The use of Monte Carlo simulation for operations management decision criteria

Gold Fields is the world?s fourth largest gold producer with operations in South Africa, Australia, Ghana and South America. All of Gold Fields? South African Operations are located in the Witwatersrand Basin and are intermediate to deep level underground mines exploiting gold bearing, shallow dipping tabular orebodies, which have collectively produced over 50 kt (1,608 Moz) of gold over a period of more than 100 years. Although the use of Monte Carlo as a business tool was introduced in 1964, it has only been in the last 30 years that it has gained increasing acceptance within the mining industry. However, the application thereof has been mostly limited to determination of risk in project areas. This paper however, considers the possibility of using Monte Carlo simulations to asses the underlying ?Root Cause? criteria critical to the operations management of existing mining operations. Currently, working operations have a distinct advantage over project areas as they have a wealth of historical information at hand. This, in turn, can be utilized to model distributions and relationships that can be used in Monte Carlo simulations, the results of which can be analysed to determine areas of concern. Projects can then be set up to ameliorate the effects of these and in turn reduce the risk of not achieving the operational targets. It is here that it must be stated emphatically that it should be the ?root causes? and the associated relationships that need to be emplaced within the model in order to achieve results that reflect the true causal relationship. The paper outlines possible sources of ?root cause? relationships and considers the outcomes of these in a case study on a large South African Gold Mine.