Topic 6 : PRODUCTION SCHEDULING

Week No. : Week 14-16

No. of Hours : 6 hours

Topic Intended Learning Outcome

At the end of this topic, the student must able to:

• Make a production schedule;

• Perform equipment selection; and
• Solve problems related to the operation cycle.

Required Course Materials

CMO No. 99, s. 2017

6.1 Introduction

Although there is no universally accepted definition of how a production schedule differs from a
short-range mine plan, the term production scheduling is generally used to mean the assignment
of production equipment to blocks in the piton an hour-to-hour or shift-to-shift basis. Normally, the
production schedule is drawn up for periods of less than a month or so, with emphasis on what is
to be accomplished in the next few shifts. The production plan must work within the constraints of
the short-range mine plan and is altered daily, or more often, to accommodate changes in the
availability of the equipment and the new blocks of ore and waste that are prepared for mining.

Production scheduling is now more useful than ever before because of the ability of mining
companies to segregate mined material within a given block into various products to be hauled to
different destinations. This is particularly true in metalliferous mining but is practiced in other mine
types as well. Scheduling at this level often requires improving the grade estimates by analysis of
the cuttings from the production drillholes. This allows a mine production plan to divide the
material broken in a blast into several categories. For example, the loader operator can identify
ore, leach, and waste material and load them into separate haulage vehicles. In addition, the
muck pile can be divided into subcategories to be processed in different metallurgical recovery
systems. Production scheduling becomes a powerful tool when used in this manner.
Production scheduling is a very important part of the mining process. This will be demonstrated
through a simple example. Consider the property shown in Figure 6.1 in which 10 ore blocks are
overlain by 10 waste blocks.

A production rate of 5 blocks per year (irrespective of whether the blocks are ore or waste) will be
assumed. The net value for an ore block is $2 and the cost of removing the waste is $l/block. The
total cost involved in waste removal would be $10 and the ore value is $20.

If both ore and waste could be mined instantaneously, the net present value would be $10.
However due to practical constraints, they cannot. Therefore a number of scheduling scenarios
must be considered.

Figure 6.1. Simple sequencing example

Figure 6.2. Mining sequence – scenario 1

Scenario 1. Removal of waste followed by ore mining

For operational simplicity it would be best if all of the waste could be stripped (removed) first
followed later by ore mining. This is shown in Figure 6.2. The net present value for this sequence
assuming an interest rate of 10% is
 −$5 −$5 $10 $10
𝑁𝑃𝑉 = 1 + 2 + 3 +
(1.10) (1.10) (1.10) (1.10)4
= −$4.55 − $4.13 + $7.51 + $6.83 = $5.66

Scenario 2. One year of pre-stiipping followed by both ore (3 blocks/year) and waste (2
blocks/year) mining
This alternative would require mining 5 blocks of waste in year 1. In years 2 and 3 three blocks of
ore would be mined for every two blocks of waste. The final year would have 1 block of waste and
4 blocks of ore. The sequencing is shown in Figure 6.3.
The net present value is now

−$5 $4 $4 $7
𝑁𝑃𝑉 = 1 + 2 + 3 +
(1.10) (1.10) (1.10) (1.10)4
= −$4.54 + $3.31 + $3.01 + $4.78 = $6.56

Scenario 3. Mining of waste is maintained one block ahead of ore

Comparing scenarios 1 and 2, there was an improvement in the net present value when the time
lag between stripping and mining was shortened. In this third scenario, the stripping will be kept
only one block ahead of ore mining, to make the time lag even shorter. This shown in Figure 6.4.
The net present value is

$1 $2.50 $2.50 $4
𝑁𝑃𝑉 = + + +
(1.10)1 (1.10)2 (1.10)3 (1.10)4
= $0.91 + $2.07 + $1.88 + $2.73 = $7.59

Scenario 4. Stripping is maintained one half block ahead of ore mining

A major improvement in the NPV was observed between scenarios 2 and 3. To explore this
further, consider the situation when the stripping lead is cut to one-half block (Figure 6.5).
The NPV is

$1.75 $2.50 $2.50 $3.25

𝑁𝑃𝑉 = 1 + 2 + 3 +
(1.10) (1.10) (1.10) (1.10)4
= $1.59 + $2.07 + $1.88 + $2.22 = $7.76
This would appear to be the most favorable alternative of the four scenarios. However, suppose
that in reducing the stripping lead it is found that the operating costs for both ore and waste
increase by $0.05/block, perhaps through lack of sufficient working space or through neglect of
drilling precision because of time pressures. Hence the cost for waste removal increases to
$1.05/block and the net ore revenue drops to $1.95/block.

The actual NPV is

$1.50 $2.25 $2.25 $3.00
𝑁𝑃𝑉 = 1 + 2 + 3 +
(1.10) (1.10) (1.10) (1.10)4
= $1.36 + $1.86 + $1.69 + $2.05 = $6.96

In this case scenario 3 remains the most attractive.

Figure 6.3. Mining sequence – scenario 2

Scenario 5. Mining rate doubled

It has been suggested that with the purchase of more equipment, the mining rate could be
increased to 10 blocks per year. There would be an increase in the equipment ownership costs
to be charged against both ore and waste however. The resulting values are:
Waste cost = $1.10/block
Ore revenue = $1.90/block
 Stripping will be kept one block ahead of ore mining as in scenario 3.
The scheduling is shown in Figure 6.6.
The NPV is

$2.50 $5.50
𝑁𝑃𝑉 = 1 + = $2.27 + $4.55 = $6.82
(1.10) (1.10)2

As can be seen scenario 3 remains the most favorable.

If there had been no additional cost then

$3.50 $6.50
𝑁𝑃𝑉 = 1 + = $3.18 + $5.37 = $8.55
(1.10) (1.10)2

and scenario 5 would have been the most favorable.

In summary, this very simple example has demonstrated some important aspects of production
scheduling. The NPV is dependent upon
• The time interval between stripping and ore mining. It is highest when the lead time is
short. With added costs associated with shortening the lead time, however, there may or
may not be an improvement in NPV.
• The production rate. For the same unit cost, the highest NPV is achieved with the highest
production rate. With added costs with increasing production rate, there may or may not
be an improvement in NPV.

Figure 6.4. Mining sequence – scenario 3.

 Figure 6.5. Mining sequence – scenario 4.

Figure 6.6. Mining sequence – scenario 5.

6.2 Phase Scheduling

Several mining areas or mine phases, typically three or more, are active at any given time during
the life of a mine. Of these, one or two would be in the process of being stripped, another being
mined for ore and the last nearing exhaustion. This section will describe a procedure which can
be used to help sequence the phases so that the desired ore stream is produced. The procedure
and the illustrative example have been adapted from Mathieson (1982).

The hypothetical deposit is shown in section in Figure 6.7. The orebody, located in rock type 2, is
overlain by waste (rock type 1). The planning scheduling will be described in a step-by-step
manner.
1. The phases are first designed. The slope angles used are selected based upon initial
geotechnical investigations. For this example it is assumed that the orebody is of uniform
grade. Hence the phases A through F (shown in Figure 6.8) have been designed, subject
to access constraints, to progressively mine the 'next best' ore in terms of annual stripping
ratio.

2. The ore-waste tonnage inventory by bench and phase is determined. The detailed results
from the first 3 phases are given in Table 6.1. At this point the mining engineer would
'mine' the ore on each successive bench gradually stepping, in order, through the phases
to meet the required annual mill production. Such an ore schedule would typically be done
using a hand calculator or an interactive desk top computer program. Each phase would
have a different ore life since they were defined on operating rather than schedule
constraints. The first trials would be based upon a fixed cutoff grade.

3. For this simple example the overall phase quantities given in Table 6.2 will be used.
Normally those broken down bench-by-bench (Table 6.1) would be considered.

Figure 6.7. Hypothetical deposit for the sequencing study (Mathieson, 1982)
4. These phases will be mined in sequence and no inter-phase blending will be considered
in this simple schedule. Each phase contains a tonnage of ore which must be exposed or
developed prior to the exhaustion of ore from the previous phase. A 2.5 million ton per
year milling rate is assumed. This is divided into the ore tons available in each phase to
determine phase life. A saw-tooth plot of available ore versus time is made such as is
shown in Figure 6.9a. This illustrates the availability and depletion of ore from the various
phases.

5. The planner is now able to define the points in time at which the waste stripping must be
completed for any given phase in order to sustain the ore supply. For phase A ore
production to commence, the 15 million tons of waste lying above the first bench must
have first been removed. During the mining of Phase A there is an additional 900,000 tons
of internal waste assumed to be evenly distributed and 'locked-up' with the ore. In order
for the phase B ore to be available, 21,400,000 tons of waste must be removed. The
cumulative waste tons versus time plot is shown in Figure 6.9b. The vertical steps in the
plot correspond to the respective overburden stripping quantities above the first ore bench
of each phase. The latter segments represent the progressive mining of internal waste.

Figure 6.8. Development scheme for the hypothetical deposit (Mathieson, 1982)
6. The next step is to arrive at a 'smoothed' stripping schedule which exceeds the minimum.
A possible schedule is shown as the straight line superimposed on Figure 6.10. It consists
of a 4 year pre-production period totalling 20 million tons followed by a constant stripping
rate of 5 million tons per year through year 15. Beyond this only the internal waste of phase
F remains. The detailed preproduction stripping schedule is shown in Figure 6.38. It
consists of 2.5 million tons during the first year when the crews are being trained and
equipment is being delivered. During years 2 and 3 the stripping rate is 5 million tons/year.
Finally in year 4 the rate is increased to the total material rate (ore plus waste) which will
be sustained nearly throughout the remaining life. It can be seen from the figure that the
required stripping is completed prior to the required time by various amounts.
Phase Early completion (months)
A 8
B 9
C 4
D 5
E 9
F 16

7. The initial curve of developed ore versus time is now adjusted to reflect the early
completion of the stripping. This construction is shown in Figure 6.12. The cumulative
stripping and developed ore curves are used. For phase B one moves horizontally at the
required cumulative stripping level to the actual stripping curve. Then one proceeds
vertically to the developed ore curve. As can be seen there are approximately 2 million
tons of ore from phase A remaining. Due to the early development of phase B, an
additional 3.1 million tons of ore become available. The construction is simply to extend
the slanted portion of the phase B ore reserve upward until it meets the vertical line from
the stripping graph. This process is repeated for phases C through F. For phase A, the
ore in the phase simply becomes available earlier. The cross hatched areas indicate
contingency ore available in the case that the stripping schedule falls behind. The modified
developed ore curve represents the predicted inventory balance with time. A further
acceleration of stripping is sometimes done in the trial scheduling process to guard against
possible surprises in mineable reserves. This can help to avoid:
• an unexpected crash stripping program,
• a forced reduction in mill feed,
 • a temporary lowering of the cutoff grade to sustain planned concentrate
production.

Table 6.1. Tonnage-grade inventory by phase and bench (Mathieson, 1982)

Table 6.2. Summary of phase quantities (Mathieson, 1982)

8. With this thorough understanding of the orebody and its development options, the pit
planner presents his/her findings to management.
Figure 6.9. Developed ore and stripping schedules
 Figure 6.10. Proposed cumulative stripping schedule for example orebody

9. Final mine plan period maps are drawn up to test the viability of the plan. Some
refinements in the ramping and phasing strategy, etc., may be needed but major changes
are unlikely.

10. To this point, a series of logical pit development phases have been defined based on the
'next best' profitable ore and a fixed cutoff. The plan can now be fine tuned. Alternative
ore and waste schedules based on variable production rate and cutoff grade strategies
can be developed using the computed tonnage - grade inventories within each successive
phase. Such schedules can then be compared economically through standard internal
ROR analysis. A visual comparison can be achieved by plotting cumulative operating cash
flow with time.

11. Once a 'final' production schedule has been decided upon, the planner generates a series
of period end plans. These might be for example:
• end of preproduction,
• years 1-5 in yearly increments,
 • years 10, 15, etc.
These plans would be based on both the phase designs and the paper schedules. They would
constitute a vital test on the mineability of the proposed plan. Shovel and drill deployment and any
internal temporary ramping would also be considered in detail.

Figure 6.11. Preproduction stripping schedule

Figure 6.12. Construction showing modification of ore

availability
6.3 Block Sequencing Using Set Dynamic Programming

In 1974, Roman (1974) described an algorithm for determining the optimum mining sequence and
pit limits patterned after one originally presented by Lerchs & Grossmann (1965). The process
will be demonstrated through the use of a 2-dimensional example. Figure 6.13 is a schematic
representation of a slice through a block model. An index number representing the column and
row position for each block is assigned. The first step in the process is to convert the grade block
model into an economic block model. To assign the appropriate costs and revenues a decision
must be made at this point regarding the destination of each block. Three possibilities might be:
• mill,
• leach dump, and
• waste dump.

Figure 6.13. Schematic of the ore deposit showing block numbers and grades (Roman, 1974)

The net block value is determined by subtracting the mining and processing costs from the
revenues. The mining costs are for the block alone and do not include stripping costs. Figure 6.14
shows the resulting economic block model. At this point a constraint relating to the final pit slope
is introduced.
 Figure 6.14. Schematic of the ore deposit showing block numbers and block values (Roman, 1974)

Constraint 1: The pit wall slope may not exceed 1:1 at any point.
Applying the floating cone procedure introduced in the previous chapter one would arrive at the
final pit shown in Figure 6.21. This same result will be achieved using the technique described in
this section. The problem is to determine the sequence in which the blocks should be mined so
that the net present value for the section is a maximum.

The optimum sequence. To begin the sequence optimizing process, the economic block model is
scanned to determine the maximum outline which the future pit could assume. Obviously all of
the positive blocks on the section must be included and the pit limit slopes obeyed. The objective
is to identify the location of the last block which might be mined. In this example, the last block
has been selected as the bottom vertice of the inverted triangle containing all blocks of positive
value. This triangle shown in Figure 6.16 has been constructed in accordance with constraint 1.
An alternative procedure would be to select a hypothetical block (a block that does not exist) lying
on or below the lowest level of positive blocks. To simplify the discussion, the triangle approach
has been used. There are 36 blocks included within the triangle. If each block corresponds to a
unit time period (of unspecified length), 36 time periods are required to mine all of the blocks.
Block (7,6) as seen in Figure 6.17 is the last one to be mined. It is mined in period 36. In order to
mine block (7,6) one must first mine blocks (6,5), (7,5) and (8,5). At this point a second constraint,
one regarding sequencing, will be introduced.
 Figure 6.15. Schematic of the deposit with the final pit limits as determined using the floating
cone superimposed

Constraint 2: Each mining level may be entered at only one point.

With this constraint in place there are only two sequencing options for the mining of blocks in time
periods 35 and 36:
Option 1. Mine block (6,5) followed by block (7,6) (Figure 6.18a).
Option 2. Mine block (8,5) followed by block (7,6) (Figure 6.18b).
The third option (shown in Figure 6.18c) of mining block (7,5) in period 35 means that both blocks
(8,5) and (6,5) had been mined earlier. This requires that two separate entries be made on level
5 thus violating constraint 2. Hence this is not an option.

In time period 34 there are several choices for the block to be mined depending upon the block
mined in period 35. If the last two blocks mined are (6,5) and (7,6) then the possible sequences
for the last 3 periods are
(1) (7,5) → (6,5) → (7,6)
(2) (8,5) → (6,5) → (7,6)
(3) (5,4) → (6,5) → (7,6)

On the other hand if blocks (8,5) and (7,6) are mined last then the possible sequences are:
(4) (6,5) → (8,5) →(7,6)
(5) (7,5) → (8,5) →(7,6)
(6) (9,4) → (8,5) →(7,6)
These 6 possibilities are shown in Figure 6.19.
Sequences 2 and 4 however involve mining the same 3 blocks in just a different order. An
economic evaluation is performed to determine the most attractive of the two alternatives.

Figure 6.16. Schematic of the ore deposit showing the triangle containing the maximum pit
superimposed (Roman, 1974)

Figure 6.17. Blocks which must be removed prior to mining block 36.

The least attractive is dropped from further consideration. Choosing an interest rate of 10% and
discounting to the beginning of time period 34 one finds:

Sequence 2: (8,5) → (6,5) → (7,6)

 $3 $5 $6
𝑁𝑃𝑉2 = 1 − 2 − = −$5.91
(1.1) (1.1) (1.1)3

Figure 6.18. Possible sequences for mining blocks 35 and 36

Sequence 4: (6,5) → (8,5) → (7,6)
−$5 $3 $6
𝑁𝑃𝑉2 = − − = −$6.57
(1.1)1 (1.1)2 (1.1)3

Figure 6.19. Possible sequences for mining blocks 34, 35, and 36.
Sequence 4 is the least attractive of the two and is dropped. The five block combinations for
periods 34 through 36 which must be included when sequencing the remaining 33 periods are:
Sequence Mining order
1 (7,5) → (6,5) → (7,6)
2 (8,5) → (6,5) → (7,6)
3 (5,4) → (6,5) → (7,6)
4 (7,5) → (8,5) → (7,6)
5 (9,4) → (8,5) → (7,6)

The remaining choices for sequencing the final four blocks after eliminating duplicate
combinations of blocks by the present value analysis are:
Sequence Mining order
1 (8,5) → (7,5) → (6,5) → (7,6)
2 (9,4) → (8,5) → (6,5) → (7,6)
3 (7,5) → (5,4) → (6,5) → (7,6)
4 (8,5) → (5,4) → (6,5) → (7,6)
5 (4,3) → (5,4) → (6,5) → (7,6)
6 (9,4) → (7,5) → (8,5) → (7,6)
7 (10,3) → (9,4) → (8,5) → (7,6)
This process is continued until all 36 blocks have been included. In the final stage the various
sequences will just be permutations of the same combination. Consequently the optimum
sequence can be determined through a present value calculation. Figure 6.20 shows the section
with the 36 blocks numbered in the order that they are to be removed.

Determination of the optimum pit

Once the optimum sequence has been found, the pit outline can be developed. The procedure
for determining which of the 36 blocks in the optimum sequence are actually to be mined
is as follows:

1. Identify the last block in the optimum sequence with a positive value. Drop all blocks after
this one.
2. Examine the remaining sequence of blocks and identify the latest negative block
scheduled for mining. If there are a number of negative blocks in a row select the earliest
 in the row. Determine the present worth for the sequence extending from identified
negative block to the end.
3. If the present value is negative, drop all these blocks from the optimum sequence and
repeat step 2. If the subsequence has a positive present value, replace the subsequence
by an equivalent block value at the end of the sequence.
4. Repeat steps 2 and 3 until the first mined block is included in the subsequence. The final
present value is that of the optimum pit.

Applying these rules to the example problem, it is seen that blocks 31 through 36, which are all
negative, are dropped by inspection. Continuing along the sequence it is seen that two adjacent
blocks (13,1) and (4,2) corresponding to mining periods 26 and 27 respectively, are negative. The
net present value for this subsequence (blocks 26 to 30) discounted to the beginning of period 26
is

−$1 $2 $2 $1 $2
𝑁𝑃𝑉 = 1 − 2 + 3 + 4 + = $0.87
(1.1) (1.1) (1.1) (1.1) (1.1)5

Since it is positive, this subsequence, referred to as subsequence SSI is retained. The next switch
between negative and positive blocks occurs after block 21. The net present value for the
subsequence SS2 through to the beginning of period 21 is

−$1 $2 $1 $2 $3 $0.87
𝑁𝑃𝑉 = 1 − 2 + 3 + 4 + 5 + = $1.91
(1.1) (1.1) (1.1) (1.1) (1.1) (1.1)6

It is positive and hence retained. This process of calculating net present value is continued until
the first block to be mined is included. The final pit is shown in Figure 6.21. The overall

NPV for the pit on this section is

NPV (overall) = $12.60
Simply summing the values of the blocks included within the outlined yield
Sum = $34
This would be the result if the pit could be mined instantaneously at time zero.
 Figure 6.20. Schematic of the deposit showing the optimum block mining sequence (Roman, 1974)

Time value of money influence

In the previous example, a 10% discount rate was applied in arriving at the optimum sequence
and pit. The question arises as to the influence this rate has both on the sequence and the final
pit. Figure 6.22 shows the section to be used with the maximum pit superimposed. Using the
techniques and constraints previously described the pits corresponding to the use of 5%, 10%,
20%, and 50% discount rates are shown in Figures 6.23 through 6.26 respectively. As can be
seen, a definite effect is observed. At first glance it would appear that the reduction in pit size
between discount rates of 5% and 10% is incorrect since the strip of blocks
 (12,1) → (11,2) → (10,3) → (9,4) → (8,5) →(7,6)

when summed has a positive value (+1). However when taking sequencing into account the
discounted value of this strip (at a rate of 10%) is

$3.5 $3.0 $2.0 $1 $1.5 $1.0

𝑁𝑃𝑉 = 36 − 35 − 34 − 33 − 32 − = $1.91
(1.1) (1.1) (1.1) (1.1) (1.1) (1.1)31

For higher discount rates this sub-sequence is even more negative.

Figure 6.21. The final pit outline and optimum mining sequence (Roman, 1974)
Figure 6.22. Hyphothetical deposit showing block values and maximum pit limits (Romans, 1974)

Figure 6.23. Mining sequence and pit limit for an interest rate of 5% (Romans, 1974)

Figure 6.24. Mining sequence and pit limit for an interest rate of 10% (Romans, 1974)
 Figure 6.25. Mining sequence and pit limit for an interest rate of 20% (Romans, 1974)

Figure 6.26. Mining sequence and pit limit for an interest rate of 50% (Romans, 1974)

The rate to be used depends upon a number of factors, the principal one being that of company
policy. In the early stages of a property, a high rate of return is generally desired in order to repay
the investment as quickly as possible. Later when the investment has been repaid, another value
may apply. Thus the procedure outlined is not intended to be used just once in the life of a property
and the derived sequence to be followed without change. Rather with changing conditions, it can
be rerun on the blocks remaining at any given time and a new optimum sequence developed.