Australia’s Identified Mineral Resources

Australia’s Identified Mineral Resources

The National Classification System for Identified Mineral Resources has been used by the Australian Government since 1975 for classifying mineral resources for regional and national assessments. It provides a long-term view on what is likely to be available for mining.

The National Classification System uses two general criteria for classifying Australia’s national inventory of mineral resources:

1. the geological certainty of the existence of the mineral resource, and
2. the economic feasibility of its extraction over the long term.

The National Classification System uses reports on mineral resources published by companies using the JORC Code (or equivalent foreign codes) and, to a lesser extent, confidential information, to compile national totals for the resource classification categories set out in Table 3 (see page 8 for terminology and definitions). Both the National Classification System and the JORC Code are based on the McKelvey resource classification system used by the USGS. Thus Australia’s national system is compatible with the JORC Code and remains comparable to the USGS system, as published in the annual USGS Mineral Commodity Summaries.

Economic Demonstrated Resources (EDR) is the category used for the national totals of economic resources and provides a basis for meaningful comparisons of Australia’s economic resources with those of other nations. For major commodities, Section 7 presents long-term trends in EDR, Ore Reserves, total resources, production and resource life, with accompanying notes on significant changes.

Estimating the total amount of each mineral commodity likely to be available for mining over the long term (EDR) is not a precise science. The long-term perspectives presented herein take account of the following:

• Ore Reserves reported in compliance with the JORC Code (or equivalent foreign codes) will all be mined, but they only provide a short-term view on what is likely to be available for mining.
• Most current Measured and Indicated Resources reported in compliance with the JORC Code are also likely to be mined.
• Some current Inferred Resources will be transferred to Measured and Indicated Resources and Ore Reserves.
• New discoveries will add to the resource inventory.

In addition, some resources that, all being equal, would normally be considered EDR are not accessible because of environmental, legal or military land-use restrictions. Thus Table 3 also lists Accessible Economic Demonstrated Resources (AEDR). Of the 36 mineral commodities assessed in this publication, only black coal, brown coal, gold, mineral sands, platinum group elements and uranium have EDR that is considered inaccessible.

Over time, all of Australia’s current EDR of gold, silver, tin, zinc, lead, iron and any number of other commodities will be mined. At first glance, this statement might seem somewhat astonishing because, obviously, not every deposit that contributes to EDR will have all of that EDR brought into production. Indeed, some deposits currently contributing to EDR will never produce any material. However, the National Classification System is not designed to be used for individual mine assessments but, instead, is a way of estimating regional and national totals. So, from an aggregated point of view, it is a reasonable proposition that, eventually, people will mine all of the current EDR (and more). Gold, for example, had an EDR of 4263 t in 1995; since then Australian miners have produced 6523 t of gold.

Australia is yet to run out of EDR because, to use JORC Code terminology, as individual Ore Reserves are depleted, Measured and Indicated Resources are reassessed into Proved and Probable Categories, Inferred Resources are worked on to bring them to Measured and Indicated status and new drilling at existing mines as well as new greenfield discoveries add to the resource inventory. In addition, extractive technologies improve over time and if a commodity becomes rare then the laws of supply and demand result in previously subeconomic deposits becoming profitable. Thus EDR fundamentally differs from Ore Reserves under the JORC Code because it is not meant to provide a picture of what is currently commercial to mine but rather an outlook on what is likely to be available for mining over the long term, i.e., of opportunity for supply at regional and national scales.

Table 3. Australia's Identified Mineral Resources as at December 2018

Abbreviations
t = tonne; kt = kilotonnes (1000 t); Mt = million tonnes (1 000 000 t); Mc = million carats (1 000 000 carats); GL = gigalitre (1 000 000 000 L); n.a. = not available; PGE = platinum group elements (Pt, Pd, Os, Ir, Ru, Rh).
Where an element symbol follows the unit it refers to contained metal content.

Trends in EDR

Australia’s EDR of the following nine mineral commodities increased significantly during 2018: cobalt, lithium, rutile, molybdenum, platinum group elements, potash, rare earths, tantalum and vanadium (Table 4). In addition, 26.05 kt of scandium resources were classified as EDR for the first time (Table 3). The EDR of three commodities decreased significantly in 2018: bauxite, diamond and phosphate in the form of phosphate rock and contained phosphate (Table 4). All other mineral EDR stayed within 5% of the previous year’s estimates (Table 4).

Trends in EDR for Australia’s major mineral commodities have undergone significant and sometimes dramatic changes over the period 1975 to 2018 (see Section 7). These changes can be attributed to one, or a combination, of the following factors:

• Increases in resources resulting from discoveries of new deposits and delineation of extensions at known deposits.
• Depletion of resources as a result of mine production.
• Advances in mining and metallurgical technologies, e.g. carbon-based processing technologies for gold have enabled economic extraction from low-grade deposits that were previously uneconomic.
• Adoption of the JORC Code for resource classification and reporting by the Australian minerals industry and the subsequent impacts on re-estimation of Ore Reserves and Mineral Resources to comply with the requirements of the JORC Code. The impacts of the JORC Code on EDR occurred at differing times for each of the major commodities.
• Significant changes in the prices of mineral commodities driven largely by both escalating and cooling demand from China over the past two decades.

Investment in exploration drilling expenditure totalling $2184 million in 2018, an increase of 25% from the previous year, contributed to the growth in Australia’s resource base. Interestingly, as much as 80% of Australia still remains under-explored. Government initiatives such as the $100.5 million Exploring for the Future program support industry to make new discoveries that will help ensure Australia’s prosperity into the future.

Table 4. Changes in Australia's EDR from 2017 to 2018

Abbreviations
t = tonne; kt = kilotonnes (1000 t); Mt = million tonnes (1 000 000 t); Mc = million carats (1 000 000 carats); n.a. = not available; PGE = platinum group elements (Pt, Pd, Os, Ir, Ru, Rh).
Where an element symbol follows the unit it refers to contained metal content.
EDR = Economic Demonstrated Resources.

Mine inventories as a proportion of EDR

While the national inventory is an aggregation of individual resources, it is useful to compare the EDR attributable to currently operating mines with all mines and the national total as shown in Table 5. In many cases, operating mines dominate the minerals inventory. With the exception of ilmenite, rutile, zircon, black coal and nickel, operating mines of most major commodities contain more than 50% of Australia’s EDR (Table 5). When all mines are considered (operating + care and maintenance + developing), only ilmenite, rutile and nickel have more than 50% of EDR associated with undeveloped deposits. For bauxite, copper, diamond, lead, manganese ore, uranium and zinc, Australian mines account for more than 80% of EDR (Table 5).

The high proportion of the national EDR attributed to operating mines is not unexpected as most resource delineation occurs at, and in the vicinity of, existing operations. However, this concentration of EDR at operating mines results in a number of potential supply vulnerabilities in the minerals sector. Many commodities have large EDR (e.g. manganese ore, bauxite, uranium and mineral sands; Table 3) but relatively few operating mines (Table 1). Price shocks or other circumstances leading to the permanent closure of one or more of these mines would dramatically impact Australia’s potential to supply these minerals. If there is no foreseeable possibility of a mine reopening, then the deposit is removed from EDR. Economic Demonstrated Resources will only be replaced from new deposits if mining and exploration companies can attract the capital necessary for exploration, drilling and development.

Other commodities with large EDR, such as gold, black coal and iron ore, have many mines (Table 1). Thus, Australia’s EDR of these commodities and ability to supply appear unlikely to be significantly impacted by the fortunes of individual mines. Black coal, for example, has 278 deposits contributing the national EDR, but the 95 operating mines comprise only 42% of that EDR (Table 5). If even a sizeable proportion of coal mines were inaccessible in the future, a large resource could potentially still be exploited.

However, this is not necessarily the case for gold. Australia has the largest EDR of gold in the world (Table 8) but most of it is associated with large, low-grade, multi-commodity deposits such as Olympic Dam (South Australia) and Cadia (New South Wales). The majority of production, however, comes from lode-gold deposits which produced 69% of Australia’s gold in 2018. At 2018 rates of production, 744 gold deposits have a potential resource life of 32 years based on AEDR (Table 9), but the operations mining lode gold only have a comparable

resource life of 10 years. With depletion of these high-grade mines, it is unlikely that production at the other types of deposit could make up the shortfall in the same period, thus Australia’s gold production, and export income, would inevitably decline. This circumstance is, of course, based on the very unlikely scenario that three things will happen: (1) future rates of production are unchanged from those of 2018, (2) deposits currently assessed as economic/subeconomic remain so in the future and (3) companies do not replace depleted gold resources. More probably, the EDR from depleted lode-gold deposits will be replaced by successful mineral exploration. Advances in extractive technologies or substantial price rises could also contribute to future EDR.

Mineral exploration will occur in and around existing mines (brownfield exploration) but the most important contributions to Australia’s future EDR of gold, and other commodities, is more likely to come from successful exploration in new and under-explored areas of the continent (greenfield exploration). It is through the discovery of large, globally significant mineral deposits such as Broken Hill, Mount Isa, Olympic Dam and the Kalgoorlie goldfields, that Australia has become a mining world leader. If Australia wishes to remain globally competitive, then new discoveries are essential as only the very best deposits will attract the investment necessary for development in an internationally competitive investment environment.

In 2018, Australia’s EDR of lithium increased by 68%, ranking Australia number two in the world. In terms of global production, Australia is ranked number one. Increasing lithium production has been largely driven by demand for its use in rechargeable batteries that power a range of electronic devices and electric vehicles. Australia is well placed to continue its significant contribution of lithium to global supply chains well into the future.

Table 5. Comparisons of EDR of major commodities at Australian mines to total EDR as at December 2018

Abbreviations
t = tonne; kt = kilotonnes (1000 t); Mt = million tonnes (1 000 000 t); Mc = million carats (1 000 000 carats).
Where an element symbol follows the unit it refers to contained metal content.

Notes
All Mines = mines that are currently operating, placed on care and maintenance or under development.
'Deposits with EDR' is inclusive of the mines.

Ore Reserves as a proportion of EDR and AEDR

The National Classification System’s category of EDR captures those Demonstrated Resources that are considered to be economic under current conditions or those of the foreseeable future: EDR indicate potential supply. However, just because a deposit could be exploited profitably does not mean that it will be. The EDR category does not capture modifying factors (such as metallurgical, engineering, processing, infrastructure, environmental, social and regulatory considerations) and commercial considerations (e.g. costs and internal rates of return) that mining companies must consider for individual deposits to determine an Ore Reserve and mine plan. Table 6 compares the short-term outlook provided by Ore Reserves to the long-term outlook of EDR.

In addition, some resources that would normally meet the criteria to be considered EDR are not accessible because of environmental, legal or military land-use restrictions. Only five mineral commodities are currently affected by land-use restrictions: 8% of black coal EDR, 13% of brown coal, <1% of gold EDR, around 10% of mineral sands EDR, 8% of platinum group elements EDR and 4% of uranium EDR (Table 3). Thus it is more applicable to compare Ore Reserves to AEDR for these commodities (Table 6).

Table 6. Comparisons of Ore Reserves of major commodities to total EDR and AEDR as at December 2018

Abbreviations
t = tonne; kt = kilotonnes (1000 t); Mt = million tonnes (1 000 000 t); Mc = million carats (1 000 000 carats).
Where an element symbol follows the unit it refers to contained metal content.
EDR = Economic Demonstrated Resources.
AEDR = Accessible Economic Demonstrated Resources.

Contribution of largest deposits to EDR

Most of Australia’s EDR of major commodities are skewed heavily toward a small number of relatively large deposits. Table 7 shows that more than 80% of all EDR lies in the top 20 deposits for most commodities. The two exceptions are gold and black coal, both of which have the greatest number of deposits of all mineral commodities in Australia, as well as the greatest number of deposits that contribute to EDR. Even so, the top 20 deposits of gold, which make up less than 3% of the 744 deposits with an EDR, account for 60% of all gold EDR (Table 7). For black coal, the top 20 deposits (7% of 278 deposits with an EDR) account for 41% of EDR.

Table 7. Distribution of EDR of major commodities in Australia as at December 2018

Abbreviations
t = tonne; kt = kilotonnes (1000 t); Mt = million tonnes (1 000 000 t); Mc = million carats (1 000 000 carats).
Where an element symbol follows the unit it refers to contained metal content.
EDR = Economic Demonstrated Resources.

Notes
For classification as a mineral deposit there must be, at a minimum, an Inferred Resource compliant with the JORC Code (or equivalent) or, in some cases, a historical (pre-JORC) resource estimate.

Geographical distribution of EDR

Figure 2. Distribution of EDR of major commodities by Australian jurisdiction as at December 2018. Where applicable, the number of mines in each jurisdiction is in brackets after the percentage of EDR.

Most bauxite EDR are attributable to Queensland and Western Australia (Figure 2) where the giant deposits in Cape York and the Darling Range respectively dominate. Similarly, Australia’s enormous iron ore EDR are geographically concentrated in the Pilbara region of Western Australia. Western Australia also holds almost all of nickel and diamond EDR, though the latter has fallen dramatically in 2018 with the closure of the Argyle mine (Table 4). Manganese ore EDR are found in Western Australia and the Northern Territory. On the other side of the country, almost all black coal EDR are located in Queensland and New South Wales (Figure 2). Silver, lead, zinc, copper, uranium and mineral sands are more dispersed across the country (Figure 2), but the top ten deposits for each of these minerals dominate EDR (68–93%; Table 7).