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Economic Analysis: Theory and Practice
 

An Economic-Mathematical Model of the Impact of Mine's Environmental and Production Characteristics on the Profit of Mining Enterprises: Evidence from Erdenet Mining Corporation

Vol. 16, Iss. 9, SEPTEMBER 2017

PDF  Article PDF Version

Received: 3 July 2017

Received in revised form: 4 August 2017

Accepted: 10 August 2017

Available online: 29 September 2017

Subject Heading: MATHEMATICAL METHODS AND MODELS

JEL Classification: O21, O32, Q56

Pages: 1759–1777

https://doi.org/10.24891/ea.16.9.1759

Potravnyi I.M. Plekhanov Russian University of Economics, Moscow, Russian Federation
ecoaudit@bk.ru

Davaakhuu Nyamdorj Plekhanov Russian University of Economics, Moscow, Russian Federation
dabuk91@mail.ru

Sukhorukova I.V. Plekhanov Russian University of Economics, Moscow, Russian Federation
suhorukovaira@yandex.ru

Likhachev G.G. INTERTECH, Moscow, Russian Federation
lihachev69@yandex.ru

Importance The article discusses the use of off-balance ore and tailings as a resource base under depletion of ore reserves in the field, and offers an economic-mathematical model of environmental management that takes into account the degree of involvement and processing of overburden, tailings and other environmental and economic parameters, and their impact on the profit of mining enterprises.
Objectives The purpose of the study is to provide methodological substantiation and develop an economic-mathematical model of miner operations, which would consider the impact of ecological factors and production characteristics on enterprise's profit, to assess the impact of changes in technical characteristics of production units on the profit of the mining enterprise.
Methods The paper employs an optimization model of environmental management using computer modeling, and methods of statistical and regression analysis.
Results We offer an economic-mathematical model of the impact of environmental and production characteristics of mines on profit. The findings show that profit is strongly susceptible to changing values of stripping ratio, washability ratio, run-of-mine output, and investment.
Conclusions It is possible to increase profit through increasing the stripping ratio at the open-pit mine and washability ratio at the concentrating mill, i.e. on the basis of processing the accumulated off-balance ore. This is associated with decreasing the production of raw materials and investment.

Keywords: depletion, natural resources, environmental damage, mining company

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