A cut-off grade optimization model in the open pit mining considering reclamation and valuable waste materials

Cut-off grade is one of the decision variables that must be determined correctly by the open pit mining company in order to generate the maximum total profit. This study develops a cut-off grade determination model by using analytical solution approach by considering cost and revenue components such as mining cost, waste removal/rehabilitation cost, processing cost, reclamation cost, marketing/selling stage cost, fixed cost and income/revenue from selling the valuable wasted materials. To illustrate the application of the model, this study also presents the numerical example for the iron ore mining case along with the sensitivity analysis of the sales price. The sensitivity analysis result shows that the optimal cut-off grade and profit obtained by the company are sensitive to the sales price. Using the model in this study, it is expected that the company can make right decision of the cut-off grade value in a mining location easily and quickly.