HANDBOOK

Mining Economic Academy

© Copyright 2019

Chapter 1
INTEGRATING ECONOMIC
INTO MINING
Nana Sumarna
• S1 Teknik Pertambangan ITB 1997 - 2002
• 2002 – 2006, PT Arutmin Indonesia, Geology Dept
• 2007 – 2010, PT Arutmin Indonesia, Mine Plan Dept
• 2010 – 2015, PT Arutmin Indonesia, Operation Dept
• 2017 - now, Independent Mining Consultant
• Resource & Reserve Statement KCMI/JORC
• Independent Technical Review
• Due Dilligence
• Pre Feasibility Study/ Feasibility Study
• Exploration Management
• Professional Organization :
• PERHAPI
• AusIMM
• CPI Estimasi Sumberdaya & Cadangan Batubara
• Contact 081346223982; nanas17845@gmail.com
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INTEGRATING ECONOMIC INTO MINING
Once a potential mining development has been identified then next the
process is to answer…………………

How does the technical evaluation proceed by accounting for the Economic of
information & the economic of mining

MINING ECONOMIC

Aim : How economic evaluation techniques are applied at various stages of

the mine evaluation process and introduces the basic concepts of economic
evaluation.

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 Chapter 1
Integrating Economic Into Mining
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Ref. Mineral Ed, BC, Canada 4
Development of Mining Industry & Risk

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Ref. Prof Irwandy Arif Presentation 5
Why is Mining different?

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Characteristics of Mining Project

❑ Finite reserves
❑ Geological uncertainty

❑ Long exploration period

❑ Unique nature of deposit

❑ Unique location

❑ Price taker

❑ Capital intensity

❑ High sunk cost

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 Mine Planning Process
(Prof. Rupprecht, 2016)
The mine planning function plays an important role in the field of mining
engineering as it creates the business plan
to which the mining engineers and other mining related disciplines must
follow.
In simplistic terms the mine planner schedules the movement of waste and
ore over a determined period.
Depending upon the design criteria the mine plan may be designed to
optimize profit (net present value), meet contract (marketing) requirements
and/or establish a sustainable operation.
The outcome of the mine planning process is also used to establish mineral
reserves and valuate mining projects.
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Mine Planning Process
Mine Planning Process : A complete task of planning and operating a mine
involves :

❑ A technical component
❑ A narrow-focused economics component, and
❑ A more broadly based economic, financial and business component

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Mine Planning Process
Technical Components :

❑ Mine layout, mine design, mine scheduling

❑ Equipment productivities,
❑ Alternative production schedules and
❑ Mine operating equipment's, e.g. explosive usage per year, workforce
number per year and fuel usage/machine/hour

It defines all of the important elements concerning implement ability of the

proposals

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Mine Planning Process
Narrowly focused economic component:

❑ Applies operating and capital costs to technical schedules,

❑ Analyses alternate schedules and equipment in economic term- eg.cost $
per tonne
❑ Builds up and examines unit costs such as fuel cost/litre annual fuel cost
for the whole mine etc.
❑ Allows economic comparison of options
❑ Concerns special component, eg. waste removal

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Mine Planning Process
More broadly based economic, financial and business component :
❑ Aims to understand the viability of a plan within a wider corporate context
❑ Whole of project viability in function of what other projects the company
has available and what other companies (supplies, customer competitors)
are doing
❑ It also examines the relative risk associated with the investment decisions,
and the sensitivity of the plan to factors outside management control
❑ From business perspective, this analysis is vital

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 Mine Planning Process
Mining
Engineering

Economically Mineable
Financial
Engineering

Economically Mineable Economically Mineable Economically Mineable

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Cadangan = tonase & kualitas minerba bagian Ref. Lufi Rachmad,
sumberdaya yang economically mineable Modified Andre Alis 13
Application Economic Procedures
❑ Justifying exploration expenditure
 On going exploration; extra reserves and greater confidence
❑ Strategic assessment of mining projects
 Underground mine vs surface mine
 Owned mined vs contracted mine
❑ Comparison of mining equipment options
 Truck vs conveyor
 Diesel truck vs electric truck
❑ Selection of reserve blocks and phased mine development.
Optimum mine development typical requires a balance between
 Averaging better and lower grade mineable material to
balance equipment utilization and for consistency of mine
output, and
 Deliberately selecting more profitable blocks in the early
mine life to maximize of early cash flows
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 Overall project evaluation Integrating Economic Into Mining
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Economic Decision in Mine Planning

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Strategic Issues in Mine Development

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THANK YOU

Chapter 1
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