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Risk assessment of a mine development strategy


A coal company had just completed a strategic review of a proposed mine development. The company wanted to conduct a risk assessment of the strategic project plan to understand any risks to the development strategy, support decision-making and assist in implementing the strategy.

The risk assessment complemented the strategic review that was generated as an input to the corporate investment approval decision. It was also to be the basis for risk management activity throughout the project if it were to proceed.

The assessment indicated the low risk character of this particular mine development, apart from the generic risks associated with underground mining that were dealt with separately. It demonstrated that the risks had been recognised and addressed, although two remaining high risks required attention. It confirmed the rigour of the management activities undertaken prior to and during the strategic review.

The structured workshop provided a valuable forum for communicating and sharing ideas. It required the team to look at risks from a whole-of-business perspective, different from their usual focus. This provided a significant benefit from the assessment process itself, in addition to the risk register from the exercise.

Objectives and approach

A large coal company engaged Broadleaf to perform a risk assessment of the strategic project plan for a proposed underground mine development. It had just completed a strategic review of the development. The purpose of the risk assessment was to:

  • Identify and understand the risks to the strategy that could effect business outcomes
  • Assess the relative priority of the risks
  • Develop a risk register that would assist decision making and in implementing the strategic project plan.

Several issues that were outside the scope of the strategic review were noted, but not assessed at this stage as they were addressed elsewhere by established management processes. These included:

  • Generic risks associated with underground coal mining
  • Generic risks associated with coal price and foreign exchange
  • The project execution plan and the risks associated with it.

The assessment was based on the risk management process of IEC 62198, Managing risk in projects – Application guidelines.

The mine development

The company was an established coal miner, a subsidiary of a large multi-national mineral resources business. It operated several high-volume mines, and it was examining the potential for developing a new mine near existing operations. The management team was familiar with the region and its broad geological characteristics. The general nature of the resource was known, as were the potential products and markets. There was some scope for using existing infrastructure. Nevertheless, a large capital injection would be needed, and the parent company required detailed information as part of its investment tollgate approval process.

Figure 1: Tollgate approval stages

The strategic review was generated as one of the inputs to the corporate investment decision. The risk assessment was intended to provide a further input to the investment decision, as well as forming the basis for risk management activity throughout the project were the approval-to-proceed to be granted.

Establishing the context

Establishing the context had several purposes:

  • To establish the strategic environment in which the risk assessment was taking place
  • To specify the main outcomes required
  • To identify a set of criteria for measuring the consequences of identified risks
  • To define a set of key elements for structuring the risk identification.

Consequence and likelihood scales were developed and used in the risk identification and assessment workshop to rate the risks. The criteria for company success are listed in Table 1; they were used to develop measurement scales for assessing the consequences of risks.

Table 1: Criteria and objectives


Company strategic objectives

General management

All mine and business outcomes.


Reliable and accurate resource information that is interpreted correctly, confirms the resource quality, quantity and ease of mining, and enables an optimum strategy to be developed.


A high quality coal resource from which the maximum value is extracted:

  • An optimum mining strategy is developed, in particular layout and schedule
  • An appropriate processing plant and infrastructure is designed, to achieve optimum utilisation and deliver the required products at required tonnages
  • The coal is marketed and sold to maximise sales revenues and margins, providing an optimum return on investment.


An accepted, approved and authorised land use, with appropriate compensation and development costs.

Safety and environment

Safe and environmentally acceptable implementation of the strategy and a safe and environmentally acceptable mine and processing plant.

Costs and timing

Capital and operating costs, and the implementation schedule, are estimated to the required accuracy and precision.

The likelihood scale was linked to the frequency of occurrence of the assessed consequences of risks. The consequence and likelihood ratings were combined to generate initial risk priorities, in four categories. The priority ratings had the following interpretations:

  • Extreme risks were those risks that would endanger the success of the project to such a degree that they must be reduced before further commitments could be made.
  • Major risks were those risks that could prevent the success of the project, and plans should be in place to reduce them before further commitments to proceed could be made.
  • Medium risks were those risks that could have a significant effect and should be monitored and managed, based on the cost to benefit ratio of doing so.
  • Minor risks were those risks that would have little impact or were very unlikely, and generally best addressed through normal management processes.

The key elements that provided the basic structure for the risk identification brainstorming activity are shown in Table 2.

Table 2: Key elements

Key element



Coal resource

Data, interpretation, physical, quality, quantity, ease of mining


Mining layout

Proposed mine layout


Development sequence

Proposed mine development sequence and timing


Mining operation

Gas, water, adjacent mines, restrictions, maintenance, technical



Processing plant capacity, capability, reliability, maintenance



Suitability, capacity, reliability, availability


Project design

New plant and equipment, reuse, modifications, location, closure


Project implementation

Schedule, sequence, management, resources, dual operations


Capital estimate

Capital cost and schedule estimation


Operating costs

Operating costs, new mine, dual operations of old mine



Personnel and assets, new, dual, old mines, project



Rejects and waste disposal, mine closure


Approvals and access

Land access, native title, environmental, land owner, costs


Marketing and sales

Predicable coal quantities, & quality optimised to market, sales



Economic analysis and feasibility, contracts, forecasts, controls


Political, community, industrial relations

Political and community influences, industrial relations


Natural perils

Weather, land movements


Improvement options

Capacity, efficiency, operability, product

The context material was reviewed with the General Manager and incorporated in a briefing document that was distributed to all those participating in the workshop.

Risk assessment workshop

Broadleaf facilitated a one-day risk assessment workshop to address the risks associated with the proposed mine development strategy, with follow-up discussion and clarification the next day. It had several purposes:

  • To systematically examine each key element and identify significant risks to the strategy
  • To analyse each risk, understand the current controls, and through an analysis of the consequences and likelihood evaluate the relative risk priority and the potential exposure
  • To document the output in the form of a risk register for the mine development.

The participants in the workshops and other discussions were selected from business functional groups to cover the main sources of risk (Table 3).

Table 3: Workshop participants


Areas of responsibility

General management

All mine and business outcomes


Mine planning

Resource development

Geology, coal quality, processing


Geotechnical drilling and testing


Site operations, land access


Infrastructure and services

Community and environment

Approvals, indigenous owners, community relations


Marketing, sales contracts

Identification and analysis

The workshop used a brainstorming approach focusing on each of the key elements in turn. The steps in the workshop were:

  • Identify the relevant risks for each key element and the controls in place for managing them
  • Assess the potential consequences, in terms of the criteria, if the risk did arise, given the controls, using the agreed consequence ratings
  • Assess the likelihood of each risk arising and generating the assessed consequences, given the controls, using the agreed likelihood ratings
  • Derive initial risk priorities from the consequence and likelihood assessments
  • Review each identified risk and confirm its priority, given the controls
  • Evaluate the potential exposure if the controls were to fail in a credible way.

Where the key element involved obtaining and analysing data and the resulting decisions, three aspects of the process were considered.

  • Was the best measurement technology used and were the data of the accuracy and precision required?
  • Were sufficient data obtained to achieve the degree of confidence required?
  • Were the data interpreted correctly?

All the information was entered into a risk management information system that was used to generate the risk register for the mine development.

Risk profile

The workshop identified and ranked 51 threats and three opportunities. There were no extreme risks, and only two were ranked high.

The profile confirmed the generally low-risk character of this particular mine development, apart from the generic risks associated with underground mining that were omitted from the scope of the assessment. It demonstrated that the risks had been recognised and addressed in the strategic review, and the use of skilled and experienced consultants to both perform and check critical work had reduced many potentially high risks to medium or low levels. However, the two remaining high risks did require attention.

The two high risks were associated with the ability of the coal handling and preparation plant to achieve the required yield and product split, and obtaining the required approvals and land access without causing a delay or a sub-optimal development sequence. The discussion is summarised in Table 4.

Table 4: High risks for the mine development



Risk 5.02: The mine does not achieve planned yield and product split.

The coal handling and preparation plant has been studied and its limitation in capacity, product split and yield is understood. Longer-term plant improvements have been proposed to remove these limitations, but, until the improvements become available, plant limitations may restrict production and performance. The capacity can be increased by going to seven day per week operation, so the risk associated with capacity has been assessed as medium, but the risk associated with achieving the product split and yield is likely to be a limitation and has been ranked as high.

Risk 13.01: Mining lease and surface title:

  • New environmental legislation requires an EIS, which may delay the granting of the mining lease
  • Native title is not resolved, delaying the development
  • Surface rights are not obtained, delaying the development.

Obtaining the required approvals and access to land was highlighted as critical in the strategic review. The proposed mine plan requires native title rights to be resolved, surface rights to be obtained and an Environmental Impact Statement to be approved to the northern mining area. A delay will force the mine to develop the already approved but lower quality southern area early, resulting in a reduction in value. Additional compensation, restrictions or delays could increase this impact.

Of the 17 medium risks, four had potential exposure levels that were high – the consequences would be high were there to be a credible failure of the controls (Table 5). The controls for these risks were to be reviewed, and strengthened where practical, to ensure the risk levels remained no greater than medium.

Table 5: Medium risks with high potential exposures



Risk 13.02: An acceptable solution to rejects disposal cannot be developed at a reasonable cost, or delays the approval.

Matters to be addressed include:

  • Leaching
  • Storage volumes
  • Rehabilitation
  • Seepage into natural watercourses or aquifers.

Not addressing this risk may contribute to the high risk 13.01 relating to approvals and land access.

Risk 2.01: Error in panel orientation results in reduced development rates, increased costs and possible safety incidents if it is too close to the cleat direction and not aligned to the stress direction.

The consequences of risks 2.01 and 1.12 were both rated as major and have the potential to seriously damage the predicted profitability of the mine. Good controls – two separate consultants, an audit of the process and review by the company – have reduced these risks to medium.

Risk 1.12: Presence and orientation of stress in the rock mass is different from that predicted and allowed for in the mining strategy, resulting in a sub-optimal panel orientation.

Along with erroneous geological assessments and decisions, risk 1.12 is a significant contribution to risk 2.01.

Extensive and consistent drilling and data gathering has occurred, with two different techniques used for measurement; regional knowledge and knowledge of current nearby workings has been exploited, and the original geological interpretation has been audited.

Risk 1.06: Structural dislocation and faulting greater than the seam thickness slows mining and increases costs.

Most of the controls associated with risk 1.12 are also controls for this risk.

Two of the 32 low risks were associated with underground mine safety: because they could result in fatalities if not managed well, their potential exposure levels were rated high. These two risks were flagged to be included in the Safety Management System.

The identification and assessment of opportunities, risks that could have a desirable effect, was not a focus of this assessment, but three opportunities were noted. They all arose as a result of the very conservative estimates used in the strategic review:

  • Smaller effects of coal seam gas than anticipated and hence lower costs associated with managing it
  • Higher coal price as the mine is developed and higher quality coal is obtained
  • Lower costs associated with the management of greenhouse gas emissions.

Risk treatment, monitoring and review

Risk treatment was outside the scope of this initial assessment. The profile indicated that most of the risks had been managed in the preceding strategic review. Appropriate managers were nominated as responsible for developing treatment actions for the two high risks and directing their implementation.

The nature of risks changes over time. Regular reviews of risks and risk treatment were planned as part of the normal management process to revise the lists of high and medium risks, to generate new risk action plans and to revise the risk register (Figure 2).

Figure 2: Regular monitoring

In addition, more extensive and formal reviews were planned for major milestones, when there were significant changes in strategy or where there was a major change in external circumstances, including any major change in policy or priorities that might impact on the underground mine development. A risk review was planned during the next stage of the mine planning and approvals process.


The strategic review had considered most of the likely areas of risk and developed treatment actions for them. This risk assessment determined the level of risk that remained. It produced a relatively low-risk profile that indicated the generally low-risk nature of the mine development, while highlighting two risks that needed particular attention. In many ways the assessment was a means of confirming the rigour of the management activities undertaken prior to and during the strategic review, and consolidating the management team's views about the proposed development.

Like many assessments of this kind, the structured workshop provided a valuable forum for communicating and sharing ideas about the new mine. It required the team to look at risks in a high level, whole-of-business framework that crossed technical and functional boundaries, thus offering a slightly different perspective from their more usual day-to-day operational focus. This provided a significant benefit from the process itself, in addition to the benefits associated directly with the risk assessment and the risk register that formed the primary outcomes of the exercise.

International mining company
Mining and minerals processing
Services included:
Risk assessment and risk treatment
Risk assessment