Capital investment appraisal for the integration of new technology into mining systems

Abstract

New technologies have been widely recognized as the key to the achievement of competitiveness in the mining industry, enabling costs and environmental impact to be reduced while increasing safety, flexibility and productivity. Research has been undertaken with industry to develop management approaches for appraisal of the integration of new technology into mining systems. The traditional capital investment appraisal (CIA) methods currently used in the mining industry are reviewed and their development and limitations are examined. Reference is made to how technologies affect mining operations—often bringing benefits in 'soft' or qualitative forms. A new CIA classification scheme is presented that aims to assist in the selection of the appropriate CIA method, according to the type of technology and the mining situation. A review of the theory underlying three particular CIA methods that are considered to offer significant potential—activity-based costing, options pricing and the Analytical Hierarchy Process—is accompanied by case studies to illustrate their application to technology integration in mining operations. A concluding discussion of new technology integration emphasizes the need for greater awareness of appraisal issues and methods.