Table of Contents
Mineral reserves and resources reporting codes and use
Understanding reserve and resource assessments requires knowledge of the terminology and the way the minerals industry operates, specifically how and why mineral resources and reserves “grow” over time coincident with production13,14. Reserves and resources are reported by the global mining industry to indicate the amount of contained metal or other commodities within a given mineral deposit. These terms form the basis for formal codes, guidelines, and legal instruments that are used to determine the value for companies and other entities that own mineral deposits. The approaches outlined in these codes contain strict definitions for resources and reserves, summarised as follows (adapted from ref. 30):
Resources are known metal concentrations of economic interest with grade, quality and quantity suggesting reasonable prospects for eventual economic extraction.
Reserves are the economically mineable part of resources that incorporate assessment of “modifying factors” such as material dilution and losses during extraction, available mining, processing, and metallurgical technology, and infrastructure, economic, marketing, legal, environmental, social and governmental factors.
Reserves and resources are typically reported in grade and tonnage terms, where the grade indicates the average concentration of the element or elements of interest within the deposit, and the tonnage represents the tonnes of mineralised material delineated to date within the deposit (above a minimum grade referred to as the “cut-off”, representing the minimum grade for economic extraction). Both are subdivided based on the amount of data and increasing levels of confidence in the reported estimates. The approach is effectively probabilistic, although probabilities are not stated explicitly in mineral and metal resource and reserve estimates.
Delineation of resources and reserves in a mineralised system is based on drilling at set spatial intervals, with smaller intervals yielding greater geological confidence in a given area. Reserves are the basis for production and can be thought of as the “working inventory” of a mine, whereas resources can be turned into reserves by further drilling and more detailed assessments of the extraction and mineral processing stages of metal production (including all of the modifying factors relevant for a given mine). Resources and reserves also almost invariably form part of a larger area of mineralisation that has not been fully delineated26 (Fig. 1). Furthermore, significant areas of known mineralisation not associated with deposits or mines that publicly report reserves and resources are known to exist. These deposits contain variable amounts of metal but do not have formally reported reserves or resources as they are typically owned by governments or private companies that are not required to report these data. All of these factors indicate that a viewpoint considering published reserves to represent a fixed stock of metals (i.e., “all there is) is inevitably inaccurate and pessimistic.
The information provided above indicates that assessing whether we have reached “peak mineral” for a given commodity, or whether peaks can actually be predicted, is nearly impossible. What can be stated with confidence is that we are currently producing more metals than ever before (e.g.13,14,31,32,33,34) and have more metal resources and reserves than ever before (e.g.13,14,31,32,33,34), indicating that we are increasingly effective at both discovering and delineating new resources and reserves and bringing these to production. A simple and optimistic outlook like this is, however, compromised to some extent by multiple non-geological factors (i.e., environmental, social, geopolitical, infrastructure13,14) that may hinder metal and mineral production, and these are likely to become increasingly important.
Reserve depletion as a possible constraint on metal supply
The potential constraints on metal supply related to reserve depletion can be examined by considering the variation in metal reserves over time compared to metal production. The ratio of reserves to production should decrease if reserves are becoming depleted over time. As mentioned above, the USGS provides the only annual source of global reserves estimates for most minerals over historical time periods27 (including the former U.S. Bureau of Mines or USBoM prior to the USGS completing this work28,29; see the Supplementary Information for details of data sources and approach). Global reserves data are available almost continually from 1956 to 2018 (excluding the period 1979 to 1986 when only “reserves base” estimates were published, which are effectively the same as resources). In Fig. 2, we plot the ratio of reserves to production using the available USGS data for 19 individual commodities and the combined group of six platinum group elements (PGE). This group of commodities, including key bulk and ferrous minerals and base, precious, and minor metals, have long-term trends (Fig. 2) that do not indicate the gradual, steady decrease in reserves to production ratios (equivalent to apparent years of remaining production at a given point in time) as expected from progressive reserve depletion. Descriptive statistics evaluating the variation of the ratios over time for these minerals and metals as well as other selected commodities (Table 1) also document either minimal changes or a small decrease in these values.
Bulk and ferrous commodities (Fig. 2a) appear to have overall reserve to production ratio trends that are generally flat or decrease slightly (<1% per year) after 1987 (with the exception of chromium as discussed below), indicating that known reserves for these commodities have increased more or less coincident with increasing production. Gold and silver ratio trends are similarly flat, whereas the PGE ratio increased sharply prior to 1987 and decreased gently after this date (Fig. 2b). With the exception of erratic changes before 1979 for nickel, the reserve/production ratio trends are relatively flat for copper, lead, nickel, tin and zinc over time (Fig. 2c). In contrast, the minor metals show more erratic reserve/production ratio trends, especially for cobalt and lithium over the last 30 years (Fig. 2d). Overall, the consistency of most of the reserve/production ratios over the past ~60 years independent of the type of commodity being considered confirms that a simple reserve depletion over time model does not apply to global metal supply. Indeed, the reserve to production data between 1956 and 2018 (or closest available year for some metals), for a wide range of commodities confirm that reserve to production ratio values change little compared to the rapid increase in both production and reserves over this time period (Supplementary Table 1).
Another important variable in metal markets is price. Metal prices are compared to production, reserves, and reserve to production ratios over time for the major commodities copper and zinc and the minor commodities cobalt and molybdenum in Fig. 3. Copper and zinc are typically primary products whereas cobalt and molybdenum are typically co/by-products. These data indicate steady to dramatic (cobalt) increases in production for all four metals matched by modest continuous increases in reserves, yielding reserve to production ratios that show almost no overall change over the period in spite of considerable short term variations. None of these metrics correlate closely with price (normalised to 1998) despite moderate to large price variations. Some short term changes in the reserve to production ratio appear to correlate with price changes, particularly for copper and zinc, possibly reflecting decreasing exploration and reserve delineation during low price periods. However these correlations are short lived, meaning that overall these data combined with the data presented in the Supplementary Information suggest that metal price does not influence medium-term to long-term metal production for at least the majority of metals that are currently being produced. The lack of a price influence on production is important as this indicates that any apparent reserve or resource depletion cannot simply be attributed to a decrease in price and a reversion of reserves to resources as a result of a lowering in confidence. This in turn indicates that any change in reserve data (barring any profound and long term change in pricing) is likely to reflect changes in the known amount of economically extractable material.
The data presented herein show that the mining industry is meeting growing demand for metals with increasing production matched by increasing reserves more or less at the same rate over the long timescales considered here (i.e., ~50 years). There are minor rapid variations in reserve to production ratios (Figs. 2 and 3), but there is no evidence to suggest that any of the metals are approaching peak supply or reserve depletion despite factors such as declining ore grades (and resulting increased energy costs for extraction9). The influence of declining ore grades on the future of the minerals industry remains unclear despite present-day mining requiring more energy per given unit of metal production than mining in the past. This increased energy demand may well be offset by an increase in the uptake of renewable energy, where larger energy costs may not result in increased amounts of greenhouse gas production. Even those metals exhibiting decreases or erratic short term changes in reserve to production ratios have returned to relative stability at a new value (e.g., phosphate, Fig. 2a; nickel, Fig. 2c). Rapid variations in reserve to production ratios (e.g., chromium, Fig. 2a; PGE, Fig. 2b) can be explained by revisions of reserve data or by improved data quality, or lack of complete data (e.g., chromium data for 2008 was restricted to four jurisdictions27). Furthermore, metals such as molybdenum, which underwent a large price drop from 2008–2015, have not undergone matching changes in production (which increased by 119% over the same period) or their reserve to production ratios (Fig. 3d).
Our assessment of reserve to production ratios suggests a gradual conversion of resources to reserves over time. In spite of increasing overall demand and hence production, there is little economic incentive for individual long life mines to extend reserves beyond about 20 years of production. This reflects the low present-day value of investments (i.e., drilling and reserve delineation) that will only provide returns after 20 or more years. Mining companies are also reluctant to book reserves well in advance of production given the risk of taking an asset write-down in the event of significant drop in metal prices.