prediction reduces a two-dimensional problem to a bundle of one-dimensional ones. This paper presents the development and application of a novel scaling technique which, when used with a streamline model, causes s bundle of one-dimensional problems to further reduce to a single one-dimensional calculation. The one-dimensional calculation accounts for chemical-rock interactions and the streamline model for areal sweep. The scaling technique significantly reduces computation time, is readily modified to desk-top calculations, and can be applied to both absorbing and reacting species. The work was sponsored by the Interior Department's Bureau of Mines.

Jan 1, 1984

The evolution of surface mine layout configuration is a function of the schedules and sequence of material excavation within the optimized layouts. The production schedules and sequence of materials movement from multi-bench and multi-face operations are difficult to plan and execute. However, the ability to maximize the profit or net present value of an orebody is largely dependent on the mining schedule. The mining schedule will determine the life of the mine, the projected cashflows, and the investment requirements over the mine life. The pit geometries, pit expansion rates and the periodic volume of materials from different benches in a multi-bench, multi-face open pit mine determine the equipment requirements. The volume of materials excavated, as well as pit layout changes from circular and elliptical geometries of an oil sands mine were modeled using analytical geometric and parabolic partial differential equations (PDEs) and solved within Matlab. The results show that the geometric values are almost the same as those obtained from PDEs for different pit configurations. The economic analysis shows that both the current mining system (CMS) and the cyclic excavator conveyor belt control system (CycEx CBCS) are viable with high NPV (= $3.20 × 1010), PI (> 19%) and IRR (> 29.02%) with short discounted payback periods (= 3.24 months). The CycEx CBCS option is more economic than the CMS option. Its NPV is 1.27 times that of the CMS option. The PI and IRR for the CycEx CBCS option are respectively 2.24 and 1.13 times that of the CMS option. As well, the CycEx CBCS option has almost half the DPBP of the CMS option. The CMS option has an operating cost of $1.386 per tonne ($2.774/barrel) while that of the CycEx CBCS option is $0.779/tonne ($1.558/barrel). These results show that the CycEx CBCS option is the better option for mining companies working on oil sands deposits to invest in.

Jan 1, 2011

By Brian Gettinger, Jim Schlaman, Alston Noronha

"INTRODUCTION The public understanding of green solutions today is based on the definition of sustainability adopted by the Brundtland Commission (World Commission on Environment and Development) in 1987: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Over time this initial definition evolved to identify three distinct factors impacting sustainability that are often referred to as the “Triple Bottom Line”: Economic, Environmental and Social. The triple bottom line approach seeks to drive outcomes that create maximum value for all stakeholders. In the last ten years purveyors of water and wastewater tunnel solutions have found themselves on the wrong side of a politically polarizing issue in the crosshairs of politicians, environmental activists and community groups branding tunnels as expensive, “gray” and not-sustainable. Tunnels under design were stopped and large planned tunnel programs were delayed or canceled. Therefore being sustainable and “green” is not simply using natural vegetation, but creating an asset that meets current and future needs and will not become a future liability. As this paper will discuss, tunnel projects embody a sustainable triple bottom line project well, are equally sustainable as green infrastructure, and have begun to gain awareness for their sustainability. GREEN INFRASTRUCTURE CHANGES TUNNELING LANDSCAPE The green movement quickly swept across the nation in the mid to late 2000’s and was a hot topic in the media and at all the local, regional and national industry conferences. Politicians espoused the benefit of green infrastructure including job creation, urban renewal, aesthetics, property values economics and sustainability. The political microscope was focused the closest on stormwater and wastewater management, particularly in communities responding to combined sewer overflow (CSO) consent decrees from the Environmental Protection Agency (EPA). As communities with CSO problems evaluated their long term control program (LTCP), local government officials and planners began to balk at the huge price tag required for compliance and began looking for alternatives. “Green” infrastructure was proposed as lower cost solution that could be used to offset capital-intensive “gray” infrastructure like new sewers, storage tanks, tunnels, and treatment facilities. In addition, including green infrastructure in a previously negotiated LTCP required a reset on the entire planning process, additional studies and more planning which would push capital investment further off into the future, subsequently delaying unpopular user rate increases. As a result, tunnel projects as well as trenched conveyance and treatment plant projects that had not yet started construction were stopped, delayed or substantially changed."

Jan 1, 2016

By E. Sabina Brady

Over the next two decades there will be significant trade and development opportunities in China for mining, engineering, equipment, and construction companies interested in becoming part of the development of China's chemical and fertilizer industries. At last count, China's phosphate ore reserves of 11.8 Gt (13 billion st), ranked fourth in the world behind the US, the USSR, and Sahara-Morocco. However, a recent statement by the head of the Ministry of Geology and Minerals, Sun Daguang, claims that with increased prospecting in the last few years, China's phosphate reserves now rank first in the world. Whatever the actual size of its known and potential reserves, China's present phosphate processing capabilities fall far short of demand, while the substantial progress that has been made in this area points out the severity of the problems that still remain. Since 1949 China has developed 181 mines and increased its phosphate concentrate production from 10 kt (11,000 st) to 10.86 Mt (11.97 million st). By the 1980s, China was the third largest chemical fertilizer producer in the world-although this claim is slightly misleading as China's nitrogen/phosphate potassium ratios are far from average world ratios and even further from US standards. According to the Sixth Five Year Plan promulgated in 1982, the country's development plans emphasize the expansion and upgrading of key energy and industrial sectors, including that of fertilizer production-specifically phosphate and potash. Within the framework of the plan, the Ministry of Chemical Industry's development priorities are to: • Increase potash production by 150% to 50 kt (55,115 st). • Raise phosphate fertilizer production 21.2% to 2.8 Mt (3.1 million st), 46 kt (50,705 st) of which will come from new projects constructed and completed within the Sixth Five Year Plan, with projected new production of phosphate concentrate and complex fertilizer in the next decades totaling 500 kt (551,146 st). • Commence work to increase phosphate ore production by 8.33 Mt (9.18 million st). Facilities for 2.43 Mt (2.68 million st) will be completed and come on stream by 1985. • Commence work to increase iron pyrite ore production by 3.69 Mt (4.07 million st), facilities for 2.9 Mt (3.2 million st) will be completed and come on stream by 1985. • Verify 600 Mt (661 million st) of new phosphate ore reserves. Since the promulgation of the Sixth Five Year Plan, Chinese authorities have announced that 70 key construction projects will receive top priority in the implementation of the plan. These projects include five in the chemical industry area, including the construction of four fertilizer plants in Urumqi (Xinjiang), Zhenhai (Zhejiang), Beijing, and Lucheng (Shanxi), and a pyrite mine in Yunfu (Guangdong). In addition, by 1985 the state will expand or construct three major phosphate mines: Wangji in Hubei, Kaiyang in Guizhou, and Kunyang in Yunnan. Fertilizer Ratios In 1982, China's fertilizer production was slightly higher than 12 Mt (13.2 million st) and consisted of 80% nitrogen, 19% phosphate, and 0.19% potassium. By 1985, state officials project that fertilizer production will reach 13.4 Mt (14.8 million st) and consist of 78.4% nitrogen (10.5 Mt or 11.6 million st), 21.2% phosphate (2.8 Mt or 3 million st), and 0.39% potassium (52.3 kt or 57,605 st). To attain the world average using the country's 1985 projected production level for nitrogen, China will have to double its 1985 phosphate production to 5.76 Mt (6.35 million st) and increase its 1985 potassium production almost 80 times to 4.1 Mt (4.5 million st). These numbers demonstrate the seriousness of the fertilizer production problem in China today and the long-term nature of the problem's solution. Development Examples Yunnan is the third largest phosphate-rich province in China with verified deposits of 1.9 Gt (2.1 billion st). Despite this abundance, the province only mines around 3 Mt (3.3 million st) of phosphate rock annually. In June of this year, Yunnan announced its intention to initiate 39 development projects within the next two and a half years, requiring an estimated $200 million worth of foreign investment. The three areas receiving the most emphasis will be:

Jan 9, 1983

By Yi Luo, Jian Yang, Hua Jiang

Surface subsidence events induced by underground longwall coal-mining operations can cause various disturbances to surface structures, ranging from integrity and stability to functionality problems. Highway bridges, as a kind of special road construction that can only tolerate smaller movements and deformations than road pavements, are particularly susceptible to severe influence caused by subsidence-induced ground movements and deformations. However, based on accurate subsidence prediction and correct influence assessments, efficient and effective mitigation and remediation measures can be designed and implemented to ensure the continuous service of bridges, safety of travelers, and smooth mining operations. In this paper, based on the predicted final and dynamic surface movements and deformations, the techniques to assess subsidence influence on the integrity, stability and functionality of bridge structures (such as decks, beams and abutments) are presented. A number of mitigation measures to protect bridge structures are recommended, along with an actual application case.

By M. Wickham

Design of an open pit backfill requires an understanding of highly varied processes including slope stability, hydrogeology, pit lake chemistry, climate, runoff, and mine waste behavior. Dynamic systems modeling (DSM) provides flexibility to the designers of open pit backfill, allowing them to directly integrate many different physical processes and varying levels of complexity. DSM also provides for the efficient application of uncertainty analysis to define a range of possible results, the sensitivity of the results to uncertainties in model inputs, and the value of additional data. This paper presents the results of an analysis using DSM to evaluate a pit backfill design at an Arizona mine. The objective of the partial backfill was to stabilize an active slope that threatened facilities adjacent to the pit. DSM was used, in part, to develop a pit lake water balance model for evaluating the influence of the backfill on the ability of the pit to maintain passive hydraulic containment of groundwater and surface water inflows and for evaluating costs for various backfill scenarios.

Jan 1, 2001

By Dan Nilsson

INTRODUCTION A company must have an objective, and that usually is to earn money. In some countries an objective can also be to reduce unemployment in an area or to develop nonindustrialized areas. Government-owned companies can also have as an objective that of serving the com¬munity. This discussion is limited to the consideration of normal companies wanting to earn money. Such an objective, however, has to be defined in more detail. It is not satisfactory only to maximize the total annual profit from, for example, a mining project. In comparison with most other branches, the mining in¬dustry is very capital intensive. When starting a new project, the mining company must invest a lot of money in mines, ore treatment plants, etc. It is normally many years before any income is received from the ore. Fig. 14 illustrates the payments for a new mining proj¬ect with an expected lifetime of 10 years. Whether this project is a profitable one depends on a lot of things. If the company has a shortage of money, it can be impossible to finance the project. Even if the company has enough money, the management may think that perhaps the project may not return the money fast enough. Such limitations will not be discussed here. Suppose that the company has internal funds from its own operation or can borrow them. Since the mining company must invest the money in advance, it is not satisfactory only to add all of the costs during the mine's lifetime and compare them with the total income during the lifetime. The company must include the time value of the capital. In this appendix, the basic investment theory neces¬sary to judge the profitability and costs of mining proj¬ects will be discussed. INVESTMENT THEORY Time Value of Money If a private person has a dollar and puts it into a bank, he or she will receive interest. If the interest rate is r%, the value after one year will be $(1 + r), after 2 years $(I + r)2 , etc. The interest rate represents the time value of money. If the same person wants to have $1 in the bank af¬ter one year, he or she has to put $(1 + r)-1 in the bank today. If the person wants $1 after 2 years, it is neces¬sary to put $(1 + r)-2 into the bank today, etc. So one dollar today is worth more than one dollar tomorrow. It is, of course, not correct to compare money at differ¬ent times since each dollar has a different value. It is necessary to transform all payments to the same point in time. That is called the calculation of the capital value of a cash flow, and to do this an interest rate is used. In the same way, the cash flow from a project like that shown in Fig. 14 can be translated to any other point in time. Most common is to translate all payments to the beginning of the mining period. That capital value is often called the present capital value. Interest Rate What interest rate will the company use? A com¬pany, just like an individual, has the basic alternatives of keeping its money in the bank and receiving interest, or borrowing money from a bank and paying an interest rate. The interest rate represents the time value of money for the company. If the company has a shortage of money, or many good potential investment projects, it has to use a higher interest rate than if it has a lot of money available. Most companies also increase their interest rate as a hedge against the risk involved by using money for uncertain investments, because of taxes, etc. Capital Value When the interest rate has been decided, it is possi¬ble to estimate the capital value of a project. Here the discussion will be limited to the estimation of present capital values. Suppose that one wants to know the present capital value of $1 (Fig. 15), which will be received after n years. To transform it n years back in time, one must multiply it by the factor (1 + r)-, where r is the inter¬est rate the company uses. Table 1 gives these factors for different years and interest rates. Example: At the end of year 5 a mining company has to invest $50 million in a new mine. What is the present capital value at the end of year 0? The company uses an interest rate of 15%a.

Jan 1, 1982