2016
IN ASSOCIATION WITH
Ken Lane
Kenneth F. Lane led the way for
value based optimisation of the full
scope of mining activities.
In particular, showing how cutoff
grade policies bridge the disciplines
and developed the framework for
maximising the whole project value
by optimising this policy every year
as the resource was depleted.
This work led to more valuable mining in many
of the largest surface mines in the world and
for the underground projects that have used
these principles.
Lane used his Mathematics degree from
Cambridge University (1950) as a foundation
for his role in Rio Tinto’s Group Planning
Department which he joined in 1960. Lane
could see how to apply dynamic programming
formulations (by Richard Bellman) to the
economic definition of ore and how this would
vary as the project was mined and as the
economic environment changed.
In 1964, he published his first paper on the
topic entitled, Choosing the Optimum Cut-off
Grade, in which he identified the best economic
criteria for making decisions (Net present Value)
and then showed how to optimise the project
considering the three main stages - mine, mill
(or concentrating) and market (or refining),
with each one having its own limiting capacity.
Lane then went on to showcase the six critical
values he has successfully formulated for
cutoff grade selection and demonstrated that
under deterministic prices, the optimum cutoff
grade is always one of these values. Due to
the remarkable and innovative concepts he
presented in the paper, Choosing the Optimum
Cut-off Grade (1964) has been considered the
pioneering formal investigation into the topic of
cutoff grade optimisation.
Since this initial publication, many academics
and operations planners have been inspired
and adopted Lane’s techniques as standard
practices. These include Mike Blackwell, the
engineer who nursed the infant ideas to maturity
SURFACE MINING
on their first major application in the planning
and development of a large-scale project in
Bougainville, Papua New Guinea in 1971. The
Rössing Uranium mine was another early adopter
of Lane’s work with two cutoff grade dimensions.
Under Lane’s management, RTZ Consultants
rapidly gained an international reputation for
its pioneering work on the development and
application of optimisation software in mining.
The concept and formulation of the ‘opportunity
cost’ was brought from financial parlance into
the mining industry by Lane, making a particular
impact on many South American projects as
Lane conducted seminars and discussions with
the mine planning community (often facilitated
by Juan Camus at Metálica Consultores SA).
Having become a Director of Rio Tinto and
seeing the lack of good mining references
available for the next generation, Lane was
inspired to create a book on cutoff grade
optimisation, hoping this would also inspire
others to follow in other mining disciplines.
Lane wrote a book dedicated to optimisation
of the entire mining business, first published
in 1988 titled “The Economic Definition of Ore:
Cut-off grades in theory in practice”. Filled with
practical guidance and the theoretical algorithm
derivations, Lane held nothing back, it was