Designing an environmental supply chain network in the mining industry to reduce carbon emissions

An important concern in the mining industry is to reduce greenhouse gas (GHG) emissions across all their processes in the supply chain (SC). A good supply chain network design (SCND) involving environmental strategic challenges allows dealing with this problem. Since the literature about SCND in the mining industry is scarce, in this paper we address a multi-echelon, multi-period and multi-product environmental mining SCND with the objective to reduce GHG emissions under Emissions Trading Scheme (ETS), along with minimizing investment, transportation, operating costs and carbon credits costs resulting by ETS. To solve this problem, we propose a mixed integer linear programming model that considers the location of capacitated facilities in the SC, addressing specific mining problems related to the ore grade available in mining fronts and the customer demand satisfaction in terms of quality and quantity, through additional processes such as blending and beneficiation that occurs along the several echelons of the mining SC. Our model integrates, for the first time the environmental impacts of ore grade on the mining SCND. Taking a base case inspired in a iron ore mining real-world scenario, several instances were generated to validate the proposed model. The results suggested that when the ore grade is included in the SC design, different configurations with direct effects on costs and emissions of equivalent carbon dioxide are obtained; in addition, the ETS showed to be a valid option for reducing both costs and the environmental impact along the SC. Finally, we analyze the environmental and economic impact in front of ore grade and carbon credit price variations to find managerial insights that can help decision-makers in this sector.