Reserve/consumption ratios - How can they be interpreted?

"This paper discusses the changing nature of reserve/consumption ratios, using data from Canadian operations and focussing particularly on copper.IntroductionStudies in world metal consumption and world metal reserves are done regularly by the U.S. Bureau of Mines, the German Federal Institute of Geosciences and Raw Materials, and other institutions. Formerly, on the basis of these data, the following figures were calculated:• a static lifetime of reserves-reserves at year end divided by the consumption of the previous year;• a semidynamic lifetime of reserves-reserves at year assumed constant growth rate.These figures were severely criticized because they were purely theoretical and did not consider the availability of the raw materials.Recent practice is to calculate reserve/consumption ratios (R/C ratios) for periods(1) or for different years(2,3) and to interpret the trend. For base metals, these R/C ratios are increasing (Table 1). This had led to the conclusion that today the relative availability of base metal reserves has increased as compared to 10 or 15 years ago(4,5) As there are normally numerous deposits for each commodity, the anticipated production rates of deposits are irrelevant to this conclusion as long as the statistical distribution of possible production rates does not change significantly.The above conclusion is only justified if the quality and the nature of the data base remain the same. This is certainly the case for the consumption data. It is also assumed for the quality of the reserve figures, which usually take into account only proven and probable reserves. For the nature of the reserve figures, however, this does not seem to be true.Undoubtedly, the reserves increased in absolute terms between 1966 and 1978. To put the absolute reserve figures into perspective, it is common, as said above, to compare them with the mine production, which increased in the free world between 1966 and 1978; e.g. for copper by 40%, for Pb by 17% and for zinc by 36%. However, the reserves are also influenced by other factors, such as average size of the mines, changes in the grade of the mined ore, price-to-cost relationships and the like.The purpose of this paper is to examine the nature of the reserve figures in more detail. Because the completeness of mining data published in Canada is rather exceptional, Canadian .data serve as an example and it is assumed that the conclusions can be extrapolated to other mining countries or at least to those with free market systems."