A Hybrid Model for Risk-Based Strategic Planning in Open-Pit Mining: Integrating Deterministic, Stochastic, and ISO 31000 Approaches

The strategic planning of open-pit mining projects is highly influenced by geological variability, economic fluctuations, and operational uncertainties. Traditional deterministic optimization models often fail to account for these uncertainties, leading to potentially misleading economic evaluations. This paper proposes a hybrid model that integrates deterministic and stochastic optimization methods, following the principles of the ISO 31000 risk management framework, to comprehensively quantify uncertainty through key parameters affecting strategic mine planning. Monte Carlo simulations were applied to generate probability distributions of input parameters, including metal prices, mining and processing costs, and ore grade variability, allowing for a more robust financial assessment. The results demonstrate that while the deterministic approach estimates an NPV of USD 130.8 million, the stochastic model yields an average NPV of USD 155.5 million with a standard deviation of USD 76.5 million, highlighting the significant variability in financial outcomes. Risk assessment using Value at Risk (VaR) and Conditional Value at Risk (CVaR) further quantifies potential financial losses, revealing a 3% probability of project unprofitability. The developed methodology provides a structured approach to integrating uncertainty into mine planning, enabling more reliable economic evaluations and improving decision-making in strategic mining operations.