A Dynamic Approach for Optimization of Open Pit Mine Invesments with Capital Budget

Mining investments require huge capitals. Since mining has an economical aspect, a reasonable profit is expected at the end of investment. In other words, a mining investment is reasonable only if it brings a desirable income. In fact. The objective of mine investment should be the optimum profit, which means the maximum profit that can be handled under certain technical conditions and constraints. In this study, dynamic programming procedures have been investigated whether they can be applied on mining investments having budget constraint. A general and brief review of dynamic programming technique and the theoretical base of capital budget problem have been presented. Two examples have been employed for the applications; first is selecting optimal mine investment alternative(s) through a group of choices and second is selection of optimum excavation-machine alternative(s) providing maximum excavation capacity. By this way, applicability of dynamic programming has been examined on both the whole system and a sub-system. The objective function and recursion functions have been defined and applied on numerical cases. The results have revealed the validity of the approach for optimization of mining investments with budget constraint.