AbstractsBusiness Management & Administration

The mining industry in South Africa has long been a crucial contributor to the Gross Domestic Product (GDP) starting in the 18th century. In 2010, the direct contribution towards the GDP from the mining industry was 10% and 19.8% indirect. During the last decade global financial uncertainty resulted in commodity prices hitting record numbers when Gold soared to a high at $1900/ounce in September 2011, and thereafter the dismal decline to a low of $1200/ounce in July 2013. Executives in these markets have reacted strongly to reduce operational costs and focussing on better production efficiencies. One such a cost for mining within South Africa is the Operational Expenditure (OPEX) associated with electrical energy that has steadily grown on the back of higher than inflation rate escalations. Companies from the Energy Intensive User Group (EIUG) witnessed energy unit prices (c/kWh) and their percentage of OPEX grow to 20% from 7% in 2008. The requirement therefore is for more accurate energy budget forecasting models to predict what energy unit price escalations (c/kWh) occur along with the required units (kWh) at mines or new projects and their impact on OPEX. Research on statistical models for energy forecasting within the mining industry indicated that the historical low unit price and its notable insignificant impact on OPEX never required accurate forecasting to be done and thus a lack of available information occurred. AngloGold Ashanti (AGA) however approached Deloittes in 2011 to conclude a study for such a statistical model to forecast energy loads on one of its operations. The model selected for the project was the Monte Carlo analysis and the rationale made sense as research indicated that it had common uses in energy forecasting at process utility level within other industries. For the purpose of evaluation a second regression model was selected as it is well-known within the statistical fraternity and should be able to provide high level comparison to the Monte Carlo model. Finally these were compared to an internal model used within AGA. Investigations into the variables that influence the energy requirement of a typical deep level mine indicated that via a process of statistical elimination tonnes broken and year are the best variables applicable in a mine energy model for conventional mining methods. Mines plan on a tonnage profile over the Life of Mine (LOM) so the variables were known for the given evaluation and were therefore used in both the Monte Carlo Analysis that worked on tonnes and Regression Analysis that worked on years. The models were executed to 2040 and then compared to the mine energy departments’ model in future evaluations along with current actuals as measured on a monthly basis. The best comparison against current actuals came from the mine energy departments’ model with the lowest error percentage at 6% with the Regression model at 11% and the Monte Carlo at 20% for the past 21 months. This, when calculated along with the unit price path studies from the EIUG for different unit…