Developing Risk Assessment of Push-Back Designs for An Indonesian Coal Mine under Price Uncertainty

Abstract

One of the critical jobs in the mine planning and design is to optimize an open pit mine under many uncertain factors. This paper explains the incorporation process of the volatility of commodity price or market uncertainty into production phase design and ultimate pit limit using a maximum flow minimum cut algorithm. The Ornstein-Uhlenbeck (OU) mean-reversion process was used to generate 50-coal price simulations for 10-years ahead. For implementation, data from an Indonesian coal mining site was integrated into the method and resulted in 42% differences compared to a conventional way.