| Open pit and underground oil shale mine expansion
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Context / Scope of project
The expected supply-demand balance for oil shale in this Eastern country made it imperative for the main supplier of the oil shale to increase capability to meet short term and long term supply and product demand changes, as well as increasingly challenging and sophisticated delivery logistics requirements.
The mining company was operating 4 significant mining sites both open pit and underground. Two of the open pit sites were coming to the end of life, while significant new volume requirements were posed both in the medium and long term. In addition the mining company was expected to increase supplies of oil shale for oil production.
The mining company had prepared for phasing out the old mines and expanding capacity of the remaining mines as well as opening new mines by developing a significant investment program. The structuring choices around increases in mining capacity, logistics, deliveries, planning and operating management was expected to have a decisive impact on the mining company’s business and economics.
PIP was asked to review the internal work, jointly identify potential optimisation opportunities, and develop an updated proposal that could be confidently presented at Board level.
Client achieved:
- Pressure tested and reviewed the existing expansion plans resulting in change of some of the basic underlying assumptions (e.g. risk levels, optimal cost and production targets)
- Identified critical areas to be focused on during the next stage of the project planning
- Made clear to the Board the key trade-offs of the capacity investment (capex) vs. increasing operating days per year (HR, manning and organisational) vs. smoothing out demand
- Identified options to delay capital investment by improving current operational practices
- Identified options to reduce the required capital investment by 250-450 M USD by smoothing the peak demand and better option evaluation process together with the downstream stakeholders
- Developed framework to trade-off the various expansion options.
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