| Western Canadian coal production faces significant production, haulage and marketing challenges from complex mining operations, long transportation distances to ports, competitive coal markets and price volatility. Thermal and metallurgical coal quality and quantity levels are presently managed using simplistic theories, and trial and error methods to meet consumer demands. This study uses stochastic modeling, linear and non-linear optimization techniques to formulate mathematical models of problems. The objective functions of the optimization models are derived from the profit maximization of an integrated mining system constrained by coal quality, quantity, demand and supply. The models are validated using data from Luscar-Sherritt and Fording mines. The results show that Luscar-Sherritt and Fording have profit expectations of {dollar}135.7M and {dollar}221.3M, at 50% probability of success, and {dollar}70M and {dollar}120M at zero failure probability. This unique study applies stochastic-optimization theories to develop comprehensive coal production, transport and marketing models for competitive business decisions. |
