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Global Metal Reserves

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Published : December 01st, 2006
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The US Geological Survey provides free and accessible data concerning both metallic and non-metallic commercial minerals. The data includes estimates for both the current rate at which each mineral is being mined and a global aggregate value of the identified deposits for the amount of each mineral.


Using these two sets of values, one can readily determine the expected mine life for each mineral. Upon doing this, one thing of immediate note is that the current identified and economically mineable reserves for the important metals, five will expire in less than twenty years at the present mining rate!


First some definitions before we get to the chart.


The reserves refer to the proven & probable portion of the reserve base that could be economically extracted or produced at the time of determination. The term reserves need not signify that extraction facilities are in place and operative.


The reserve base is the total measured & indicated resource of an identified deposit that meets specified minimum physical and chemical criteria related to current mining and production practices, including those for grade, quality, thickness, and depth. This value includes the proven & probable portion of the deposit as well as the marginal and sub-economic reserves.


The total resource estimates for those minerals that have them include inferred and undiscovered resource estimates for those deposits that are hypothetical and/or speculative in nature.




Several conclusions can be drawn from this analysis.


  1. Of the precious metals, the platinum group has larger reserves than gold. Initially, this seems strange at first given that all of the platinum group metals with the exception of palladium are more expensive than gold. However, gold (and silver) have been mined for millennia while mankind has only recently begun mining the platinum group metals. For gold, at least 150,000 tonnes has already been mined.
  2. The reserves for silver are higher than gold, but given the faster mining rate, the reserve life for silver is less than gold. From the existing silver reserves, if we continue mining at the current rate, we will be out of mineable silver in twelve years! Of course, as this event draws closer, the price for silver will begin to increase, thereby resulting in marginally and sub-economic grade deposits to become feasible thereby extending the mine life.
  3. Important base metals such as tin, lead and zinc are running low on reserves. Present mining rates will deplete these in less than two decades. This will inevitably cause a surge in the price for these metals and additional exploration for new deposits. The estimated total world resource for these metals are large, so the question isn't so much a matter of running out, it is more a question of whether the price justifies the extraction and refining costs of the underlying metal. Essentially, we are running out of cheap, readily available sources of these metals.


As the millennium unfolds and the existing known metal deposits are mined and consumed we should see an increase in both the metal price and recycling rate. Higher metal prices will justify the promotion of currently marginal or sub-economic deposits to become commercially feasible to mine. It will also increase the exploration budget of mining companies in efforts to find new deposits or expand existing ones.


2007 was the highest ever for mineral exploration budgets since the Metal's Economics Group began compiling such information in 1989. For 2006, a total of 1,624 companies with annual budgets of over US$100,000 spent almost US$7.13 billion. That's up 47% from 2005. The largest proportion of this spending (43%) was allocated to late-stage development as mining companies seek to expand the size and grade of their producing mines. Another 39 percent was grassroots exploration.




As always, gold attracted the most exploration dollars but copper, nickel and zinc all saw proportional increases. Geographically speaking, the areas that saw the greatest level of attention were Latin America, Canada and Africa. Latin America has been the leading destination for exploration for more than a decade.




The late-90's saw stable or declining metal prices for a variety of reasons. As a result, the exploration budgets of mining companies diminished as they tried struggled to survive on their existing deposits. With the advent of major economies such as China, and to a lesser degree India, beginning to industrialize the demand for metals has risen steadily to the point where there exists an annual deficit for many metals.




China has surpassed the US in consumption of aluminium, coal, copper, lead, nickel, tin, and zinc. While there are some significant projects in development over the next five years (such as Oyu Tolgoi, Las Christinas, Agua Rica, Pebble, Toromocho), the lack of many new large-scale projects will provide substantial support for strong metal prices. The long length of time required between discovery and production means that even if a large number of new discoveries occurred, they would not benefit global supply for years to come.




Mike Hewitt

Editor

DollarDaze.org



Mike Hewitt is the editor of www.DollarDaze.org, a website pertaining to commentary on the instability of the global fiat monetary system and investment strategies on mining companies.

Disclaimer: The opinions expressed above are not intended to be taken as investment advice. It is to be taken as opinion only and I encourage you to complete your own due diligence when making an investment decision.

© 2007 DollarDaze


Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed herein are those of the author and are subject to change without notice. The information herein may become outdated and there is no obligation to update any such information. The author, 24hGold, entities in which they have an interest, family and associates may from time to time have positions in the securities or commodities discussed. No part of this publication can be reproduced without the written consent of the author.



 



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