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24-MMP-A5 Surface Mining Methods and Design · May 2013

Question 7 of 13: Mine Cost-Index Terminology

Nivaar worked solution (AI-drafted; not reviewed by a licensed engineer)

Notes on this paper

EGBC National Exam — Mining and Mineral Processing Engineering, 09-Mmp-A5 Surface Mining Methods and Design, 2013-May. 3 hours duration; one handwritten 8.5×11 in reference sheet permitted (not an open-book exam); only approved Sharp or Casio calculators allowed. Question 1 is compulsory (40 marks, parts 1.1–1.7); candidates then select FOUR of the six optional Questions 2–7 (15 marks each) to complete the paper.

Reference texts: Hartman & Mutmansky, SME Mining Engineering Handbook, 3rd ed. (dewatering, slope stability classification, dragline stripping geometry, truck dispatch, mine closure); Hustrulid, Kuchta & Martin, Open Pit Mine Planning and Design (moving-cone and Lerchs–Grossmann pit optimization, capital-cost estimating, truck-shovel match factor); Lerchs, H. & Grossmann, I.F. (1965) “Optimum Design of Open-Pit Mines,” CIM Bulletin (the graph-theoretic 2-D worked example this question is drawn from); O’Hara, T.A. (1980) “Quick Guides to the Evaluation of Orebodies,” CIM Bulletin, Feb. 1980, and Mular, A.L. & Poulin, R. (1998) CANCOST, CIM Special Volume 47 (capital-cost formulae); Bieniawski, Z.T. (1989) Engineering Rock Mass Classifications (RMR system).

Question 1.7: Mine Cost-Index Terminology (5 marks)

Question text not reproduced: the examination questions are © Engineers and Geoscientists BC. Open the official past paper (linked at the top of this page) to read the question, then follow the worked solution below.

1. Marshall & Swift Mine/Mill index. The M&S Mine/Mill index is a published, industry-specific cost-escalation index (a sub-index of the broader Marshall & Swift Equipment Cost Index family, tracked historically in Chemical Engineering magazine and, for mining, referenced through SME/CIM literature) used to update a historical capital or operating cost estimate to current dollars: $C_{present} = C_{historical}\times (Index_{present}/Index_{historical})$ – exactly the escalation method used elsewhere in this discipline’s cost-index problems and referenced again in Question 7.3 below.

2. The six-tenths (or 0.7 / two-thirds) rule. Capital cost scales with capacity by a power law rather than linearly, because larger equipment gains economy of scale (surface-area/volume relationships, shared overhead): $C_2 = C_1\left(\dfrac{Q_2}{Q_1}\right)^{n}$, with the exponent $n$ conventionally taken as 0.6 (“six-tenths”) for a generic capacity scale-up, though individual equipment or cost-centre classes are calibrated to their own exponent – commonly 0.6–0.85 in practice, which is exactly why some practitioners quote it as a “two-thirds” (0.67) or “0.7” rule for a different class of equipment. It is the same functional form as the O’Hara-method power-law cost formulae exercised numerically in Question 7 (e.g. $C_{12}=11410\,T^{0.5}$), just with a different characteristic exponent per cost centre.

3. Cost centres underlying the mining indices (2 marks). The Marshall & Swift-style mining indices (and the related O’Hara/CANCOST family used in Question 7) are built up from separate sub-indices for the major mine cost centres, typically: site preparation and access; pre-production stripping; mining equipment (shovels/loaders, trucks, drills); ancillary/auxiliary equipment (dozers, graders); maintenance facilities and workshops; electrical power and water supply; general plant services and administration/camp facilities; and engineering, feasibility and project-management (indirect) costs – the same categories that are summed explicitly in the Question 7.4 capital-cost buildup below.