BHP Transportation Problem - Desklib

Running header: Transportation Problem 1
BHP Transportation Problem
Name:
Institution:

Transportation Problem 2
Introduction
The BHP is one of the largest companies that involves in mining of minerals across the
globe whereby it has branches in at least 25 countries although the headquarter is located in
Melbourne, Australia. The company is as a result of a merger between Broken Hill Proprietary
and Billiton. Consequently, the company engages in numerous activities which includes
operations in Western Australia, Queensland, New South Wales and South Australia that focus
on iron ore, copper, coal and nickel. The main source of copper is the Olympic Dam located 560
km north of Adelaide (BHP, 2019). Notably, the Dam comprises of underground and surface
activities that operates a complete integrated processing facility from ore to metal. The
processing plants comprise of two grinding systems that use the floatation extraction process to
extract high-quality copper concentrate from the Sulphide ore.
The main source of Iron ore is the Western Australian Iron Ore (WAIO) which contains
an integrated system of four processing hubs and five mines connected by more than 1000 km of
rail and port infrastructure in the Pilbara region of northern Western Australia (BHP, 2019). The
processing-hubs include Jimbebar, Mining Area C, Newman, and Yandi whereas the mines
comprise of Yarrie, Yandi, Orebodies (18, 23, and 25), Mount whale back, and Area C.
Consequently, the main BHP source of coal is the Queensland Coal, which comprises of BHP
Mitsubishi Alliance (BMA) and Mitsui Coal (BMC). Notably, both BMA and BMC are partially
owned by the BHP, whereby BMA is owned 50:50 by BHP and Mitsubishi whereas BMC is
owned 80:20 BHP and Mitsui respectively. The nickel major source of nickel is located in
Western Australia known as Nickel West. Notably, Nickel West is a complete integrated system
(mine to market), whereby all operations, which include mines, concentration, smelter, and
refinery are located in Western Australia (BHP, 2019).

Transportation Problem 3
Selection of the Company
As evident, BHP engages in the production of four major minerals. However, among the
minerals, Iron ore is transported from the mines to the processing hubs, which have a distance of
approximately 1000 km. between them. Therefore, the company often faces the transportation
challenge. Notably, there are numerous assumptions associated with the transportation problem,
which include there is limited amount of iron mined at a specific mine for a particular time
period. On the other hand, there are various processing hubs that can accommodate the iron.
Besides, the amount of iron mined (supply) and processed (demand) are constant always, also the
per unit cost of transporting the iron from the mines to the processing hub is constant. Notably, it
is assumed that there are no shipments incorporated between the mines and the processing hubs
since the transshipments will require adjustments of the model. Furthermore, the amount of
supply and demand is given is tons and as whole numbers. Generally, the model seeks to
determine the amount of iron to be transported from the mines to the hub such that all the
requirements are satisfied at a minimum transporting cost.
Problem Definition
As evident, the mines comprise of Yarrie, Yandi, Orebodies (18, 23, and 25), Mount
whale back, and Area C, which produce 1200, 1350, 2550, 1000, and 1100 respectively whereas
the processing-hubs include Jimbebar, Mining Area C, Newman, and Yandi which have a
processing capability of 1800, 1500, 2000, and 1900 respectively. Besides, the table below
shows the per unit transportation cost from the mines to the hubs
Mines Processing hubs
Jimbebar Mining Area C Newman Yandi
Yarrie 10 8 15 9
Yandi 12 7 9 5
Orebodies 8 7 6 10
Mount Whale Back 9 10 11 7