Establishing a Model to Reduce the Risk of Premature Mine Closure

Abstract

Premature mine closure causes serious economic losses to mining projects. Premature mine closure occurs due to numerous factors, including economic, environmental, and social conditions. In order to reduce the adverse effects of premature mine closure, it would be of great help to use the risk management techniques. The present study aims to propose a model through which the risks having roots in mine closure are calculated and the safety factor for investments in the mining industry is measured. Using statistical analysis and the multiple-criteria decision analysis (MCDM) methods, the risk matrix and its components, including the probability and intensity of risks, are identified and the risk factor is calculated. In the proposed model, the types of minerals (the K index) and the types of ores (the O index) are added to the risk matrix and the risk of mine closure is computed for all types of minerals and ores. Moreover, the risk factor for all types of minerals is computed. To verify the validity of the model, 2400 premature mine closures in Iran (until the 1st of August, 2017) were investigated. The risks of mine closure for each group of minerals and for each type of minerals in their corresponding group were determined. It was found that the risk factor of premature mine closure for the Iranian building stone mines and the safety factor of investment were 1.52% and 0.9848, respectively. The findings show that equipment efficiency, lack of technology, high royalties, decreased pricing, loss of market, and high mining and processing costs are among the main reasons for premature mine closure in Iran.