Life of Asset planning,uncertainty and value optimisation of the Iron Ore business – from exploration,to market,to closure

Strategic planning at BHP Billiton Western Australia Iron Ore (WAIO) aims at sustainable value maximisation of its large, long-life, low-cost, expandable mineral inventory and supply chain infrastructure. This requires a whole of business approach and optimisation of the full value chain, beyond mine plans alone. Only through a system view can the value proposition of a set of plans be truly optimised. Fundamental system components include: mineral inventory information with intrinsic uncertainty; full supply chain optimisation utilising throughput accounting; a marketing view of future quality premiums based on overall market quality load; alternative sequences of capital decisions; and closure costs including optimisation of total material movement. An annual, structured Life of Asset planning process optimises maximum value through a nondeterministic scenario-based optimisation approach, while also identifying the activities that will resolve key uncertainties and steadily improve confidence in the plan. This is a key input to medium-term plans and budgets.