The value of automated mineralogy

Ying Gu
a
, Robert P. Schouwstra
b,
, Chris Rule
c
a
JKMRC, The University of Queensland, 40 Isles Road, Indooroopilly, QLD 4068, Australia
b
Anglo Technical Solutions Research, PO Box 106, Crown Mines 2025, South Africa
c
Anglo American Platinum, 55 Marshall Street, Marshalltown, Johannesburg 2001, South Africa
a r t i c l e i n f o
Article history:
Received 27 May 2013
Accepted 17 January 2014
Available online 13 February 2014
Keywords:
Automated mineralogy
Value of information
Concentrator optimisation
a b s t r a c t
Automated mineralogy methods and tools, such as the Mineral Liberation Analyser (MLA) and the
QEMSCAN, are now widely used for ore characterization, process design and process optimization.
Several case studies published recently demonstrate that large gains can be obtained through grinding
and otation optimization guided by automated mineralogy data. However, since automated mineralogy
can only provide the information pointing to where the process gains can be made, it does not directly
impact the production gain. Thus the question is often asked: how to value the contribution of automated
mineralogy to process improvement at a particular plant. This appears to be a difcult question to
answer. On close examination however, it is found that this is essentially a question of the value of infor-
mation and this is reasonably well documented in various other industries. Hubbard, 2010, in chapter 7
Measuring the Value of Information, dealt with exactly this type of problem. The value of information is
the reduced risk of an investment and opportunity loss. The methods Hubbard developed can be applied
to estimate the value of automated mineralogy, as well as metallurgical test work, both producing
information that reduces the risk of investment.This paper rst introduces Hubbards theory on the value
of information and how to measure it. It then applies his methods to estimate the value of automated
mineralogy, using Anglo Platinums ne grinding project as an example. In the end, a general model is
developed to allow the simulation of the value of automated mineralogy in different mining operations
constrained by different parameters.
2014 Elsevier Ltd. All rights reserved.
1. Introduction
Automated mineralogy methods and tools, such as the Mineral
Liberation Analyser (MLA) and the QEMSCAN, are now widely used
in the mining industry worldwide, with close to two hundred of
these systems installed in research and company central labs over
the last ten years. By measuring samples of ore and processing plant
material, these instruments provide statistical distribution of the
size distribution and associations of minerals of interest, critical
for ore characterisation, process design and optimization. As such,
automatedmineralogy has become animportant contributor to pro-
cess mineralogy and geometallurgy. Several case studies of the
application of automated mineralogy for process improvements
were published recently (Rule and Schouwstra, 2011; Rule, 2011;
MacDonald et al., 2011; Lotter, 2011; Lotter et al., 2010), demon-
strating signicant returns obtainable through grinding and ota-
tion optimisation supported by automated mineralogy data.
It must be emphasized that automated mineralogy can only
provide information pointing to where the process gains can be
made and the extent of the benet. To realise the gain, the process-
ing plant needs to be adjusted and, in most cases, modied signif-
icantly by expert process engineers. Consequently, the link
between automated mineralogy data and nal production gain is
indirect. As such, the question is often asked how to value the con-
tribution of automated mineralogy to process improvements at a
particular plant.
The answer to the above question is of interest for at least three
reasons. Firstly, a proper valuation of automated mineralogy infor-
mation will assist managers to determine the level of investment
considered necessary to obtain such information, giving the size
of the mine and operation. Secondly, it will guide the automated
mineralogy profession to produce higher value and more relevant
information. Thirdly, it will encourage the evaluation of process
improvement proposals, therefore reducing the risk and maximis-
ing the return of mining investment.
So far, there are only qualitative statements in the literature
regarding the value of automated mineralogy. Quantitative miner-
alogical data are often used as a diagnostic tool to pin point the
http://dx.doi.org/10.1016/j.mineng.2014.01.020
0892-6875/ 2014 Elsevier Ltd. All rights reserved.

Corresponding author. Tel.: +27 113774602; fax: +27 114961034.

E-mail addresses: y.gu@uq.edu.au (Y. Gu), robert.schouwstra@angloamerican.
com (R.P. Schouwstra), chris.rule@angloamerican.com (C. Rule).
Minerals Engineering 58 (2014) 100103
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problem area or unit in a processing plant. There are a number of
case studies showing signicant returns from optimising plant
operation or plant design based on that information (Lotter
2011). Quantitative measurement of the value of automated min-
eralogy has not been studied to date. On the surface, it appears
to be a difcult subject and vexing problem to solve. However, it
is essentially a question of the value of information, which is rea-
sonably well documented in various other industries. Hubbard
(2010), in chapter 7 Measuring the Value of Information, dealt
with exactly this problem and provided a good framework which
can be used to estimate the value of automated mineralogy.
This paper introduces Hubbards theory in the context of mining
industry and applies it to estimate the value of automated miner-
alogy, using Anglo Platinums ne grinding project as an example.
Afterwards, a general model is developed to allow the simulation
of the value of automated mineralogy in different mining opera-
tions constrained by different parameters.
2. Measuring the value of information Hubbards theory
2.1. Measurement and intangibles
Measurement is A quantitatively expressed reduction of
uncertainty based on one or more observation (Hubbard, 2010,
p. 23). It never completely removes uncertainty. Based on this def-
inition, many of the things that were thought to be impossible
turned out to be quite easy to measure. Hubbard (2010, p. 4) ob-
served Intangibles that appear to be completely intractable can
be measured. This measurement can be done in a way that is eco-
nomically justied. For many organisations, it is a routine task to
measure the risk of bankruptcy, the value of public health initia-
tives and the value of IT investments. Through many case studies,
Hubbard found that the perceived impossibility of measurement is
often an illusion caused by not understanding:
1. The concept of measurement reduce uncertainty and
hence risk.
2. The object of measurement the core of the question and
the purpose.
3. The methods of measurement model the uncertainty
statistically.
Once those aspects of a problem are clearly dened and under-
stood, then the question becomes how to best measure it. He pro-
posed the following general approach:
1. Model what you know now.
2. Compute the value of additional information.
3. If economically justied, conduct observations that reduce
uncertainty.
4. Update the model and optimise the decision.
2.2. Measure the value of information
Information reduces uncertainty about decisions that have
economic consequences. In other words, Information can reduce
the uncertainty. Reduced uncertainty improves decisions. Im-
proved decisions have observable consequences with measurable
value. It is generally recognised that information has value, but
how to measure the value of information is not generally known.
If we can estimate the chance of being wrong and the cost of
being wrong about a decision, then their multiplication is Ex-
pected Opportunity Loss (EOL). The Expected Value of Information
(EVI) is simply the reduction of EOL after information and EOL be-
fore information available.
Once we know the value of information, we can use that to
determine how much we should spend to obtain that information
(Hubbard, 2010).
The above are the essentials of Hubbards theory and methods
that are relevant to this paper. It will become clearer when we
apply them to derive an effective method for measuring the value
of automated mineralogy.
3. A case study Anglo Platinums ne grinding project
Anglo Platinum, the worlds largest primary producer of plati-
num, has invested substantial capital to build the capacity to track
the mineralogy of processing plants and ore sources. After a
detailed study into the losses of value minerals (platinum group
minerals and sulphides) it became clear that to improve recoveries
an increase in liberation of the value minerals would be required.
After some pilot testing to demonstrate that ner grinding would
increase the liberation and recovery of the value minerals a deci-
sion was made to go ahead with large scale implementation of a
ne grinding project in 2009. The outcomes of the implementation
of ne grinding at the Amandelbult operation were published in
detail in Rule (2011) and Rule and Schouwstra (2011). In summary,
the Amandelbult project resulted in 50% reduction in tailings grade
with corresponding increase in recovery of over 5% of platinum
group of metals (PGM). If an improvement in recovery of 1% in
PGM could be implemented across all the operations in the group
this would translate into a gain in excess of US$75 million annually
for Anglo Platinum (2009 estimates based on annual production,
PGE prices and exchange rate, Rule and Schouwstra, 2011). The
capital cost of implementing the ne grinding program is US$250
million and annual running cost of the additional grinding equip-
ment is US$15 million. Based on these estimates the return of
capital investment for this initiative is within six years and the
net present value (NPV) of this project is approximately US$158
million based on annual discount rate of 10% for 12 years.
This is a good example to demonstrate how to measure the va-
lue of automated mineralogy using Hubbards method. The NPV of
US$158 million is attributed to automated mineralogy and metal-
lurgical test work carried out before and during the implementa-
tion of the ne grinding project. The cost of the automated
mineralogy and metallurgical test work totalled to less than US$2
million/annum, an insignicant amount compared to the value
gained.
The value of automated mineralogy is to provide information
that reduces the risk of ne grinding project:
1. By estimating the potential gains of the project, which effects
the decision on how much to invest in the ne grinding project.
2. By helping the metallurgists to determine how ne to grind and
to optimise the circuit design.
Let us assume that at the time when Anglo Platinum considered
the ne grinding project, management believed the investment
should have a good chance of success (say 80% of the target). This
estimation is based on available automated mineralogy informa-
tion and preliminary pilot test work. Let us further assume that
without the automated mineralogy information, the estimated
chance of success would be 55%. This and relevant information
are listed in Table 1.
So, from the investment point of view, automated mineralogy
reduced the risk from 45% to 20%. Since we are investing US$250
million, the expected value of information (EVI) is US$62.5 mil-
lion = 250 (0.45 0.20). From potential gain point of view, auto-
mated mineralogy reduced the risk of this project being rejected.
The EVI is US$39.7 million = 158 (0.8 0.55).
Y. Gu et al. / Minerals Engineering 58 (2014) 100103 101
The automated mineralogy work is estimated to have brought
forward the implementation of ne grinding project by, say two
years. Delaying the project by two years would have resulted in
an opportunity loss of around US$53 million (based on the income
of US$75 million per year, minus US$15 million per year running
costs and the cost of investing US$250 million two years earlier).
This is another way to look at the value of information provided
by automated mineralogy.
The same can also be applied to estimate the value of metallur-
gical test work by estimating how much risk is reduced by each
test project.
4. Modelling the value of automated mineralogy
In Anglo Platinums case above, we measured the value of auto-
mated mineralogy after the value of mineral processing improve-
ment was realised and documented. It would be more useful to
be able to predict the value of automated mineralogy when only
relatively small amounts of information are available. This kind
of prediction will help management to decide how much to invest
in the automated mineralogy and mineral processing improve-
ments (i.e. plant modication), so that they spend enough to cap-
ture the potential returns from improved efciency and
productivity.
The case study above also shows that the value of automated
mineralogy depends on the benet of mineral processing improve-
ments. The information from automated mineralogy reduces the
risk and the change in EOL. The size of opportunity largely deter-
mines the contribution of automated mineralogy. So, when we
model the value of automated mineralogy, we really need to model
the return from overall process improvements. In this section, we
will develop a general model that would allow us to evaluate the
return of process improvements for different commodities given
a set of plant operation conditions.
We know that if a change in our operation can lead to an in-
crease in recovery, then the value of this change can be calculated
as follows:
Return/year = DT OD AG MP DR.where DT is the daily
tonnage of ores processed (tonnes), OD is the operation days per
year, AG is the Average grade of ore (%), MP is the current metal
price ($/tonne of contained metal in concentrate) DR and recovery
gain = improved recovery (IR)current recovery (CR) (%)
Most of the 5 parameters above are variables, with some uctu-
ating more than others. DT and OD are relatively constant in any
well managed operations. AG is reasonably known through good
geo-metallurgical work. MP is controlled by market forces, but
can be estimated. DR is critical and the most uncertain parameter.
DR, by denition should be higher than zero and should be less
than 100 CR. So, DR usually has a wide variation. In the case
study above, DR turned out to be 5%. However, this value must
be estimated when the process change is proposed. In Anglo
Table 1
Impact of automated mineralogy (AM) to ne grinding project. Adaption from
Hubbards exhibit 7.1, p. 101.
Variable Project works Project fails
Chance of success without AM 55% 45%
Chance of success with AM 80% 20%
Impact if project is approved +US$158 million -US$250 million
Impact if project is rejected -US$158 million US$0
Table 2
The basic operation information with calculated returns at a hypothetical plant.
Parameter Value Note
DT (tonnes) 150,000 Measured
OD (days) 360 Measured
AG (%) 1.6 Measured
MP ($/tonne of contained metal) Mean value 5000 Estimated
a
Low value 3000 Estimated
a
High value 6000 Estimated
a
DR (%) Mean value 2 Estimated
a
Low value 0.5 Estimated
a
High value 3.5 Estimated
a
Return ($M) Mean value US$86 million Calculated
b
Low value US$13 million Calculated
b
High value US$181 million Calculated
b
DT daily tonnage of ores processed (tonnes).
OD operation days per year.
AG average grade of ore (%).
MP current metal price ($/tonne of contained metal in concentrate).
DR recovery gain = Improved recovery (IR) current recovery (CR) (%).
a
Estimated values have 90% condence interval.
b
Calculated values do not have the same condence interval. Its distribution is
expected to be wider.
Table 3
Returns and probabilities from 5000 simulations.
Index Return ($M) Frequency Probability (%) Cumulative (%)
1 10 62 1.24 100.00
2 0 55 1.10 98.76
3 10 128 2.56 97.66
4 20 174 3.48 95.10
5 30 242 4.84 91.62
6 40 314 6.28 86.78
7 50 352 7.04 80.50
8 60 479 9.58 73.46
9 70 485 9.70 63.88
10 80 430 8.60 54.18
11 90 452 9.04 45.58
12 100 405 8.10 36.54
13 110 354 7.08 28.44
14 120 254 5.08 21.36
15 130 235 4.70 16.28
16 140 165 3.30 11.58
17 150 122 2.44 8.28
18 160 106 2.12 5.84
19 170 57 1.14 3.72
20 180 46 0.92 2.58
21 190 30 0.60 1.66
22 200 21 0.42 1.06
23 210 13 0.26 0.64
24 220 5 0.10 0.38
25 230 3 0.06 0.28
26 240 4 0.08 0.22
Fig. 1. Return intervals and frequencies of 5000 simulations.
102 Y. Gu et al. / Minerals Engineering 58 (2014) 100103
Platinums case, the estimated DR value at the time of proposal
was 2%. Metallurgists were condent that 2% should be achievable
and that the return is large enough to justify the process change.
Let us use a hypothetic processing plant of moderate size to
demonstrate how to model the return when we have two or more
variables. The current long term average recovery for this plant is
85% and expected improved recovery after process modication
is 87%. The basic information with calculated return is listed in
Table 2.
In Table 2, the mean return value is calculated from the mean
values of DR and MP and so forth for low and high values. These
values represent a wide range of possibilities. If we need to invest,
say US$50 million to modify the circuit in order to obtain the
estimated recovery increase there is a range of possible returns.
However, we do not know the likelihood associated with each
possible outcome, and therefore use a Monte Carlo simulation
1
to
provide detailed information to support the decision.
Given the basic information in the above table, a simulation of
5000 scenarios produces the distribution of returns as shown in
the Table 3 and Fig. 1.
Table 3 shows that there is a 36.5 % chance that this investment
will produce a return of US$100 million or more per year. It also
shows that there is a 19.5% chance that the return will be well be-
low US$50 million per year and a 2.3% chance of no return at all.
With the detailed information, plant metallurgists and manag-
ers can select between different investment strategies and the level
of investment and calculate the return on investment (ROI) for
each of the options with a certain degree of condence. With that
information, they can plan and carry out more automated mineral-
ogy and metallurgical test work to reduce the uncertainties and in-
crease the condence in the DR estimates, thereby simulating new
return distributions. This iterative process can continue until a
clear decision can be arrived at. In each iteration the contribution
from automated mineralogy is equivalent to the value of reduced
risk, same as for metallurgical test work.
As mentioned before, the returns modelled above are a com-
bined value of automated mineralogy and metallurgical test work.
As these two disciplines are interrelated and complementary, the
relative contribution of those two parts of work is determined lar-
gely by estimating the level of risk reduced by each activity. Good
estimation demands insight knowledge and experience with accu-
mulated case studies.
5. Conclusions
A model is developed using Monte Carlo simulation allowing
the input of multiple variable parameters to calculate the probabil-
ity of return. The value of automated mineralogy is essentially the
value of information that it provides to allow informed decision
making. Without the information, a decision can not be made
and the opportunity is lost. The loss is the value of information.
The return on investment for automated mineralogy is particularly
high at the start of an optimisation project.
This is the rst time an attempt has been made to quantitatively
value the contribution of automated mineralogy for mineral pro-
cessing plant optimisation. The above method can be used to esti-
mate the value of metallurgical test work in the context of either
ore source characterisation (geometallurgy) or plant optimisation.
The methodology developed in this paper can be applied to dif-
ferent commodities and different scales of mining operations. Each
mine will have different operational parameters, such as tonnages,
grades of ore and the price of their products. It is often the case that
the metallurgist needs to evaluate different plant modication op-
tions. The simulated results for each of the options can be used to
rank them so as to allow for the selection of the option that can
deliver the best possible outcome with acceptable risk prole.
The model developed here is by no means the most comprehen-
sive one. However, it should be more than adequate to assist the
plant managers when they consider plant optimisation and invest-
ment in automated mineralogy.
The model is not a black box. It depends on the estimates of
uncertainties of the parameters (their ranges -condence inter-
vals). Hubbard also provides ways for users to calibrate their esti-
mates, so that they generate realistic values.
Acknowledgements
The rst author would like to thank FEI for their nancial sup-
port to a research project, resulting in this paper. We would like to
thank colleagues at JKMRC for stimulating discussions and com-
ments. We also express our appreciation to the anonymous
reviewers for their constructive comments.
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1
Monte Carlo simulations or Monte Carlo experiments are a broad class of
computational algorithms that rely on repeated random sampling to obtain numerical
results. The method is used in a wide range of elds from economics to nuclear
physics. In this paper, we use it to model the variation of all the variables inuence
the return of investment.
Y. Gu et al. / Minerals Engineering 58 (2014) 100103 103