WEBVTT 00:00:00.000 --> 00:00:02.445 align:middle line:90% [SQUEAKING] 00:00:02.445 --> 00:00:03.912 align:middle line:90% [RUSTLING] 00:00:03.912 --> 00:00:05.379 align:middle line:90% [CLICKING] 00:00:05.379 --> 00:00:18.890 align:middle line:90% 00:00:18.890 --> 00:00:21.920 align:middle line:84% RICHARD DE NEUFVILLE: So this is a vision 00:00:21.920 --> 00:00:25.910 align:middle line:84% of-- that is, a fairly classic example of simulation, 00:00:25.910 --> 00:00:29.570 align:middle line:84% and has to do with the development of the Antamina 00:00:29.570 --> 00:00:31.850 align:middle line:90% copper mine in Peru. 00:00:31.850 --> 00:00:34.460 align:middle line:84% And for those who know anything about mining, 00:00:34.460 --> 00:00:36.200 align:middle line:84% it's not just copper you get out of it, 00:00:36.200 --> 00:00:38.210 align:middle line:84% but it's zinc and all kinds of other things 00:00:38.210 --> 00:00:42.600 align:middle line:84% that may be associated with it, molybdenum in particular. 00:00:42.600 --> 00:00:45.300 align:middle line:84% So first of all, I want the opportunity 00:00:45.300 --> 00:00:51.150 align:middle line:84% to talk about two kinds of flexibility, on a system 00:00:51.150 --> 00:00:53.500 align:middle line:90% and in a system. 00:00:53.500 --> 00:01:00.480 align:middle line:84% So design features that enable systems to evolve easily 00:01:00.480 --> 00:01:03.300 align:middle line:84% in the future has some technical thing 00:01:03.300 --> 00:01:05.190 align:middle line:84% that you do to the physical design. 00:01:05.190 --> 00:01:06.840 align:middle line:90% It is in the system. 00:01:06.840 --> 00:01:10.360 align:middle line:84% That is, this requires an engineering approach to it. 00:01:10.360 --> 00:01:13.380 align:middle line:84% You need to be able to do the right things and you 00:01:13.380 --> 00:01:18.410 align:middle line:84% mess with the guts of the simulation, so it's in that. 00:01:18.410 --> 00:01:20.540 align:middle line:84% At the same time they have the flexibility 00:01:20.540 --> 00:01:23.220 align:middle line:84% to do various things, such as abandon 00:01:23.220 --> 00:01:27.500 align:middle line:84% the project is one thing where it has nothing 00:01:27.500 --> 00:01:28.790 align:middle line:90% to do with the design of it. 00:01:28.790 --> 00:01:30.680 align:middle line:90% It's just simply saying, OK. 00:01:30.680 --> 00:01:34.380 align:middle line:84% If prices are not right, it's not worthwhile to proceed, 00:01:34.380 --> 00:01:35.570 align:middle line:90% we're going to stop. 00:01:35.570 --> 00:01:38.660 align:middle line:84% So that's a flexibility that you might have as opposed 00:01:38.660 --> 00:01:41.000 align:middle line:84% to saying, I'm going to continue regardless. 00:01:41.000 --> 00:01:45.500 align:middle line:84% That is a flexibility on the system. 00:01:45.500 --> 00:01:49.160 align:middle line:84% It's useful later to have that capability 00:01:49.160 --> 00:01:53.120 align:middle line:84% to think about between flexibility in and on a system, 00:01:53.120 --> 00:01:56.090 align:middle line:84% and both are involved in this case. 00:01:56.090 --> 00:01:57.950 align:middle line:84% And this presentation was originally 00:01:57.950 --> 00:02:01.850 align:middle line:84% built up by some economists at the Harvard Business School. 00:02:01.850 --> 00:02:04.450 align:middle line:90% 00:02:04.450 --> 00:02:11.650 align:middle line:84% Now the idea is that it's a site in the mountains of the Andes, 00:02:11.650 --> 00:02:16.390 align:middle line:84% north of Lima towards Ecuador, that was privatized 00:02:16.390 --> 00:02:20.690 align:middle line:84% and the government wanted to get people to look at it. 00:02:20.690 --> 00:02:22.880 align:middle line:90% So it was in two phases. 00:02:22.880 --> 00:02:25.180 align:middle line:84% First of all, you asked for bids. 00:02:25.180 --> 00:02:27.370 align:middle line:90% And the bid was to say, OK. 00:02:27.370 --> 00:02:31.300 align:middle line:84% I have the right to examine the site for two years. 00:02:31.300 --> 00:02:33.970 align:middle line:84% I mean, nobody was sure how difficult it 00:02:33.970 --> 00:02:38.380 align:middle line:84% was to get the ore out, although there was some there. 00:02:38.380 --> 00:02:41.590 align:middle line:84% But how difficult it was and whether it would be worthwhile. 00:02:41.590 --> 00:02:44.260 align:middle line:84% Would the price be right, and whatever. 00:02:44.260 --> 00:02:48.340 align:middle line:84% So the idea was that they'd go and explore 00:02:48.340 --> 00:02:51.340 align:middle line:84% it with geological information, et cetera, et cetera. 00:02:51.340 --> 00:02:53.800 align:middle line:84% And they were given two years to do that. 00:02:53.800 --> 00:02:59.290 align:middle line:84% And they could either proceed with the development 00:02:59.290 --> 00:03:02.580 align:middle line:90% or give the project up. 00:03:02.580 --> 00:03:05.850 align:middle line:84% Now just to give you an example of what this is, 00:03:05.850 --> 00:03:11.970 align:middle line:84% we're talking-- these are altitudes in Meters Above Sea 00:03:11.970 --> 00:03:13.470 align:middle line:90% Level, MASL. 00:03:13.470 --> 00:03:17.610 align:middle line:90% And this is an enormous project. 00:03:17.610 --> 00:03:21.960 align:middle line:84% So you have the scope of the mine. 00:03:21.960 --> 00:03:26.830 align:middle line:84% You're seeing it going down to about 2,000 feet of it. 00:03:26.830 --> 00:03:28.410 align:middle line:84% And just to give you an impression 00:03:28.410 --> 00:03:33.210 align:middle line:84% of what this means in terms of the vision-- 00:03:33.210 --> 00:03:36.810 align:middle line:84% and by the way, this is all at about 15,000 feet, 00:03:36.810 --> 00:03:38.040 align:middle line:90% so the air is thin. 00:03:38.040 --> 00:03:40.800 align:middle line:84% And for those of you who have been hiking at that level, 00:03:40.800 --> 00:03:42.930 align:middle line:84% you run out of steam pretty quickly 00:03:42.930 --> 00:03:46.000 align:middle line:84% unless you've been acclimatized over a long period. 00:03:46.000 --> 00:03:50.760 align:middle line:84% So here's what it looks like to get to the copper deposit. 00:03:50.760 --> 00:03:53.880 align:middle line:84% You're taken down several hundred feet 00:03:53.880 --> 00:03:57.160 align:middle line:84% and quite wide across an area of it. 00:03:57.160 --> 00:04:00.450 align:middle line:84% And here is an example of what's happening here. 00:04:00.450 --> 00:04:03.300 align:middle line:84% And by the way, these cranes and so on, 00:04:03.300 --> 00:04:06.390 align:middle line:84% this may be the equivalent of three or four stories high. 00:04:06.390 --> 00:04:08.903 align:middle line:84% These are really monster units and the same thing 00:04:08.903 --> 00:04:09.570 align:middle line:90% with the trucks. 00:04:09.570 --> 00:04:14.280 align:middle line:84% The wheels on these trucks here are about six feet tall, 00:04:14.280 --> 00:04:15.300 align:middle line:90% typically. 00:04:15.300 --> 00:04:17.550 align:middle line:90% It's a big thing. 00:04:17.550 --> 00:04:18.360 align:middle line:90% Here it is. 00:04:18.360 --> 00:04:21.029 align:middle line:90% It's actually operating. 00:04:21.029 --> 00:04:25.000 align:middle line:90% And the plant. 00:04:25.000 --> 00:04:27.140 align:middle line:90% So a big project. 00:04:27.140 --> 00:04:39.000 align:middle line:90%