Australia’s Estimated Ore Reserves

Australia’s Estimated Ore Reserves

In December 2019, 2,192 companies and securities were listed on the Australian Securities Exchange (ASX). Of these, 842 (38%) were categorised as belonging to the materials and energy sectors, which includes mining and exploration companies. Recognising that confidence in such a large part of the Australian economy is paramount, the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia have developed the JORC Code for reporting exploration results and estimates of Mineral Resources and Ore Reserves to the public.

The JORC Code has been adopted by the ASX as part of its listing rules and its use is mandatory for all mining companies listed on the ASX and New Zealand Stock Exchange. Variations of the JORC Code have been adopted in many parts of the world and the code is compatible with the international CRIRSCO⁸ and United Nations Framework Classification for Resources templates.

Recently, the Joint Ore Reserves Committee commenced a review of the 2012 edition of the JORC Code. In commencing the review, the Committee noted that while the key focus of the JORC Code remains to provide principles-based disclosure transparency, there are a number of areas where industry, regulator and public expectations have evolved since the last update⁹.

As part of the Australian Government’s annual assessment of the national minerals inventory, Geoscience Australia compiles all known estimates of Ore Reserves and Mineral Resources reported publicly by mining companies in compliance with the JORC Code, or JORC-equivalent codes. In addition, reserve and resource estimates from private companies and foreign companies operating in Australia are also included in the annual compilation wherever possible.

Determining how much of a particular mineral commodity is in the ground and how much is extractable is not an exact science, hence Ore Reserves and Mineral Resources are always referred to as estimates, never calculations. Ore Reserves and Mineral Resources are categorised by confidence in both the geology of the deposit and the economic viability of production. Of all the different categories (see description of JORC Code on page 2), an Ore Reserve is the category of highest confidence. From a commercial point of view, this category is the most applicable to understanding the state of Australia’s minerals industry now and in the near future (say, the next five years).

Geoscience Australia began publishing amalgamated national totals for Ore Reserves in 2002. Prior to this, these estimates were included within the national inventory of EDR (and continue to be included) but were not specifically noted.

Operating Mines

In 2019, Australia had over 300 operating mines producing 26 major and minor mineral commodities. In addition, there were a large number of excavations for a range of industrial materials and gemstones (not covered in this publication). Mining contributed 12% to Australia’s gross domestic product in 2019¹⁰ and 47% of Australia’s export income. In determining the outlook for the industry in Australia, it is useful to look at the Ore Reserves and Mineral Resources associated with operating mines (Table 1) as it is usually easier and cheaper to expand current mines than to start new ones. While some of the mines that operated in 2019 have since closed or been placed on care and maintenance, subject to favourable economic, environmental and regulatory conditions, most will continue mining for the foreseeable future.

One way of gaining an impression of future viability of a mine or resource is to calculate the ratio of reserves or resources to production, thus establishing a reserve or resource ‘life’ (Table 1). The resulting reserve and resource life must be treated with caution as it is an average and it assumes three things: (1) that production rates in the future will remain the same as those used in the calculation, (2) deposits deemed economic/uneconomic remain so in the future and (3) that depleted resources are never replaced. In reality, production rates vary from year to year, mining companies continually reassess the economic viability of their deposits and companies typically do upgrade resources or discover new resources to replace ore depletion. Nonetheless, this ratio provides a potentially useful ‘snapshot in time’ that can help reveal trends in Australia’s ability to supply a range of mineral resources into the future.

Table 1. Australia's Ore Reserves and Mineral Resources of selected commodities at operating mines in 2019.

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

Notes
Reserve Life = Ore Reserves ÷ Production.
Resource Life 1 = Measured and Indicated Resources ÷ Production.
Resource Life 2 = Measured, Indicated and Inferred Resources ÷ Production.

Ore Reserves at other mines and deposits

Figure 1. Ore Reserves attributable to operating mines as a percentage of total Australian Ore Reserves, 2019.

Australia’s Identified Mineral Resources covers 36 mineral commodities, of which 30 have estimated Ore Reserves and 26 were actually in production in 2019 (Table 2). For many commodities (e.g. bauxite, copper and lead) the majority of Ore Reserves are associated with operating mines but Ore Reserves are also attributable to mines on care and maintenance, mines under development and, in some cases, undeveloped deposits (Figure 1). Australia’s graphite, potash and scandium sectors, for example, do not yet have operating mines so Ore Reserves are predominantly attributable to developing mines.

Table 2. Australia's Estimated Ore Reserves¹ as at December 2019.

Abbreviations
t = tonne; kt = kilotonnes (1,000 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.

Notes
Reserve Life = Ore Reserves ÷ Production.
Figures are rounded so Proved, Probable and Proven & Probable Ore Reserves may not add up to Total Ore Reserves exactly.

JORC Code

The following terminology and definitions are used by the Joint Ore Reserves Committee (JORC) Code for reporting of Mineral Resources and Ore Reserves (2012 Edition). A full copy of the JORC Code can be found at www.jorc.org.

Mineral Resource: A ‘Mineral Resource’ is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade (or quality), continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.

Inferred Mineral Resource: An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade (or quality) are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade (or quality) continuity. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to an Ore Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

Indicated Mineral Resource: An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes, and is sufficient to assume geological and grade (or quality) continuity between points of observation where data and samples are gathered. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Ore Reserve.

Measured Resource: A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes, and is sufficient to confirm geological and grade (or quality) continuity between points of observation where data and samples are gathered. A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proved Ore Reserve or under certain circumstances to a Probable Ore Reserve.

Modifying Factors: ‘Modifying Factors’ are considerations used to convert Mineral Resources to Ore Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.

Ore Reserve: An ‘Ore Reserve’ is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or Feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified.

Probable Ore Reserve: A ‘Probable Ore Reserve’ is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Ore Reserve is lower than that applying to a Proved Ore Reserve.

Proved Ore Reserve: A ‘Proved Ore Reserve’ is the economically mineable part of a Measured Mineral Resource. A Proved Ore Reserve implies a high degree of confidence in the Modifying Factors.