A mathematical optimisation approach to modelling the economics of a coal mine

Maryke C. Rademeyer, Richard C.A. Minnitt and Rosemary M.S. Falcon

Resources Policy, 2019, vol. 62, issue C, 561-570

Abstract: A mathematical model of a multi-product coal mining project is proposed to characterise the economics governing coal production. The model accounts for mining cost variation due to varying production levels, changes in reserves available for extraction by means of a cut-off parameter, as well as lead-time delays between investment and when operations begin. The resulting constrained optimisation problem is solved computationally by maximising the net present value of future cash flows from the mining operation subject to physical limitations. We find that the capital investment problem has greater bearing on the overall project configuration decision and that changes in production capital are made throughout the life of the project while production volumes are largely unchanged.

Keywords: Mineral economics; Coal mining; Computational optimisation (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:62:y:2019:i:c:p:561-570

DOI: 10.1016/j.resourpol.2018.11.003

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