Today’s post is the first in a series by Darrienne Thobaven, one of our Strategic Mine Planning Knowledge Consultants. Although the term strategic mine planning is occasionally used in the mining industry, it is not always included in a company’s mine planning process. Over the next few months, Darrienne will aim to put the “strategy” back in to strategic mine planning.
In a mining organization, mine planning is the mechanism that ensures the company’s mission is realized in mine production. However, mine planning is often thought of as a subset of the bigger business planning model applicable to many industries: the vision and mission are typically determined by the company board of directors and are implemented via strategies and tactics.
But what is strategic mine planning? And what about tactical mine planning?
The term strategic mine planning is a derivative of the business management definition of strategy to determine how to use limited resources to achieve a goal.
Any kind of strategic planning, whether for mining or for any other industry, aims to select the most appropriate strategy. Therefore, multiple strategies must be evaluated. A strategy exploits the project and can provide choices, which could include beneficiation via CIL or heap leach or HMS; loading using a 100t digger or a 250t shovel; bulk mining or selective mining; 3 stage pit or 5 stage pit; grade control using dedicated RC drilling; blasthole sampling; or ditchwitch for open cut mining. The evaluation of multiple strategies is called scenario analysis and evaluation occurs in a schedule, which reports physical and financial measures for the scenario being investigated. Strategic mine planning requires many schedules representing different strategies.
This level of mine planning is often focused on achieving highest value in line with the vision of publicly-listed companies to increase shareholder returns. The outcome of strategic mine planning is the strategy (configuration and schedule) chosen, which also determines the limitations and constraints for further planning such as tactical planning. The time unit of a strategic plan is usually a year and most strategic planning occurs in the early part of the mine life when there is more opportunity to change strategy. For example, the block model is likely to be based on resource modelling as more accurate or grade control data is not available for the timeframe of several years.
In contrast, tactical mine planning is focused on implementing the strategic plan. To successfully implement the strategic plan, the constraints and limitations of the strategic plan must be used as inputs to the tactical plan. Tactical planning aims to generate a single schedule whereas strategic planning generates many schedules (see Figure 2). It has a smaller unit of time such as a quarter, month, week or day and can be used, partly or wholly, for more detailed block model estimation such as grade control. In other words, the resolution of tactical planning is higher than the resolution of strategic planning but scenario analysis is not performed.
The above image lists GEOVIA Whittle™as the software for strategic mine planning and GEOVIA MineSched™ as the tactical mine planning software. However, all work performed in Whittle is not strategic in nature. Optimization or the generation of pit shells by scaling the commodity price (using revenue factors) is not sufficient to define the various strategies given in the example above. Optimization does not evaluate different mining or processing strategies.
In Whittle, there is a node called an operational scenario node, which allows scenario analysis via scheduling. But the addition of a scenario node does not mean that strategic planning is being performed. Strategic mine planning can be visualized in Whittle as multiple operational scenario nodes each with multiple schedules. The common practice of generating pit shells and running a pit by pit graph to choose pit shells shown is a tactical use of Whittle, as seen in the image, below. Attempting to create a schedule that models current status on site is also a tactical use of Whittle. However, different strategies are not being evaluated. Although a tactical use of Whittle may be useful for a mine and will provide a schedule that is utilized in some way, no strategic planning has occurred.
Misconception or Fact: Is strategic mine planning just long term planning?
Confusingly, the planning job functions in a mining organization usually relate to the time horizons that the planning covers. A larger organization might have a long term planner for the five year – life-of-mine plans; medium term planner covering one to five years; and a short term planner for activities less than one year. Any of these timeframes could have both strategic and tactical components or, they could all simply perform tactical planning.
A typical organizational structure for a mining company does not allocate strategic planning to a specific job description, which contributes to the situation of some companies performing little or no strategic planning within the mine planning department.
Both the terms ‘long term planning’ and ‘optimization’ are not synonymous with strategic mine planning. Software that truly performs strategic mine planning must allow easy scenario analysis so that schedule results for many scenarios can be generated quickly, viewed at once and compared. Whittle’s tree structure is perfect for the scenario analysis of strategic planning.
The biggest issue with not performing planning in a strategic manner is the tactical solution found can have a much lower financial result than the strategic solution. That tactical solution could have been generated in MineSched, an “NPV optimized scheduler” or Whittle and is tactical only because different strategies using the project driver have not been quantified.
How is your organization putting strategy back into Strategic Mine Planning?
Be sure to come back to the blog for our next post in the series, which will discuss what happens when strategic mine planning is not included in the mine planning process.
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UPDATE: Post Two – Taking the Pain out of Tactical Planning and Post Three – The Three Phases of Mine Planning are now available online to read.
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