Geostatistical approach to blending sodium in coal

This paper describes a procedure for minimizing the operational costs associated with blending sodium in coal at a surface mine in the Powder River Basin. Mine site blending is performed by adjusting daily production rates for high- and low-sodium pits. These adjustments are designed to produce a consistent sodium value called the blending target. The mine's contractual limit for sodium is sufficiently close to the field average value that any decrease in the sodium blending target may result in an opportunity cost, if the number of potentially minable tons is reduced. Conversely, any increase in the blending target may result in a higher sampling cost if more information is required to keep the blend within contractual limits. Blending parameters were defined using a geostatistical block model of sodium content that was based on analyses of hundreds of in-pit sample holes. Variograms for these data were used to compute the marginal costs of opportunity and sampling for a series of hypothetical in-pit drilling patterns. These marginal costs provided a basis for selecting optimum values for key parameters such as the blending target, production variance and in-pit sampling density. The benefit of implementing these optimized parameter values is that operational costs of sodium blending will be minimized over the long-term. At the mine where this procedure was developed, each dollar spent to increase the sampling density to the optimum value was shown to generate a $10 savings in opportunity cost.