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Canadian applications in resources analysis
Canadian applications resource analysis
in
D.C. Findlay and J.H. Walsh
Resource this
analysis
article
to
identify
and
options The
authors cases.
resource
economic consider
as examples
the
first,
options
are
considered
available
paths towards transport.
the specific
In
second
Canadian
copper
in an attempt
D.C.
Technology
Energy. Ottawa,
is with
limits
with
the
601
Canada is
are
to identify to the
of the resource.
of Canada,
Ottawa,
case, use of
resources
may provide
Findlay
Walsh
of
vehicle
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considered that
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energy
technological
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of tech-
and
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KIA the
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Geological
Booth Street, 0E8.
J.H.
Science
and
Department and
Canada.
0301-4207/79/050061-10
of
Resources,
$02.00
Public concern over resource issues has deepened in recent years. This has been most evident in energy matters, but parallel if less dramatic developments have also occurred in mineral (nonhydrocarbon) regimes. In a constitutionally complex country like Canada such developments have given rise to complicated and frequently politically sensitive resource issues. One result has been widespread recognition of the need for more rigorous information on resources, coupled with better methodologies for the analysis and interpretation of such information to provide answers to a variety of resource questions some technical, some economic and others social and political. Such terms as ‘resource evaluation’, ‘resource appraisal’ and the like are now familiar, but for the most part the emphasis has been on the technical and economic side - how much? where? how feasible is recovery? and at what cost? The term ‘resource analysis’ is used here in the broader sense of attempting to incorporate other factors affecting the recovery and use of resources in addition to the usual geological, technological and economic considerations. One of the principal reasons for attempting such expanded analyses is the existence of strong feedback loops in many resource questions that may make it difficult and perhaps misleadingly simplistic to emphasize only the traditional factors in the relationships between the supply and use of resources. Perhaps the most familiar example of this problem is represented by the plethora of recent studies that have yielded pessimistic opinions as to the ‘geological limits’ of resources. Such conclusions may neglect the important influence of feedback mechanisms, generally driven by shorter term economic, social or political considerations. Two quite different applications are considered here. In the first case various ways are examined through which energy resources can be applied toward a specific use through alternative combinations of energy generation and transformation technologies. The various resource technologies are fairly well defined and the problem is to evaluate the alternatives in terms of the reliability of existence of the energy resources, the feasibility and relative costs of their extraction and transformation, and the effects of possible external factors affecting their use, such as environmental protection regulations and mechanisms. In the second example, major factors that may influence the use of Canadian copper resources over a relatively long time are considered.
0 1979
IPC Business
Press
61
Canadian applicatiom in resource analvsis Table 1. Energy resource estimates Commodity Conventional oil, established regions fbbl x 10’) Conventional oil, frontier regions (bbl x 10’) Oil sand% mining
Source: Canada, Department Mines and Resources. a
At 50% probability.
b Relative crude. c
of Energy,
0.15
to production
1 5% recovery.
- estimated
d
eg underground
e
At
Up
to
of conventional
coal gasification.
$60/lb.
f (307) inferred, 656 inferred prognosticated (known districts). g
Installed
h Additional
i
capacity
1976.
possible capacity
Eauals about 2.06
plus
to 1990.
(bblx 10 ) Oil sands, in situ recoven/ (bbl x 10’) Heavy oils, cold lake (bbl x 10’) Heavy oils, Lloydminstertype (bbl x 10’) Coal, conventional (short tons x 10’) Coal, deep, in situ recovery (short tons x 10’) Uranium (tonnes x 103P
(excluding natural gas) for Canada, 1976 Remaining reserves
Additional resources
8
3.7a
26
minor
18.3a
32
-26.5-
Multiple of 1976 production
45b
-
714xo.15c
-
165x0.20’
56b
-
11 x 0.25’
4b
5.9
222xo.10c
1004
-
1 300xo.10c
4643 (101) 173
182
(307) 656’
Hydro (GW) Biomass, wood
40s
32.5h
(oven dry tonnes x 106)’
-llO-
Mb
N1.8 Renewable
x 1OT5 Btu.
Table 2. Estimates of copper resources, Canada, 197576 Source: Canada, Department Mines and Resources.
of Energy,
a In producing mines or in deposits prepared for production. b Neglecting and refining. c
747
000
recovery
losses
being
in mining
Category
Contained coppera (tonnes x l@jb
Multiple of 1976 productionC
Reserves Additional resources Reasonable probability (discovered) Undiscovered
16.8
22
2540 3&l&
33-54 48-194
tonnes.
This is a more difficult example because the analysis is not directed at a specific objective and the parameters that may affect the overall use of Canadian copper resources in the future cannot be defined as precisely as those considered in the energy example. However, the two examples are interdependent because of two major factors - the increasingly significant role that energy availability will play in the recovery of copper, and the major application of copper as a carrier of electrical energy. Quantitative answers are not attempted here, principally because of gaps or uncertainties in the data base. This is doubtless inherent in the analysis process but the identification of such weaknesses may be a useful product of the exercise.
Resource information As background for the energy and copper cases considered here, the current status of knowledge about their respective resources is summarized in Tables 1 and 2. Table 1 (energy) shows the various
62
RESOURCES
POLICY
March
1979
Canadian Energy
Target-m
Conversion -technology
case-
technologxol
poths
Tronsfomatlon technology
~ *-
Energy
to one obwtwe
Generotlon
case - ovo~ loble
resow
analysis
hoses
-Resource bose
technology-~
I
RECOVERY TECHNOLOGY
RESERVE
RESOURCE
Avo~loble
Sufflaent
ExlStS
Avo~loble
FIxed
Ex~sis
lmmoture, development
Not ovolloble development
Synthetic fuels wth storage
in resource
-
Nuclear
_
applicalions
llquld on-board
d
Conventlonol llqud fuels with on-board storage
_
in phase
I” phase
mox,mum
F’xed
mox’mum
Depends extraction developed
Direct use of LPG and LNG from ony source
Avolloble
FIxed
011 from reserves
Immature II? both productlon and delivery systems
present
upon technology
rnox~mum
Exists
Exists
I
Ex sts
f
-
-
Figure
1.
Alternative
resource-technology
routes
energy con-
sidered in the supply of fuel for cars in the future.
’ The terms ‘reserves’ and ‘resources additional to reserves’ are in accordance of the Canada with current usage Mines and Department of Energy, Resources. For a discussion see Canada, Mines and Department of Energy, Resources, ‘A summary view of Canadian reserves and additional resources of nickel, copper, zinc, lead, molybdenum’, Mineral Bulletin, MR169, Ottawa, 1977. 2 Statements of commodity reserves and estimates of additional resources are the publications of mainly from Mines and Department of Energy, Resources, Ottawa. The principal sources Department of Energy, are: Canada, Mines and Resources, 1976 Assessment of Canada’s Uranium Supply and Demand, Report EP77-3. Ottawa, 1977; Canada, Department of Energy, Mines and Resources, Oil and Natural Gas Resources of Canada, 1976. Report EP77-1, Ottawa, 1977: Peter Love and Ralph Overend, Tree power an Assessment of the Energy Potential of Forest Biomass in Canada, Report ER781, Department of Energy, Mines and Resources, Ottawa, 1978; Canada, Department of Energy, Mines and continued on page 64
RESOURCES
POLICY
March
convenhonol frontier regions
011 from conventlonol reservoirs I” estobllshed re 10”s ond from 4 en owed 011 recovery
_
-Avolloble
Decllnlng, prospect reversal
Inferred but not found
llttle of
Exlstmg , some potent101 not yet found
starting energy sources considered in the energy technology routes set out in Figure 1.’ Table 2 shows the case for copper in a similar format is made between discovered and except that a distinction undiscovered resources. As is usual in any quantitative aggregation of resources, there are many hidden uncertainties and subjective judgments involved, notably in the resources additional to reserves categories.2 Such accountings are, at best, transient and will almost certainly change as new information becomes available.
Energy case - provision of energy for vehicle transport For Canada, as for other countries, the question of how best to power ground vehicles is a major problem in energy and transport policy in the face of declining oil availability from conventional reservoirs in alternative means of established producing regions. Although providing transport - such as improved mass transport facilities - will obviously be evaluated, the evidence to date suggests that there will still be a major requirement for personal automobiles, even with significantly higher fuel costs than those prevailing at present. The pump price of petrol in most of western Europe approaches twice that in Canada at the present time. When such higher prices prevail in Canada, cars will become smaller, lighter and increasingly fuelefficient, and the North American custom of two or even three car families will probably become less common. Nevertheless, the need and desire for personal vehicles will persist to the extent that serious attention must be paid to the associated fuel requirements. Moreover, several sources of energy in Canada potentially usable for this
1979
63
purpose could be brought into play on at least a technical cost of production (and distribution) basis if the present European pump prices for petrol were applicable in Canada. Furthermore, since the price of oil (on a crude oil basis) is expected to rise in the later 1980s relative to other sources of energy, oil will be gradually substituted for in many markets so that its use will become concentrated in the fields where its comparative advantage is greatest - in transport and in the manufacture of certain chemicals. Of these two ultimate markets, transport is by far the larger quantitatively; it is also the field where it is most difficult to provide other options. The purpose of this example is to trace the main factors bearing on the provision of energy for vehicle transport through comparison of the most feasible routes for using the various primary energy sources available, or thought to be available. The main routes of interest are summarized in Figure 1 for a simplified case involving basically only two general alternatives for powering vehicles: mechanical work provided from electrical energy stored in batteries in the vehicles, or from various fuels converted in engine cycles. For each case the various possible routes back to the relevant starting resource can be traced. The now almost universally used system, involving petrol or diesel oil fuelled vehicles, can be traced back across the bottom of Figure 1 to reveal the difficulty - in the case of Canada - that oil available from the normal sources is in decline, and the undiscovered potential that may be found (Table 1) is relatively small compared with other possible sources. Given the desire to maintain a large vehicle fleet, alternatives will have to be found. When the other possible routes are traced through the technological sequences in Figure 1 to explore the nature of the difficulties that may be encountered, it becomes apparent that these obstacles fall into three main groups: 0 0 0
colllilJoerlfrolll pap? 63 ‘An energy strategy for Resources, Canada ~ policies for self-reliance’, Supply and Services Canada Caialogue, No M27-14/1976-l, Ottawa, 1976; Canada, Department of Energy, Mines and Resources. op tit, Ref 1.
64
no proof of existence of adequate resources; no technology presently available to extract or upgrade the resources; no technology presently available to transform the energy supplied from the resources into a form usable for vehicle transportation.
The most important difficulty of the first class relates to the question of undiscovered petroleum resources thought to occur in the frontier regions. If these resources can be found and produced in severe Arctic or northern offshore environments, the oil product can be used directly in the usual way. An alternative assumption is that this oil will not be found, or, if it is, that the oil may not be produced until some later time when new extraction and transport technologies become available. If, as a consequence of this assumption, other options are chosen for development which prove more costly, the penalties could be very great indeed. Such considerations illustrate that the critical factor is knowledge of whether or not a resource exists in recoverable form and that its normal economic value accruing on production is of secondary importance. A rationale of this kind might support a decision for public investment in accelerating the determination of the petroleum potential of the frontier regions quite independently of the related but different interests of discoverers and extractors. An example of the second class of difficulty is the in situ recovery
RESOURCES
POLICY
March 1979
Canadian applications in resource analysis
3 P. Love and R. Overend, op tit, Ref 2. 4 Recently, fuel from biomass sources has been considered as a possible alternative for road transport requirements of the future in the UK. The concept has, apparently. been rejected because of the prohibitively large agricultural acreages estimated to be needed for biomass (crop) generation. See G. Charlesworth and T.M. Baker, ‘Transport fuels for the post-oil era’, Energy Policy, Vol 6, No 1, March 1978, pp 2 l-35. ‘This is based on the assumption that agricultural technologies such as the development of fast-regenerating biomass crops, improved fertilization methods and rotation can compensate for the probable eventual decline in fertility of lands used for successive biomass production. ‘Canada, along with Sweden, the USA, Belgium and the Republic of Ireland, have in a joined ‘Forestry for Energy’ agreement to promote research into this general field, under the sponsorship of the International Energy Agency. ‘In Table 1 the estimated additional installed hydroelectric generation capacity is given to 1990, since it is considered that nearly maximum capacity will have been reached by that time.
RESOURCES
POLICY
of oil sands and heavy oils which occur in the provinces of Alberta and Saskatchewan. It is evident from Table 1 that the perfection of this extraction process, together with the solution of related problems in ‘upgrading’ the recovered bitumen or oil and in lessening the environmental impact of such developments would be of great A series of government-industry field importance to Canada. demonstrations are underway in this context, led by the Alberta Oil Sands Technology and Research Authority (AOSTRA). While present indications are promising, the final result remains uncertain. The third class of difficulty is illustrated by the special case of the production of liquid fuels from biomass. Estimates have been made of the quantity of possible material available each year in Canada from the potential wood supply. 3 Immature processes are available to convert wood to synthesis gases from which, in turn, either methanol or synthetic petrol can be produced. There is every reason to believe that the gasification (or alternatively, fermentation) processes will be improved within the short term future. Thus another potential fuel alternative becomes available.4 An important consideration is that although faster growing trees might be developed, or other biomass sources might be brought into play, there is, in principle, an upper limit to the quantity of fuel available from this source each year, even if the source itself is sustainable indefinitely.5 Estimation of the technical costs involved in such a ‘renewable’ alternative is important since this route could place an upper limit on the costs which might be acceptable in the development of other options. Furthermore, since trees are omnipresent throughout much of Canada, there may be geographical advantages in pursuing this route. A major study of this possibility is being conducted in Canada under the auspices of the Canada Department of Fisheries and Environment6 In the more general cases lying in the third class of difficulty, electrical energy derived from nuclear, coal or hydroelectric sources could be used for vehicle transport in a number of ways, but all routes contain unsolved technological bottlenecks such as the need for improved batteries, or the development of techniques for storing hydrogen on board vehicles. Although the availability of additional supplies from hydroelectric sources has long term limitations, there is still a considerable unused potential for the short term future (Table l).’ The availability of energy in electrical or steam forms from the nuclear system appears constrained only by the normal factors limiting the deployment of any new technology of high unit cost and long construction times. It is interesting that a parallel set of problems inhibits supply from the only route in Figure 1 free of fundamental obstacles - oil produced from the oil sands by surface mining methods. Finally, it should be noted that there may be economically attractive links among the ‘sustainable’ sources themselves - those energy sources considered here as being available for long periods into the future, namely the ‘renewables’, oil sands and heavy oils, coal and the nuclear system. The broken line in Figure 1 illustrates that electricity or steam from the nuclear system has potential application in processing biomass sources or in the recovery and processing of oil from the oil sands. The effect in both cases would be to extend their respective potential contributions. For example, electricity could be used to electrolyse water into hydrogen and oxygen - the oxygen, in turn, could be used to gasify biomass sources and the hydrogen to
March 1979
65
Carmdiar~ applicatiom in resource anal_vsis Table 3. Factors requiring consideration over different timeframes
in analysis of Canadian
Relative importance General factors Canada) shbrt and medium terma
a 1 most important; least important.
2 less important:
3
copper resources
Relative Importance long term’
2
1
Knowledge of reserves
1
3
2
Estimation of resources additional to reserves
1
1
3
Technologies and efficiencies of recovery
2
2
4
Production (supply) factors (a) Capital availability (b) L&our availability (cl Equipment lead-time (d) Etc
2
5
Demand factors (a) Cost/price data and forecasts (b) Consumption patterns and forecasts (cl Etc
2
Co-commodity relationships (Cu-MO, Ni-Cu. etc) Energy requirements and availability Regional considerations Environmental considerations Political, jurisdictional and policy considerations Timeframe considerations
3 1 2 3 2 Variable
3 2 1 1 1 Variable
6 7 8 9 10 11
augment the quantity and quality of synthesis gas produced in the gasification stage. In a second case, steam from nuclear reactors could be used in heavy oil extraction technology in lieu of combustion of some of the bitumen produced, or of using coal. In either example, a combination of the sustainable technologies may become attractive with time and the fuel produced could be made available longer, and perhaps cheaper, than otherwise might be the case. The choice of such combinations could decrease the urgency for developing improved battery technology, yet still allow the increased use of nuclear energy to provide transport.
Copper; the factors and stages in resource analysis
*The term ‘resource system’ is used in the broad sense of including all the components involved in the recovery and use of a resource, from its discovery or identification in the ground through its recovery. processing and fabrication to its use and re-use (through recycling) in products. It also embraces the variety of labour, (capital, energy, inputs information, etc) that are involved in the operation of the ‘system’ to produce the end product. 9 The distinction between timeframes is but a useful criterion for arbitrary, assigning the short and medium term might be the approximate reserve amortization period of a deposit at the time a production decision is made, generally of the order of 15-20 years for large mines.
66
Table 3 lists some general factors that may be examined in assessing a resource system8 such as copper with a view to identifying those that may be critical to operation of the system. The time period of consideration obviously plays an important role in determining the relative importance of the various factors. In Table 3 it can be seen that important changes in priorities amongst the various factors are considered to take place when the period of projection is shifted from long term (right side) to the medium and short term (left side), and that these changes will strongly influence the selection of factors requiring detailed analysis. 9 For example, ‘knowledge of reserves’ is considered less important in the short and medium term than over the longer term because the economics of producing mines or mines about to enter production subsumes, by definition, that there is adequate knowledge of reserves to satisfy the economic requirements to maintain the operation of the system for at least some calculable period. Although this period will vary widely for individual mines and will obviously be critically short for certain properties or mines (those with the knowledge that they will shortly run out of reserves), in an aggregated sense the cumulative knowledge of reserves for the total
RESOURCES
POLICY
March
1979
Catladiatl Relatvx6hlps
applications
it? resource analysis
between resource appro~sol and explorotlon
SBGE4
Figure
2. Components
and stages of
analyses
of factor
2
(estimation
resources
additional
to reserves).
of
_
system in question will be more important over the longer term. In another example, an inverse situation is supposed with regard to environmental considerations. Emplacement of adequate environmental protection mechanisms may have significant adverse economic impacts on operating establishments or on properties about to enter production, so this factor is considered to have an important influence over the short and medium term. However, since appropriate technologies are evolving rapidly in this area, in response to legislative and public pressures, it seems probable that environmental protection will be an automatic built-in factor over the longer term. To assess the relative influence of the various factors of Table 3 it is first necessary to disaggregate each factor to identify and evaluate the components that define it. Figure 2 illustrates schematically the various components involved in factor 2 (estimation of resources additional to reserves), obviously one of the critical components in assessing the future course of the copper system. The following points may be made:
commodity
0 0
0
0
0
RESOURCES
POLICY
March
1979
a clear distinction between discovered and undiscovered resources is obvious and necessary; of sophisticated statistical and machine the application techniques is only valid towards the end stages of the process after a firm data base has been established; the relationships between the processes leading to exploration on the one hand and resource estimation (of undiscovered resources) on the other are close, but the end products of the two processes are different and distinct, since one (exploration) results, and the other merely places hopefully, in discovery prognostications in quantitative (generally probabilistic) terms; stage 2 is probably most critical in the sense that in most cases it is unlikely that either effective exploration or realistic resource estimation can be done without the acquisition of new data; in analyses in the short and medium term periods (Table 3) the product of stage 3 (qualitative estimates) is likely to have much more useful application than the product of stage 4 (quantitative estimates). This is because the object of a stage 3 product is to provide a ranking of areas or sub-areas (on geographic or geological grounds) in terms of their relative favourability to
67
Canadian
applications
in resource analysis Table 4. Comparison of Canadian reserve-resource and uranium
Department Mines and Resources.
a Reasonably
assured
(2)
Reserve multiple
(3) Additional resources multiple
Iron
1
119
120
50
Copper
1
22
33
Uranium
1
38
458 166b 638 136b
Production base, 1979
of Energy,
resources
(discovered). b Prognosticated resources (average
undiscovered and of estimates).
Proportion of (2) + (3) in reserve category (%I
(1)
Commodity Source: Canada,
relationships for iron, copper
2 22
contain undiscovered resources, and is thus of more immediate practical value in a number of different applications including exploration, land use assignments, transport route planning, etc. In looking at the long term case for the Canadian copper system it is supposed that factors 1, 2 and 7 (Table 3) are likely to have very strong influences over the long run. Factor 5 (demand), although obviously critical in influencing shorter run fluctuations in a commodity system, is considered, in the case of Canadian copper at least, to be relatively strong over the long term. Obviously the relative importance of the various factors here will depend in part on the commodity under consideration. In the energy case discussed previously, the generally most critical areas over the longer term may lie in factors 3 (technological), 4 (economic) and 9 (environmental) and not necessarily on the resource adequacy side of the spectrum (factors 1 and 2). A more detailed analysis of the various energy routes might focus on uranium supply as an obviously critical subset in the analysis of the nuclear route. Here, factor 9 (environmental) might emerge as critical, through the identification of the question of radioactive waste disposal as a subfactor of highest priority. This in turn would lead to a subset of factors under 9 that could be considered as analogous to factors 1, 2 and 3; that is the application of geological and technological criteria to the definition, evaluation and categorization of sites for permanent waste disposal. Obviously a failure to resolve satisfactorily such a critical subset problem would have a crucial influence on the relative viability of the energy routes considered. The reasons for isolating factors 1, 2 and 7 as critical in the copper analysis relate essentially to two characteristics of the Canadian copper system: 0 0
lo Data for copper and uranium are from sources listed in Ref 2. Data for iron are from Canada, Department of Energy, Mines and Resoukes, ‘A summary -of additional and Canadian reserves resources of iron ore’, Mineral Bulletin, MR 170, Ottawa, 1978.
68
the current domestic status of reserves and additional resources of copper; the patterns of declining ore grades coupled with a geographic and geological shift of copper production in the country.
Table 4 compares present Canadian reserves and resources additional to reserves for three principal trade commodities - copper, iron ore and uranium - in terms of 1976 production.1° Although there is the usual degree of uncertainty involved in the additional resources figures it seems that in terms of the proportion of total resources available in the reserve category, iron and uranium are in a stronger position than copper. This is partly a function of the relative characteristics of the three systems in the sense that iron source materials are usually much more easily delineated than are those for
RESOURCES
POLICY
March
1979
Carladian
applications
in resource
analysis
copper. It is also undoubtedly a function of the economics of the systems since at present copper is hardly a commodity that generates concern about supply over the short or medium term. These factors aside, Canadian copper resources, considered over the longer term, may have inadequacies that are related to the nature and distribution of copper in the Canadian geological framework. The average grade of copper ore mined in Canada declined from about 1.5% to about 0.8% over the decade 1965-75. This was to a large degree the result of large tonnage, low grade western porphyry deposits brought into production in the early and mid-1960s. The effects of this show up also in the shift of the production base for copper from east to west over approximately the same period. In 1965 only about 8% of total annual Canadian copper production came from British Columbia. By the mid-1970s this figure had increased to 35%.” The above patterns are further influenced by the increasing costs and technological difficulties in discovering and mining higher grade copper deposits in Precambrian Shield terrains in Canada. Deposits in these terrains, such as those of the Chibougamau district of Quebec, the Abitibi region in Quebec and Ontario, and the Flin Flon district of Manitoba have, along with the nickel+opper ores of the Sudbury basin, provided much of the traditional copper production 6f the country. Since Canada does not possess known significant economic bedded copper deposits characteristic of other major producing areas of the world, the evolution of Canada’s copper industry may be constrained by growing difficulty in increasing production from large tonnage, low grade (porphyry) types on the one hand and the traditional higher grade Precambrian Shield types on the other hand. In the former case (porphyry types), the limits of exploitation may be set by the costs of energy in mining and grinding. Some data bearing on this question are summarized in Figure 3, which illustrates the rapid acceleration in energy requirements in treating ores to concentrate stage as the primary grade of ore decreases.‘* Unless radical new mining or energy technologies can be brought to bear on this problem, limits to exploitation of second generation types of these deposits may be approached at copper-equivalent ore grades in the 0.25-0.35% range. The continuing availability of copper from traditional producing areas in other parts of the world (eg Africa) will presumably mark a base (in recovery cost terms) below which Canadian porphyry deposits with their high energy requirements may not be competitive in world markets.
Conclusions
” Data are derived from Canada, Department of Energy, Mines and Resources, Canadian Minerals Yearbook. Ottawa, various years. ‘* Department of Energy, Mines and Resources, ‘Minerals, science and technology’, Mineral Bulletin, MR 1 6 1, Ottawa.
RESOURCES
POLICY
March
The energy and copper examples used in this article illustrate different approaches to resource problems, but also serve to emphasize that there are a number of factors common to any process of resource analysis. Probably the two most important common denominators are: the necessity to define the timeframe of the analysis; and the necessity to recognize and accommodate the effects of interdependency between factors and the requirement to define the effects of such relationships on the evolution of resource systems. Although these feedback relationships have not been discussed in detail, they have been noted in the case of linkages between the various
1979
69
Camdim
applicatiorls i/z resource anal_vsis
. Figure
3.
requirements concentrate
Estimates for producing from
various
of
\?
energy copper
grades
in of
1973
.
Chapman, 1974
.\
Kellog, 1974
\
ore. Note: The principal sources of information used in Figure 3 are: P.F. Chapman, ‘No overdrafts in the energy economy’, New Scientist. Vol 58, No 846, 17 May 1973, p 409; P.F. Chapman, ‘The energy costs of producing copper and aluminium from primary sources’, Metals and Materials, Vol 8. No 2, February 1974, p 110; J.C. Bravard. H.B. Flora II and C. Portal, Energy Expenditures Associated with the Production and Recycle of Metals, Oak Ridge National Laboratory, National Environmental Science Foundation Program ORNL-NSF-EP-24, 1972, Table 4. p 15; W.G. Lugg, ‘Present and projected energy consumption in the mineral industry of Canada’, Mineral Bulletin. MR 164, Department of Energy, Mines and Resources, Ottawa, 1977, p 8; H.H. Kellog, ‘Energy Table 6. efficiency in the age. of scarcity’, Journal of Metals. Vol 26, No 6, June 1974, pp 26-27.
0
Lugg. ‘A
1977
Bravord et
l ‘\
.
\
q
\ \ \ \
\
4 \
\
‘,*
‘1 1.0
_I
7 -----
l
___I_I
I 5 Ore grade (% copper 1
20
25
technological routes in the energy example and are implicit in the case of the copper system in the sense that the future evolution of this system (as of many other systems) may be strongly affected by feedback from the energy side. Such major influences are obvious, but commodity systems also contain more subtle feedback loops that may not be so easily recognized or defined but may have potentially significant effects. A case in point may be buried in factors 3 (technologies) and 9 (environmental) of the copper system where the introduction of overly stringent SO2 stack emission standards for smelters could cause serious disturbances in primary copper production. It is concluded that there is a useful role for various techniques of resource analysis in developing effective policies for resource management, but that these techniques need to evolve beyond the restricted field of documentation and estimation of available and potentially available resources. In particular, the common emphasis on the definition and categorization of different kinds and amounts of resources and the preoccupation with distinctions among definitions of the various categories of reserves and resources provides too limited a framework for dealing with the multiplicity of factors that can affect the transfer of resources from raw materials in the ground to products useful to society. In the shorter and medium term the important questions bearing on minerals production, and probably fuels production too, will be overwhelmingly economic, political and social in nature and, for most commodities at least, questions of the geological and technological availability of resources are not likely to be critical. For the longer term, nevertheless, these questions are of prime importance.
70
RESOURCES
POLICY
March 1979
in
D.C. Findlay and J.H. Walsh
Resource this
analysis
article
to
identify
and
options The
authors cases.
resource
economic consider
as examples
the
first,
options
are
considered
available
paths towards transport.
the specific
In
second
Canadian
copper
in an attempt
D.C.
Technology
Energy. Ottawa,
is with
limits
with
the
601
Canada is
are
to identify to the
of the resource.
of Canada,
Ottawa,
case, use of
resources
may provide
Findlay
Walsh
of
vehicle
the general
considered that
in
target
for
the
affecting
exploitation
energy
technological
energy
providing
Survey
in
systems.
In
assessing
those
other possible
constraints
resource-based two
of tech-
and
economic
information
for
process
the
geological,
integrating nological,
factors
defined
is
as
KIA the
Sector, Mines
Geological
Booth Street, 0E8.
J.H.
Science
and
Department and
Canada.
0301-4207/79/050061-10
of
Resources,
$02.00
Public concern over resource issues has deepened in recent years. This has been most evident in energy matters, but parallel if less dramatic developments have also occurred in mineral (nonhydrocarbon) regimes. In a constitutionally complex country like Canada such developments have given rise to complicated and frequently politically sensitive resource issues. One result has been widespread recognition of the need for more rigorous information on resources, coupled with better methodologies for the analysis and interpretation of such information to provide answers to a variety of resource questions some technical, some economic and others social and political. Such terms as ‘resource evaluation’, ‘resource appraisal’ and the like are now familiar, but for the most part the emphasis has been on the technical and economic side - how much? where? how feasible is recovery? and at what cost? The term ‘resource analysis’ is used here in the broader sense of attempting to incorporate other factors affecting the recovery and use of resources in addition to the usual geological, technological and economic considerations. One of the principal reasons for attempting such expanded analyses is the existence of strong feedback loops in many resource questions that may make it difficult and perhaps misleadingly simplistic to emphasize only the traditional factors in the relationships between the supply and use of resources. Perhaps the most familiar example of this problem is represented by the plethora of recent studies that have yielded pessimistic opinions as to the ‘geological limits’ of resources. Such conclusions may neglect the important influence of feedback mechanisms, generally driven by shorter term economic, social or political considerations. Two quite different applications are considered here. In the first case various ways are examined through which energy resources can be applied toward a specific use through alternative combinations of energy generation and transformation technologies. The various resource technologies are fairly well defined and the problem is to evaluate the alternatives in terms of the reliability of existence of the energy resources, the feasibility and relative costs of their extraction and transformation, and the effects of possible external factors affecting their use, such as environmental protection regulations and mechanisms. In the second example, major factors that may influence the use of Canadian copper resources over a relatively long time are considered.
0 1979
IPC Business
Press
61
Canadian applicatiom in resource analvsis Table 1. Energy resource estimates Commodity Conventional oil, established regions fbbl x 10’) Conventional oil, frontier regions (bbl x 10’) Oil sand% mining
Source: Canada, Department Mines and Resources. a
At 50% probability.
b Relative crude. c
of Energy,
0.15
to production
1 5% recovery.
- estimated
d
eg underground
e
At
Up
to
of conventional
coal gasification.
$60/lb.
f (307) inferred, 656 inferred prognosticated (known districts). g
Installed
h Additional
i
capacity
1976.
possible capacity
Eauals about 2.06
plus
to 1990.
(bblx 10 ) Oil sands, in situ recoven/ (bbl x 10’) Heavy oils, cold lake (bbl x 10’) Heavy oils, Lloydminstertype (bbl x 10’) Coal, conventional (short tons x 10’) Coal, deep, in situ recovery (short tons x 10’) Uranium (tonnes x 103P
(excluding natural gas) for Canada, 1976 Remaining reserves
Additional resources
8
3.7a
26
minor
18.3a
32
-26.5-
Multiple of 1976 production
45b
-
714xo.15c
-
165x0.20’
56b
-
11 x 0.25’
4b
5.9
222xo.10c
1004
-
1 300xo.10c
4643 (101) 173
182
(307) 656’
Hydro (GW) Biomass, wood
40s
32.5h
(oven dry tonnes x 106)’
-llO-
Mb
N1.8 Renewable
x 1OT5 Btu.
Table 2. Estimates of copper resources, Canada, 197576 Source: Canada, Department Mines and Resources.
of Energy,
a In producing mines or in deposits prepared for production. b Neglecting and refining. c
747
000
recovery
losses
being
in mining
Category
Contained coppera (tonnes x l@jb
Multiple of 1976 productionC
Reserves Additional resources Reasonable probability (discovered) Undiscovered
16.8
22
2540 3&l&
33-54 48-194
tonnes.
This is a more difficult example because the analysis is not directed at a specific objective and the parameters that may affect the overall use of Canadian copper resources in the future cannot be defined as precisely as those considered in the energy example. However, the two examples are interdependent because of two major factors - the increasingly significant role that energy availability will play in the recovery of copper, and the major application of copper as a carrier of electrical energy. Quantitative answers are not attempted here, principally because of gaps or uncertainties in the data base. This is doubtless inherent in the analysis process but the identification of such weaknesses may be a useful product of the exercise.
Resource information As background for the energy and copper cases considered here, the current status of knowledge about their respective resources is summarized in Tables 1 and 2. Table 1 (energy) shows the various
62
RESOURCES
POLICY
March
1979
Canadian Energy
Target-m
Conversion -technology
case-
technologxol
poths
Tronsfomatlon technology
~ *-
Energy
to one obwtwe
Generotlon
case - ovo~ loble
resow
analysis
hoses
-Resource bose
technology-~
I
RECOVERY TECHNOLOGY
RESERVE
RESOURCE
Avo~loble
Sufflaent
ExlStS
Avo~loble
FIxed
Ex~sis
lmmoture, development
Not ovolloble development
Synthetic fuels wth storage
in resource
-
Nuclear
_
applicalions
llquld on-board
d
Conventlonol llqud fuels with on-board storage
_
in phase
I” phase
mox,mum
F’xed
mox’mum
Depends extraction developed
Direct use of LPG and LNG from ony source
Avolloble
FIxed
011 from reserves
Immature II? both productlon and delivery systems
present
upon technology
rnox~mum
Exists
Exists
I
Ex sts
f
-
-
Figure
1.
Alternative
resource-technology
routes
energy con-
sidered in the supply of fuel for cars in the future.
’ The terms ‘reserves’ and ‘resources additional to reserves’ are in accordance of the Canada with current usage Mines and Department of Energy, Resources. For a discussion see Canada, Mines and Department of Energy, Resources, ‘A summary view of Canadian reserves and additional resources of nickel, copper, zinc, lead, molybdenum’, Mineral Bulletin, MR169, Ottawa, 1977. 2 Statements of commodity reserves and estimates of additional resources are the publications of mainly from Mines and Department of Energy, Resources, Ottawa. The principal sources Department of Energy, are: Canada, Mines and Resources, 1976 Assessment of Canada’s Uranium Supply and Demand, Report EP77-3. Ottawa, 1977; Canada, Department of Energy, Mines and Resources, Oil and Natural Gas Resources of Canada, 1976. Report EP77-1, Ottawa, 1977: Peter Love and Ralph Overend, Tree power an Assessment of the Energy Potential of Forest Biomass in Canada, Report ER781, Department of Energy, Mines and Resources, Ottawa, 1978; Canada, Department of Energy, Mines and continued on page 64
RESOURCES
POLICY
March
convenhonol frontier regions
011 from conventlonol reservoirs I” estobllshed re 10”s ond from 4 en owed 011 recovery
_
-Avolloble
Decllnlng, prospect reversal
Inferred but not found
llttle of
Exlstmg , some potent101 not yet found
starting energy sources considered in the energy technology routes set out in Figure 1.’ Table 2 shows the case for copper in a similar format is made between discovered and except that a distinction undiscovered resources. As is usual in any quantitative aggregation of resources, there are many hidden uncertainties and subjective judgments involved, notably in the resources additional to reserves categories.2 Such accountings are, at best, transient and will almost certainly change as new information becomes available.
Energy case - provision of energy for vehicle transport For Canada, as for other countries, the question of how best to power ground vehicles is a major problem in energy and transport policy in the face of declining oil availability from conventional reservoirs in alternative means of established producing regions. Although providing transport - such as improved mass transport facilities - will obviously be evaluated, the evidence to date suggests that there will still be a major requirement for personal automobiles, even with significantly higher fuel costs than those prevailing at present. The pump price of petrol in most of western Europe approaches twice that in Canada at the present time. When such higher prices prevail in Canada, cars will become smaller, lighter and increasingly fuelefficient, and the North American custom of two or even three car families will probably become less common. Nevertheless, the need and desire for personal vehicles will persist to the extent that serious attention must be paid to the associated fuel requirements. Moreover, several sources of energy in Canada potentially usable for this
1979
63
purpose could be brought into play on at least a technical cost of production (and distribution) basis if the present European pump prices for petrol were applicable in Canada. Furthermore, since the price of oil (on a crude oil basis) is expected to rise in the later 1980s relative to other sources of energy, oil will be gradually substituted for in many markets so that its use will become concentrated in the fields where its comparative advantage is greatest - in transport and in the manufacture of certain chemicals. Of these two ultimate markets, transport is by far the larger quantitatively; it is also the field where it is most difficult to provide other options. The purpose of this example is to trace the main factors bearing on the provision of energy for vehicle transport through comparison of the most feasible routes for using the various primary energy sources available, or thought to be available. The main routes of interest are summarized in Figure 1 for a simplified case involving basically only two general alternatives for powering vehicles: mechanical work provided from electrical energy stored in batteries in the vehicles, or from various fuels converted in engine cycles. For each case the various possible routes back to the relevant starting resource can be traced. The now almost universally used system, involving petrol or diesel oil fuelled vehicles, can be traced back across the bottom of Figure 1 to reveal the difficulty - in the case of Canada - that oil available from the normal sources is in decline, and the undiscovered potential that may be found (Table 1) is relatively small compared with other possible sources. Given the desire to maintain a large vehicle fleet, alternatives will have to be found. When the other possible routes are traced through the technological sequences in Figure 1 to explore the nature of the difficulties that may be encountered, it becomes apparent that these obstacles fall into three main groups: 0 0 0
colllilJoerlfrolll pap? 63 ‘An energy strategy for Resources, Canada ~ policies for self-reliance’, Supply and Services Canada Caialogue, No M27-14/1976-l, Ottawa, 1976; Canada, Department of Energy, Mines and Resources. op tit, Ref 1.
64
no proof of existence of adequate resources; no technology presently available to extract or upgrade the resources; no technology presently available to transform the energy supplied from the resources into a form usable for vehicle transportation.
The most important difficulty of the first class relates to the question of undiscovered petroleum resources thought to occur in the frontier regions. If these resources can be found and produced in severe Arctic or northern offshore environments, the oil product can be used directly in the usual way. An alternative assumption is that this oil will not be found, or, if it is, that the oil may not be produced until some later time when new extraction and transport technologies become available. If, as a consequence of this assumption, other options are chosen for development which prove more costly, the penalties could be very great indeed. Such considerations illustrate that the critical factor is knowledge of whether or not a resource exists in recoverable form and that its normal economic value accruing on production is of secondary importance. A rationale of this kind might support a decision for public investment in accelerating the determination of the petroleum potential of the frontier regions quite independently of the related but different interests of discoverers and extractors. An example of the second class of difficulty is the in situ recovery
RESOURCES
POLICY
March 1979
Canadian applications in resource analysis
3 P. Love and R. Overend, op tit, Ref 2. 4 Recently, fuel from biomass sources has been considered as a possible alternative for road transport requirements of the future in the UK. The concept has, apparently. been rejected because of the prohibitively large agricultural acreages estimated to be needed for biomass (crop) generation. See G. Charlesworth and T.M. Baker, ‘Transport fuels for the post-oil era’, Energy Policy, Vol 6, No 1, March 1978, pp 2 l-35. ‘This is based on the assumption that agricultural technologies such as the development of fast-regenerating biomass crops, improved fertilization methods and rotation can compensate for the probable eventual decline in fertility of lands used for successive biomass production. ‘Canada, along with Sweden, the USA, Belgium and the Republic of Ireland, have in a joined ‘Forestry for Energy’ agreement to promote research into this general field, under the sponsorship of the International Energy Agency. ‘In Table 1 the estimated additional installed hydroelectric generation capacity is given to 1990, since it is considered that nearly maximum capacity will have been reached by that time.
RESOURCES
POLICY
of oil sands and heavy oils which occur in the provinces of Alberta and Saskatchewan. It is evident from Table 1 that the perfection of this extraction process, together with the solution of related problems in ‘upgrading’ the recovered bitumen or oil and in lessening the environmental impact of such developments would be of great A series of government-industry field importance to Canada. demonstrations are underway in this context, led by the Alberta Oil Sands Technology and Research Authority (AOSTRA). While present indications are promising, the final result remains uncertain. The third class of difficulty is illustrated by the special case of the production of liquid fuels from biomass. Estimates have been made of the quantity of possible material available each year in Canada from the potential wood supply. 3 Immature processes are available to convert wood to synthesis gases from which, in turn, either methanol or synthetic petrol can be produced. There is every reason to believe that the gasification (or alternatively, fermentation) processes will be improved within the short term future. Thus another potential fuel alternative becomes available.4 An important consideration is that although faster growing trees might be developed, or other biomass sources might be brought into play, there is, in principle, an upper limit to the quantity of fuel available from this source each year, even if the source itself is sustainable indefinitely.5 Estimation of the technical costs involved in such a ‘renewable’ alternative is important since this route could place an upper limit on the costs which might be acceptable in the development of other options. Furthermore, since trees are omnipresent throughout much of Canada, there may be geographical advantages in pursuing this route. A major study of this possibility is being conducted in Canada under the auspices of the Canada Department of Fisheries and Environment6 In the more general cases lying in the third class of difficulty, electrical energy derived from nuclear, coal or hydroelectric sources could be used for vehicle transport in a number of ways, but all routes contain unsolved technological bottlenecks such as the need for improved batteries, or the development of techniques for storing hydrogen on board vehicles. Although the availability of additional supplies from hydroelectric sources has long term limitations, there is still a considerable unused potential for the short term future (Table l).’ The availability of energy in electrical or steam forms from the nuclear system appears constrained only by the normal factors limiting the deployment of any new technology of high unit cost and long construction times. It is interesting that a parallel set of problems inhibits supply from the only route in Figure 1 free of fundamental obstacles - oil produced from the oil sands by surface mining methods. Finally, it should be noted that there may be economically attractive links among the ‘sustainable’ sources themselves - those energy sources considered here as being available for long periods into the future, namely the ‘renewables’, oil sands and heavy oils, coal and the nuclear system. The broken line in Figure 1 illustrates that electricity or steam from the nuclear system has potential application in processing biomass sources or in the recovery and processing of oil from the oil sands. The effect in both cases would be to extend their respective potential contributions. For example, electricity could be used to electrolyse water into hydrogen and oxygen - the oxygen, in turn, could be used to gasify biomass sources and the hydrogen to
March 1979
65
Carmdiar~ applicatiom in resource anal_vsis Table 3. Factors requiring consideration over different timeframes
in analysis of Canadian
Relative importance General factors Canada) shbrt and medium terma
a 1 most important; least important.
2 less important:
3
copper resources
Relative Importance long term’
2
1
Knowledge of reserves
1
3
2
Estimation of resources additional to reserves
1
1
3
Technologies and efficiencies of recovery
2
2
4
Production (supply) factors (a) Capital availability (b) L&our availability (cl Equipment lead-time (d) Etc
2
5
Demand factors (a) Cost/price data and forecasts (b) Consumption patterns and forecasts (cl Etc
2
Co-commodity relationships (Cu-MO, Ni-Cu. etc) Energy requirements and availability Regional considerations Environmental considerations Political, jurisdictional and policy considerations Timeframe considerations
3 1 2 3 2 Variable
3 2 1 1 1 Variable
6 7 8 9 10 11
augment the quantity and quality of synthesis gas produced in the gasification stage. In a second case, steam from nuclear reactors could be used in heavy oil extraction technology in lieu of combustion of some of the bitumen produced, or of using coal. In either example, a combination of the sustainable technologies may become attractive with time and the fuel produced could be made available longer, and perhaps cheaper, than otherwise might be the case. The choice of such combinations could decrease the urgency for developing improved battery technology, yet still allow the increased use of nuclear energy to provide transport.
Copper; the factors and stages in resource analysis
*The term ‘resource system’ is used in the broad sense of including all the components involved in the recovery and use of a resource, from its discovery or identification in the ground through its recovery. processing and fabrication to its use and re-use (through recycling) in products. It also embraces the variety of labour, (capital, energy, inputs information, etc) that are involved in the operation of the ‘system’ to produce the end product. 9 The distinction between timeframes is but a useful criterion for arbitrary, assigning the short and medium term might be the approximate reserve amortization period of a deposit at the time a production decision is made, generally of the order of 15-20 years for large mines.
66
Table 3 lists some general factors that may be examined in assessing a resource system8 such as copper with a view to identifying those that may be critical to operation of the system. The time period of consideration obviously plays an important role in determining the relative importance of the various factors. In Table 3 it can be seen that important changes in priorities amongst the various factors are considered to take place when the period of projection is shifted from long term (right side) to the medium and short term (left side), and that these changes will strongly influence the selection of factors requiring detailed analysis. 9 For example, ‘knowledge of reserves’ is considered less important in the short and medium term than over the longer term because the economics of producing mines or mines about to enter production subsumes, by definition, that there is adequate knowledge of reserves to satisfy the economic requirements to maintain the operation of the system for at least some calculable period. Although this period will vary widely for individual mines and will obviously be critically short for certain properties or mines (those with the knowledge that they will shortly run out of reserves), in an aggregated sense the cumulative knowledge of reserves for the total
RESOURCES
POLICY
March
1979
Catladiatl Relatvx6hlps
applications
it? resource analysis
between resource appro~sol and explorotlon
SBGE4
Figure
2. Components
and stages of
analyses
of factor
2
(estimation
resources
additional
to reserves).
of
_
system in question will be more important over the longer term. In another example, an inverse situation is supposed with regard to environmental considerations. Emplacement of adequate environmental protection mechanisms may have significant adverse economic impacts on operating establishments or on properties about to enter production, so this factor is considered to have an important influence over the short and medium term. However, since appropriate technologies are evolving rapidly in this area, in response to legislative and public pressures, it seems probable that environmental protection will be an automatic built-in factor over the longer term. To assess the relative influence of the various factors of Table 3 it is first necessary to disaggregate each factor to identify and evaluate the components that define it. Figure 2 illustrates schematically the various components involved in factor 2 (estimation of resources additional to reserves), obviously one of the critical components in assessing the future course of the copper system. The following points may be made:
commodity
0 0
0
0
0
RESOURCES
POLICY
March
1979
a clear distinction between discovered and undiscovered resources is obvious and necessary; of sophisticated statistical and machine the application techniques is only valid towards the end stages of the process after a firm data base has been established; the relationships between the processes leading to exploration on the one hand and resource estimation (of undiscovered resources) on the other are close, but the end products of the two processes are different and distinct, since one (exploration) results, and the other merely places hopefully, in discovery prognostications in quantitative (generally probabilistic) terms; stage 2 is probably most critical in the sense that in most cases it is unlikely that either effective exploration or realistic resource estimation can be done without the acquisition of new data; in analyses in the short and medium term periods (Table 3) the product of stage 3 (qualitative estimates) is likely to have much more useful application than the product of stage 4 (quantitative estimates). This is because the object of a stage 3 product is to provide a ranking of areas or sub-areas (on geographic or geological grounds) in terms of their relative favourability to
67
Canadian
applications
in resource analysis Table 4. Comparison of Canadian reserve-resource and uranium
Department Mines and Resources.
a Reasonably
assured
(2)
Reserve multiple
(3) Additional resources multiple
Iron
1
119
120
50
Copper
1
22
33
Uranium
1
38
458 166b 638 136b
Production base, 1979
of Energy,
resources
(discovered). b Prognosticated resources (average
undiscovered and of estimates).
Proportion of (2) + (3) in reserve category (%I
(1)
Commodity Source: Canada,
relationships for iron, copper
2 22
contain undiscovered resources, and is thus of more immediate practical value in a number of different applications including exploration, land use assignments, transport route planning, etc. In looking at the long term case for the Canadian copper system it is supposed that factors 1, 2 and 7 (Table 3) are likely to have very strong influences over the long run. Factor 5 (demand), although obviously critical in influencing shorter run fluctuations in a commodity system, is considered, in the case of Canadian copper at least, to be relatively strong over the long term. Obviously the relative importance of the various factors here will depend in part on the commodity under consideration. In the energy case discussed previously, the generally most critical areas over the longer term may lie in factors 3 (technological), 4 (economic) and 9 (environmental) and not necessarily on the resource adequacy side of the spectrum (factors 1 and 2). A more detailed analysis of the various energy routes might focus on uranium supply as an obviously critical subset in the analysis of the nuclear route. Here, factor 9 (environmental) might emerge as critical, through the identification of the question of radioactive waste disposal as a subfactor of highest priority. This in turn would lead to a subset of factors under 9 that could be considered as analogous to factors 1, 2 and 3; that is the application of geological and technological criteria to the definition, evaluation and categorization of sites for permanent waste disposal. Obviously a failure to resolve satisfactorily such a critical subset problem would have a crucial influence on the relative viability of the energy routes considered. The reasons for isolating factors 1, 2 and 7 as critical in the copper analysis relate essentially to two characteristics of the Canadian copper system: 0 0
lo Data for copper and uranium are from sources listed in Ref 2. Data for iron are from Canada, Department of Energy, Mines and Resoukes, ‘A summary -of additional and Canadian reserves resources of iron ore’, Mineral Bulletin, MR 170, Ottawa, 1978.
68
the current domestic status of reserves and additional resources of copper; the patterns of declining ore grades coupled with a geographic and geological shift of copper production in the country.
Table 4 compares present Canadian reserves and resources additional to reserves for three principal trade commodities - copper, iron ore and uranium - in terms of 1976 production.1° Although there is the usual degree of uncertainty involved in the additional resources figures it seems that in terms of the proportion of total resources available in the reserve category, iron and uranium are in a stronger position than copper. This is partly a function of the relative characteristics of the three systems in the sense that iron source materials are usually much more easily delineated than are those for
RESOURCES
POLICY
March
1979
Carladian
applications
in resource
analysis
copper. It is also undoubtedly a function of the economics of the systems since at present copper is hardly a commodity that generates concern about supply over the short or medium term. These factors aside, Canadian copper resources, considered over the longer term, may have inadequacies that are related to the nature and distribution of copper in the Canadian geological framework. The average grade of copper ore mined in Canada declined from about 1.5% to about 0.8% over the decade 1965-75. This was to a large degree the result of large tonnage, low grade western porphyry deposits brought into production in the early and mid-1960s. The effects of this show up also in the shift of the production base for copper from east to west over approximately the same period. In 1965 only about 8% of total annual Canadian copper production came from British Columbia. By the mid-1970s this figure had increased to 35%.” The above patterns are further influenced by the increasing costs and technological difficulties in discovering and mining higher grade copper deposits in Precambrian Shield terrains in Canada. Deposits in these terrains, such as those of the Chibougamau district of Quebec, the Abitibi region in Quebec and Ontario, and the Flin Flon district of Manitoba have, along with the nickel+opper ores of the Sudbury basin, provided much of the traditional copper production 6f the country. Since Canada does not possess known significant economic bedded copper deposits characteristic of other major producing areas of the world, the evolution of Canada’s copper industry may be constrained by growing difficulty in increasing production from large tonnage, low grade (porphyry) types on the one hand and the traditional higher grade Precambrian Shield types on the other hand. In the former case (porphyry types), the limits of exploitation may be set by the costs of energy in mining and grinding. Some data bearing on this question are summarized in Figure 3, which illustrates the rapid acceleration in energy requirements in treating ores to concentrate stage as the primary grade of ore decreases.‘* Unless radical new mining or energy technologies can be brought to bear on this problem, limits to exploitation of second generation types of these deposits may be approached at copper-equivalent ore grades in the 0.25-0.35% range. The continuing availability of copper from traditional producing areas in other parts of the world (eg Africa) will presumably mark a base (in recovery cost terms) below which Canadian porphyry deposits with their high energy requirements may not be competitive in world markets.
Conclusions
” Data are derived from Canada, Department of Energy, Mines and Resources, Canadian Minerals Yearbook. Ottawa, various years. ‘* Department of Energy, Mines and Resources, ‘Minerals, science and technology’, Mineral Bulletin, MR 1 6 1, Ottawa.
RESOURCES
POLICY
March
The energy and copper examples used in this article illustrate different approaches to resource problems, but also serve to emphasize that there are a number of factors common to any process of resource analysis. Probably the two most important common denominators are: the necessity to define the timeframe of the analysis; and the necessity to recognize and accommodate the effects of interdependency between factors and the requirement to define the effects of such relationships on the evolution of resource systems. Although these feedback relationships have not been discussed in detail, they have been noted in the case of linkages between the various
1979
69
Camdim
applicatiorls i/z resource anal_vsis
. Figure
3.
requirements concentrate
Estimates for producing from
various
of
\?
energy copper
grades
in of
1973
.
Chapman, 1974
.\
Kellog, 1974
\
ore. Note: The principal sources of information used in Figure 3 are: P.F. Chapman, ‘No overdrafts in the energy economy’, New Scientist. Vol 58, No 846, 17 May 1973, p 409; P.F. Chapman, ‘The energy costs of producing copper and aluminium from primary sources’, Metals and Materials, Vol 8. No 2, February 1974, p 110; J.C. Bravard. H.B. Flora II and C. Portal, Energy Expenditures Associated with the Production and Recycle of Metals, Oak Ridge National Laboratory, National Environmental Science Foundation Program ORNL-NSF-EP-24, 1972, Table 4. p 15; W.G. Lugg, ‘Present and projected energy consumption in the mineral industry of Canada’, Mineral Bulletin. MR 164, Department of Energy, Mines and Resources, Ottawa, 1977, p 8; H.H. Kellog, ‘Energy Table 6. efficiency in the age. of scarcity’, Journal of Metals. Vol 26, No 6, June 1974, pp 26-27.
0
Lugg. ‘A
1977
Bravord et
l ‘\
.
\
q
\ \ \ \
\
4 \
\
‘,*
‘1 1.0
_I
7 -----
l
___I_I
I 5 Ore grade (% copper 1
20
25
technological routes in the energy example and are implicit in the case of the copper system in the sense that the future evolution of this system (as of many other systems) may be strongly affected by feedback from the energy side. Such major influences are obvious, but commodity systems also contain more subtle feedback loops that may not be so easily recognized or defined but may have potentially significant effects. A case in point may be buried in factors 3 (technologies) and 9 (environmental) of the copper system where the introduction of overly stringent SO2 stack emission standards for smelters could cause serious disturbances in primary copper production. It is concluded that there is a useful role for various techniques of resource analysis in developing effective policies for resource management, but that these techniques need to evolve beyond the restricted field of documentation and estimation of available and potentially available resources. In particular, the common emphasis on the definition and categorization of different kinds and amounts of resources and the preoccupation with distinctions among definitions of the various categories of reserves and resources provides too limited a framework for dealing with the multiplicity of factors that can affect the transfer of resources from raw materials in the ground to products useful to society. In the shorter and medium term the important questions bearing on minerals production, and probably fuels production too, will be overwhelmingly economic, political and social in nature and, for most commodities at least, questions of the geological and technological availability of resources are not likely to be critical. For the longer term, nevertheless, these questions are of prime importance.
70
RESOURCES
POLICY
March 1979