Embedding extreme events to mine project planning: Implications on cost, time, and disclosure standards

Sena Senses and Mustafa Kumral

Resources Policy, 2023, vol. 86, issue PA

Abstract: Extreme events, characterized as infrequent and catastrophic occurrences, can present significant challenges in various industries. These events can be associated with earthquakes, landslides, hurricanes, floods, rainfalls, and wildfires. The mining industry is also highly vulnerable to extreme events because it threats operation sustainability, employees' safety, and environmental compliance. This paper presents a comprehensive analysis of earthquakes in a mining area and evaluates their impacts on a mining operation through a case study based on a mine construction project. To this end, Extreme Value Theory (EVT) using both the Block Maxima (BM) and Peaks Over Threshold (POT) methods was employed to analyze the historical earthquake data and estimate the return levels corresponding to the planned mine project completion time. Furthermore, a Discrete Event Simulation (DES) model was developed to perform a comprehensive risk assessment, allowing for a detailed examination of the potential consequences that a specified magnitude earthquake could have on the project's cost and duration. 1000 earthquake scenarios for the period covering the project life were generated for a thorough risk assessment. The case study focused on a hypothetical open pit mine construction project located in the province of British Columbia, Canada. Historical earthquake data specific to the selected region were analyzed, and the potential consequences of earthquakes on the project were evaluated. According to the results, the return level of 4.7 ML earthquake was obtained corresponding to the return period defined as the planned project completion time. In the event of an earthquake with this specified magnitude, simulation results revealed that there is a 95% probability that the project will experience a delay of at least 6.28% of the project completion time, ultimately leading to project costs exceeding the normal project cost by a minimum of 4.85%. The study highlights the importance of considering extreme natural events, such as earthquakes, in mining project planning and risk mitigation. The results provide valuable insights into the likelihood and potential consequences of earthquakes, contributing to better risk assessment, strategic planning, informed decision-making, and improved project management practices in the mining industry.

Keywords: Extreme value theory; Block maxima; Peaks-over-threshold; Discrete event simulation; Project planning; Mining disclosure standards (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301420723008735
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:86:y:2023:i:pa:s0301420723008735

DOI: 10.1016/j.resourpol.2023.104162

Access Statistics for this article

Resources Policy is currently edited by R. G. Eggert

More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().