Ultimate pit limit determination considering mining royalty in open-pit copper mines

Abstract

Mining royalty is a payment to the holder of mineral rights for utilization of the mineral resources. As well, the royalty is recognized as the amount of mining contribution in sustainable development. So far, there has not been a generalized world acceptable approach to examine the effects of royalty on mine design elements such as cut-off grade, strip ratio, and revenue as well as mineable reserve and its influence on Ultimate Pit Limit (UPL) determination. The present paper aims to investigate these effects. To this end, a data-driven simulation-based technique was developed to show how the mining royalty might be changed and how it might affect the open pit mine design. To this end, a regression model was developed to predict the royalty based on commodity price volatilities. A series of price scenario and the corresponding royalty values are created using the cumulative probability distribution function of the price data. These scenarios are not those fancied by the authors, indeed they are those happen in the real world. Thereafter, both price and royalty scenarios are used to the subsequent block economic value and UPL determinations. The technique was tested in Sungun copper mine of Iran. The results show that mining royalty often does not influence the mine design elements with a 72% probability of concurrence. Whereas, there is about 28% chance that the royalty reduces the mine life, the minable reserve, and the total revenue by 1.06% and 1.07% and 0.73% respectively, compared to the base case where the royalty is not considered. In addition, with the same chance, the stripping ratio and the average grade are to be relatively decreased by 0.23% and 0.34% compared to those by the base case.