The resource base and mercury — a fresh perspective

The resource base and mercury - a fresh perspective

Ni@ Roxburgh

Inadequacies in the knowledge base seriously hamper diission of the resource problem. Following a mercurycentred explanation of problems of estimates, the resource limits and of calculation of figures for d&rent categories of resources and reserves, the article attempts to clarify the roles that empirical theoretical and knowledge have in structuring the options within the resource system. The author was until recently

with the

Economist Intelligence Unit Ltd. 27 St James Place, London SW1 , UK and is now with STC Ltd, Harlow,

UK.

This article is an edited version of a chapter in Nigel Roxburgh’s book, Policy Responses to Resource Depletion: The Case of Mercury, published by JAI Press Inc, 1979, Greenwich, CT, USA. ’ Flask = 761b. * SI = static index and El = exponential index. Both are expressed in terms of years. The ‘static’ index is an expression of the number of years a resource will last at current consumption levels. The ‘exponential’ index expresses the number of years the resource will last given an in exponential growth expected consumption levels. D.L. Meadows, J. Meadows, ’ D.H. Randers. and W. Behrens. The Limits to Growth, Earth Island, London, 1972, D 56: and D.L. Meadows, D.H. Meadows Towards Global Equilibrium: ied& Collected Papers, Wright-Allen Press, Cambridge, MA, 1973, pp 144 and 294. l See Nigel Roxburgh, Policy Responses to Resource Depletion: The Case of continuedonpage261

260

Much of the resource debate is characterized by a situation where the participants fail to agree on the real resource limits that face mankind. The geological concepts of reserves and resources have frequently been confused, while misconceptions about their nature, even when they are distinguished between, have in many cases robbed the extrapolationist and economic models of much meaning and heuristic value. The degree of confusion that exists is particularly well demonstrated in the case of mercury.

Choosing a resource limit The group headed by D.H. Meadows at MIT have, for example, made two attempts to establish the resource limits for mercury with little success. In Limits to Growth and Towards Global Equilibrium the same figure of 3.34 x lo6 flasks’ (SI = 13; EI = 11)2 was advanced, although considerable procrastination surrounded the evaluation of the exponential index.3 The team’s second attempt, perhaps with the benefit of hindsight and considerable criticism, drew data from the 1973 US Geological Survey, and presented figures for both ‘identified resources’ and ‘hypothetical and speculative resources’.4 Actually the figure purporting to represent the latter concept was in fact derived from estimates indicating the level of ‘identified resources’ to be expected at a price of $1 OOO/flask.sThe summation of these two figures, however, was taken to represent the ‘ultimate geologic availability of each resource’,6 which for mercury was evaluated at 2.42 x 10’ flasks (SI = 84; EI = 44).’ Such a figure does not even compare favourably with an estimate of 9.8 x 10’ flasks (SI = 338; EI = 88)8 suggested by Erickson in the same US Geological Survey for currently recoverable resources alone.9 Indeed, independent confirmation of the Erickson estimate derives from an econometric computer model called MIMIClO which suggests a figure of 9.3 x 10’ flasks for currently recoverable resources.” It appears, therefore, that the MIT/team’s concept of ‘ultimate geologic availability’ in the case of mercury, and as it turns out for other resources as well, is far from being an ultimate resource limit, and is instead more akin to the geologists’ concept of the

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The resource base and mercury

quantity of resources recoverable at prevailing price and technology levels. To provide some sort of conception of the possible scale of the ultimate or Malthusian resource limit, two figures, both derived from Erickson’s paper, are cited. The first is based on an extension of Erickson’s figures by Sierra, which suggests that 1 x lo’* flasks (SI = 3.4 x 106; EI = 439) of mercury could be available through the complete mining and processing of the first kilometre of the earth’s crust on land alone.‘* The second is derived directly from Erickson’s paper and shows that the total mining of the earth’s crust (nb average depth 16km),13 including oceanic as well as continental crust, would yield 6.08 x lOi flasks (SI = 2.1 x lo*; EI = 597).14 Although such estimates are necessarily somewhat contentious, they provide a belittling perspective for the MIT limits, and emphasize the problem of defining the ultimate resource limit at all.

Role of uncertainty in the estimation of resources

continued from page 260 Mercury, JAI, Greenwich, CT, 1979; and E. Bailey, A. Clark, and Ft. Smith, ‘Mercury’, in US Geological Survey Professional Paper 820. US Government Printing Office, Washington, DC, 1973, p 409. 5 Ibid. * D.L. Meadows, W. Behrens, D.H. Meadows, R. Naill, J. Randers and E. Zahn. Dynamics of Growth in a Finite World, Wright-Allen Press, Cambridge, MA, 1974, p 388. ‘Ibid,p372. a SI and El calculations are based on data in Ref 4 as are all such consecutive calculations. s Ft. Erickson, ‘Crustal abundance of elements, and mineral reserves and resources’, in US Geological Survey Professional Paper 820, US Government Printing Office, Washington, DC, 1973, pp 21-25. lo MIMIC was developed for the European Economic Community (EEC) in Brussels by Brink for the evaluation of mineral resources. “J. Brink and L. Van Wambeke, World resources of mercury’, Primer Congreso lnternacional del Mercurio, Vol 1, Barcelona University, Barcelona, May 1974, pp 49-53; and J. Brink, ‘MIMIC’, Euro-Spectra, Vol 10, No 2, June 197 1, pp 46-56. l2 J. Sierra, ‘Perspectivas de reservas y recursos del mercurio en el mundo’, Primer Congreso International del Mercurio. op cit. Ref 1 1, p 434. (a B. Skinner, Earth Resources, PrenticeHall, New Jersey, 1969, p 17. I4 See Erickson, op cit. Ref 9. ‘6 Ibid. ” Sierra, op cit. Ref 12, p 428. I7 Ibid. I8 Ibid.

RESOURCES

The problem illustrated in the estimation of the resource limit is indicative of an important factor in the resource debate, a pervasive element of uncertainty. Geological knowledge is not absolute, and, therefore, any quantitative assertion concerning resources, whether at the aggregated level of ultimate resource limits or more simply the specification of productivity limits for the individual mine, should be handled with a degree of care that the associated uncertainty warrants. Too often proponents in the resource debate, economists and extrapolationists alike, have ignored this attending uncertainty to the detriment of their case. Crustal abundance, based on a historic aggregate of observations, is by no means an absolute concept and Lee and Yao’s estimate for mercury in 1970, for example, is one-seventh of the value suggested by Goldschmidt in 1954. I5 Such disparity between estimates, indeed, is not uncommon for other elements as reference to Erickson’s paper shows. Even estimates of reserves based on data at the level of the individual mine are, according to Sierra, necessarily unreliable.‘:, This surprising observation arises from consideration of several underlying factors. There is considerable disinclination, for example, on the part of mining operations to expend great effort in determining the total economic extent of a deposit beyond the dictates of business survival. Even in countries where such exploration does take place, as in the USSR, the results are jealously guarded. l7 Thus a situation prevails in which nobody knows the total reserves and resources of the most important mercury deposits, and estimates concerning them, therefore, are little better than informed guesses based on past production levels and the geological style of the deposit.ls Even where official reserve estimates have been reported for the individual mining concern, they rest heavily on the financial, geological, and technical acumen of the operation’s management. Such estimates necessarily express the concern’s ability to compete in the market place of the future under prevailing operation conditions, with an existing level of technological equipment, against the background of the current perception of the deposit’s geological make-up. It is all too easy, even given these warnings, to underestimate the lack of knowledge existing about the extent of individual deposits even

POLICY December 1979

261

The resource base and mercury

among their owners. Two examples, however, of mining operations at different ends of the mining spectrum enable the demonstration of this point most effectively. Investment in the Study Butte Mine, Texas, a relatively small operation, was based largely on a preliminary ore reserve estimate calculation in 1967 showing 14 000 tons of ‘inferred’ ore containing some 15 000 flasks of mercury, yet when the mine closed in 1970 only 1 200 flasks of mercury had been recovered from as much as 40 000 tons of ore.19 At the other end of the spectrum, however, is Almaden which historically has accounted for one-third of the total world production since the 16th century, and was mined, indeed, at least as early as 150 BC. 2oDespite this long history the ultimate size of the deposit’s reserves still remain unknown.*’ It is known, for example, that economic ore grades continue down to a depth of 650 metres (the maximum depth investigated), and that they extend over a considerable area even without allowing for the possibility that mineralization continues past certain geological fault lines.** However, no sensible estimate of the mine’s true reserves can be based upon the scant nature of existing knowledge, although such data that do exist would appear to imply that Almaden could economically produce at least as much mercury again as that produced over its long history.23

Resources in geologIcal perspective

Is J. Merz, ‘The exploration and geology of the Study Butte mine, Telingua District, Primer Brewster County, Texas’, Conareso lnternecional del Mercurio. op cit. Ref 11, pp 166 and 170. 2o Bailey et al, op cit. Ref 4, p 408, and ‘Spotlight on Almaden’, Metal Bulletin Monthly, September 197 1, p 6. 21 Sierra, OP tit, Ref 12, p 429. 22 Ibid. 23Ibid: and ‘Spotlioht on Almaden’, op cit. Ref 20.~6. mineral ‘Potential 24v. McKelvev. reserves’, Resoukes Policy, Vol 1, No 2. December 1974, pp 76-77. 26 Ibid: and Sierra, op cit. Ref 12, pp 413414. =aibid. ” Ibid. 28 Sierra, op cit. Ref 12, pp 413-414.

262

The geologists and mining community, aware of the surrounding uncertainty attached to any resource estimate, have tended to place their estimates within uncertainty bounds. Thus the industry has long used the categorization of the three Ps to sort reserves into ‘proved’, ‘probable’, and ‘possible’ types, to provide a basis for planning and investment decisions.24 ‘Proved’ reserves refer to materials so closely sampled that the amount and quality of ore has been established within a relatively small margin of error, which in some cases may be formulated statistically with 90% probability and a 10% margin of error.25 The next category of reserves, the ‘probable’ type, is not so rigidly defined but usually refers to deposits sampled on two or three sides, having a statistical probability range of 70-90% and a margin of error as high as 20%.26 Finally, the ‘possible’ reserves are those that have usually only been sampled on one side, and where probability of occurring is as low as 30% and uncertainty of magnitude is covered by a 50% margin of error.*’ Such statistical quantification of the reserve categories is particularly revealing because it is indicative of the level of uncertainty with which the resource owners must contend, and this appears surprisingly high, particularly in the ‘possible’ category. Although it seems that very few mercury deposits have been classified within such strict statistical limits, it is reasonable to assume that such limits reflect the conventionally accepted uncertainties in the more qualitative assessment of such categories.** As has been pointed out, these uncertainties may be considerable. The US Bureau of Mines and Geological Survey have based their estimates on a different form of categorization employing the terms ‘measured’, ‘indicated’ and ‘inferred’ to replace the three Ps. ‘Measured’ is an almost exact analogue of ‘proved’ thus denoting a

RESOURCES

POLICY

December

1979

The resource base and mercury Totol resources Undiscovered

ldentlfled Demonstrated lndlcoted

Measured

inferred

Hypothetxol (In known

Speculohve (In undiscovered

dstrlcts

dmtrlcts

=:I Fn I

I

)

t

i

Resources

1

I

e B

Figure

1.

Classification

of

P ‘6 b g d

mineral

resources. Source: V. McKelvey. resources’, December

Resources

‘Potential mineral Policy, Vol 1, NO 2,

1974, pp 76-77.

29 McKelvey, M Ibid.

op cit. Ref

24.

31 Ibid. as v. McKelvey,

‘Mineral resource and public policy’, American Scientist, Vol 60, No 1, January-February 1972, p 9. 33 McKelvey, op cit. Ref 24. estimates

SkIbid. ” G. Govett and M. Govett,

The concept and measurement of mineral reserves and resources’, Resources Policy, Vol 1, No 1, September 1974, p 52.

RESOURCES

++

+

I

I

+

I

I

similarly high degree of certainty.29 ‘Indicated’, it appears, is employed to define deposits on which estimates of quality and quantity have been computed partly from samples and measurements and partly from reasonable geological projections.30 This category, then, automatically subsumes the ‘probable’ and ‘possible’ concepts and thus the wide range of statistical certainty that attaches to them. The final term ‘inferred’ stands on its own, having no direct commercial counterpart, to encompass unexplored deposits from which estimates of quality and size are based on geological evidence and projection. 31 As such it must be considered to be subject to a particularly high degree of uncertainty. These three categories, which together form what would normally be regarded as the resource reserve, have been placed in a wider context by McKelvey who has introduced the concept of undiscovered resources,32 later subdivided into ‘hypothetical’ and ‘speculative resources’ by Brobst and Pratt,33 and distinguished between economic and subeconomic resources. ‘Hypothetical’ resources are defined as those that may reasonably be expected to exist in known districts, while ‘speculative’ resources describe those occurring in broadly favourably geological terrain where no discoveries have previously been made or, alternatively, in previously unknown deposit types. The whole resource scheme is neatly represented diagramatically in Figure 1, which clearly shows how geological uncertainty increases across the model and economic uncertainty down it. The subeconomic category has been split in order to introduce the concept of paramarginal resources, those that border on the economic grade and which a 50% increase in price levels would make financially viable.34 Although the perspective that such a model lends to resource considerations is valuable, Govett and Govett have pointed out that in spite of its advantages it fails ‘. . . to emphasise the dynamic character of resource categories and to illustrate the realistic relative proportions of these categories’.35 This criticism may be partially overcome, in the case of mercury at least, with a presentation, as in Figure 2, which shows the relative percentage contributions of the various categories to the total resource base. If such a representation is coupled with an acknowledgment that prospecting tends to reduce

POLICY December 1979

263

The resource base and mercury Total

Figure 2. Indication the resource

of the extent

resources

I

ldentlfled

Undiscovered

of

base known.

Sources and notes: Resource % based on (1) Measured = 2.9 x 1 O6 flasks (based on annual production figures in D.L. Meadows er al, op cit. text Ref 3, p 372, and an observation arising from Bailey et a/, op cit. text Ref 4, that ‘at few mines is enough ore blocked out for more than a year of operation’); (2) Identified = 7.185 x 10’ flasks (based on figures in ibid for identified world mercury resources recoverable at $400, 1973 value); (3) Identified plus undiscovered = 9.8 x 10’ flasks (based on data in Erickson, op tit, text Ref 9, in a context suggested by Sierra, op tit, text Ref 12, p 434); and (4) Total resources (Malthusian limit) = 6.06 x 1 0q3 flasks (Erickson, op cit. text Ref 9).

Resources 100 % +

++

I

+

I

the undiscovered economic reserves to zero, while increases in resource price level and cost reducing process innovations lead to an ever-increasing encroachment of the economic upon the subeconomic elements, then a dynamic perspective of the resource situation may be restored. Perhaps the most interesting feature about Figure 2 is the surprising perspective it introduces into resource considerations. Thus, against a Malthusian resource concept, based upon crustal availability, the economic ‘identified resources’ and even economic ‘undiscovered resources’ represent a negligible fraction. Furthermore, it should be noted that the ‘measured’, and therefore most assured, element of economic reserves only represent 4% of the total of such reserves, while the presently identified economic reserve itself represents only 8% of total estimated economic resources (ie identified and undiscovered). Such figures, then, reemphasize the incompleteness of geological knowledge, and give indication of the scale of prospecting activity that may be required to eliminate such vast areas of uncertainty.

Resources in the context of the theoretical model Many issues discussed above, the dynamic nature of reserves, their relation to industrial activity, the degree of uncertainty involved in such estimates, and the partial nature of the knowledge base, are presented elsewhere in an overall theoretical resource model which conceptualizes the interaction of policy decisions within the resource context.36 The concepts that the resource sector encompasses (ie physical resource base, knowledge base, economic reserve, proven reserve) and their interrelationships are discussed in the following four sections.

The physical resource base

” Roxburgh, op cit. Ref 4.

264

The model attributes pride of place in the conceptual resource hierarchy to the physical resource base, whose actual qualitative and quantitative make-up is assumed to impose continuous constraints

RESOURCES

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1979

The resource base and mercury

37 Sierra, op ci Ref 12 pp 411-413. 311 T. overing, bvlineral’resources from the land’,\ in National Academy of Sciences National Research and Council,\ Resources end Men, W.H. Freeman, San Francisco, 1969, pp 112=TlZ3* S. Lasky, ‘How tonnage-grade relations help predict ore reserves’, Engineering and Mining Journal, Vol 155, No 9, 1955, pp 94-96. u) Sierra, op cit. Ref 12, pp 41 l-41 3. 4’ See op cit. Ref 38, p 116; and D. Brooks and P. Andrews. ‘Mineral resources, economic growth, and world population’, Science, Vol 185, No 4145, 5 July 1974, p 14. u Sierra, op tit, Ref 12, pp 41 l-41 3.

RESOURCES

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December

upon the activities of societies which rely on the exploitation of that base. The partial nature of the resource-associated knowledge base inherent in the model implies that a complete description of the physical reserve base employing current knowledge is impossible. However an attempt to sketch the essential features of such a base, in both quantitative and qualitative form, can be made. The quantitative extent of the resource base for mercury in common with the total resource figures selected for the McKelvey model (Figure 2) is placed at 6.08 x lOI flasks (SI = 2.1 x 10’; EI = 597). Although this figure is somewhat contentious, it does at least reflect, within the limits of accuracy of crustal abundance and crust mass estimates, the ultimate quantity of resource recoverable should resource exploitation ever be pushed to the extreme of mining common rock over the entire terrestrial surface. Although the realization of such an extreme presently seems improbable, improved technology, changing economics, and a considerable extension of the knowledge base may allow a Ricardian approach to such a limit. The exact nature of this approach, however, would necessarily be constrained by the qualitative and quantitative make-up of the resource base, a theme which is further discussed below. The form of the approach to the resource limit will depend upon the quantitative distribution of resource availability across ore grades of steadily decreasing quality. It appears, however, that not only is there insufficient data to give a quantitative representation of such a function, but there also exists considerable disagreement as to its qualitative form.37 The extensive utilization of the relationship postulated by Lasky, based on copper porphyry deposits, has been heavily criticized by Lovering, who maintains that it has frequently been misapplied by mineral economists.3* Lasky’s relationship simply relates ore grade inversely to the logarithm of ore tonnage, thus implying increasing metal availability with lower quality ores.39 It appears, however, that the relationship is neither applicable universally to all metals nor even to the whole range of deposits of those elements where it does hold,4O Despite the fact that optimists and pessimists cite and countercite examples of different elements and deposit types in an attempt to justify their positions, the discussion in the absence of further data becomes a rather pointless intellectual tug-of-war.41 One thing that does appear agreed, however, is that mercury, whose deposits are characterized by a marked hiatus between the level of metal content in the ore and the amount normal in average rock, does not conform to the Lasky model. Sierra has suggested that the quantitative resource availability profile for mercury may, in fact, be analogous to that of the individual deposits. Thus, the volume of ore currently being found worldwide in the 2-5% and O.l-0.5% quality ranges is purported to mark the peaked starting point of this profile, which falls away and retains a steadily low quantitative availability until background concentration levels are reached.42 It is possible, however, that such a view stems from a too limited interpretation of what constitutes an ore. Certainly some sort of continuous gradation between background concentration levels and presently mined ore grades can be postulated, even if only at the level enabled by the evidence sketched below. The computation of a crustal abundance figure, such as Lee and

1979

The resource base and mercury Table I. Mercury

content

of rocks, parts per billion

(log).

Igneous Ultrabasic (dunite, kimberlite etc 1 Basic intrusives (gabbro, diabase etc 1 Basic extrusives (basalt etc 1 Intermediate intrusives (diorite etc ) intermediate extrusives (andesite etc ) Acidic intrusives (granite, granodiorite, syenite) Acidic extrusives (rhyolite, trachyte etc 1 Alkali-rich rocks (nepheline, syenite, phonolite etc Metamorphic Quartzites Amphibolites Hornfels Schists Gneisses Marbles, crystalline

)

dolomites

Sedimentary Recent sediments:

Source: I. Jonaeeon and R. Boyle. ‘Geochemistry of mercury and the origins of the contamination natural of the Transactions of environment’,

Canadian Institute of Mining and Metallurgy 8nd the Mining Society of Nova Scotia, Vol 75, 1972, p 10.

stream river lake ocean and sea Sandstones, arkoses, conglomerates Shales, argillites, mudstones Carbonaceous shales, bituminous shales Limestones, dolomites Evaporites: gypsum, anhydrite halite, sylvite etc Rock phosphates (composite samples)

Range 7-250 5-84 5-40 13-64 20-200 7-200 2-200 40-t 400

Mean 168 28 20 38 66 62 62 450

10-100 30-90 35-400 10-I 000 25-l 00 10-100

53 50 225 100 50 50

1 O-700 1 O-700 < 1 o-2 000 < 10-300 5-300 100-3 250 < 10-220 < lo-60 20-200 -

73 73 100 55 67 437 40 25 30 120

Yao’s evaluation of mercury at 89 parts per billion (103 (ppb),43 relies on the accretion of a considerable volume of empirical data relating to the concentrations of an element in different types of geological environment. Table 1 shows a set of such background data for mercury and demonstrates that a considerable range of concentrations can exist even in common rock. Furthermore, an assessment of mercury concentrations in recognized minerals (Table 2) suggests an overlap with common rock in the low parts per million (ppm) range, and a dovetailing at the top end of this range with the low concentration mercury ore bodies currently being mined at 0.1% (1 000 ppm). It seems feasible, therefore, that a continuous profile relating ore grade to resource tonnage may exist, although its true nature remains undisclosed. The accumulation of a considerable amount of further data concerning mercury concentration in rock types, minerals and ore bodies will, it appears, be required before such a profile can be qualitatively and quantitatively conceptualized. Only when this has been achieved can a full descriptive chronology of likely economic and technological constraints be resource-imposed satisfactorily attempted.

The resource-associated knowledge base

u Erickson, op cit. Ref 9. * Roxburgh, op cit. Ref 4.

266

The discussion of the resource base itself has been hampered, it will be recognized, by the essential incompleteness of the associated knowledge base. Indeed, inadequacies in the latter, it has been argued,44 are as likely to place constraints on the resource system as the physical make-up of the resource base itself. This is necessarily so because the base forms the pool of knowledge that guides new prospecting activity aimed at the expansion of the vital economic

RESOURCES

POLICY December

1979

The resource base and mercury Table 2. Mercury content of some common ore and gangue minerals. Mineral

Composition

Normal range (ppm) limits

Highest reported content (%I

Tetrahedrite Grey copper ores Sphalerite Wurtzite Stibnite Realgar Pyrite Galena Chalcopyrite Bornite Bournonite Chalcocite Marcasite Pyrrhotite Molybdenite Arsenopyrite Orpiment

Source: As Table 1.

46Sierra,

op cit. Ref

RESOURCES

(Cu.As.

Sb& S,

ZnS ZnS ZsS3 FeS2 PbS CuFeS2 CugFeS4 PbCuSbSg cu2s FeS2 Fel_$ MoS2 FeAsS A+3

Native gold Native silver Barite Cerussite Dolomite Fluorite Calcite Aragonite Siderite Chalcedony and opalinesilicas Quartz

Au

Pyrolusite Hydrated iron oxides Graphite Coal Gypsum

MnO2 Fq03nH20 Carbon _

Ag BaSO4 PbC06 CaMg(CO& Ca Fp CaC03 CaC03 FeC03 Si02nH20 SiOz

CaS042H70

10-l 000 5.0-500 0.1-200 O.l--200 0.1-150 0.2-I 50 0.1-100 0.04-70 0.1-40 0.1-30 0.1-25 0.1-25 0.1-20 0.1-5 0.1-5 0.1-3 0.1-3 l.O--100 1.0-100 0.2-200 0.1-200 0.1-50 0.01-50 0.01-20 0.01-20 0.01-10 0.01-I 0 0.01-2 1.0-l 000 0.1 O-500 0.5-I 0 0.05-10 0.01-4

17.6; 21 14 1 0.03 1.3 2.2 2 0.02 0.07 _ 60 30 0.5 0.1 0.01 0.03 3.7 0.01 _ _ 2 0.2 0.01 2 -

reserve. Subsequent discussion attempts, however, to clarify the role that theoretical and empirical knowledge have in structuring the options within the resource system. The accumulation of general geological, geophysical, geochemical and geographical knowledge concerning all elements, arising variously from research institutes, universities, government-funded agencies and organizations directly concerned with the supply sector, provides a body of advancing knowledge containing many implicit theoretical structures. It is on the basis of such a body of knowledge that new theorizing may be built and an unifying perspective developed. It is possible within the context of existing knowledge to set mercury in its true perspective within the resource spectrum (Table 3), and to thereby recognize its relative scarcity as the 17th most rare natural element.45 Immediately such a perspective structures eventual mercury production expectations, but at a more sophisticated level comparison of crustal abundance and reserve data has led McKelvey to postulate a constant relationship between the two. Such a development has allowed existing economic reserve data to be extended into the hypothetical and speculative resource categories (Figures 1 and 2). McKelvey has used the element lead as a base for his calculations

12, p 408.

POLICY

Cul2SblS13

December

1979

The resource base and mercury Table 3. Crustal abundance

table.

% Oxygen

Source: R. A.

Baez.

Resources, York, 1972,

Deju, R. Bhappu,

The

G. Evans and

Environment

Gordon p 130.

and

and

Breach,

its New

Silicon Aluminium Iron Calcium Sodium Potassium Magnesium Titanium Manganese Barium Chromium Carbon Zirconium Nickel Vanadium Cerium and yttrium Copper

%

46.710 27.720 8.130 5.010 3.630 2.850 2.600 2.090 0.630 0.100 0.050 0.037 0.032 0.026 0.020 0.017 0.015 0.010

Tungsten Lithium Zinc Columbium Hafnium Lead Cobalt Boron Beryllium Molybdenum Arsenic Tin Cadmium Mercury Silver Selenium Gold

and tantalum

0.005 0.004 0.004 0.003 0.003 0.002 0.001 0.001 0.001 0.0001 0.0001 0.0001 0.00001 0.00001 0.000001 0.000001. 0.0000001

because this appears to be the most extensively prospected element in the USA. By assuming that the crustal abundancereserve ratio should be a constant if other elements are subjected to equally intense exploration, then from the lead-associated ratio a generalized relationship can be formulated thus: US reserves = crustal abundance (g/tonne) x 2.45 x 10” tonnes.

4o E. Bailey,

in chapter

3 of J. Pennington, Survey, Bureau of Mine Information Circular 7941, Dept Interior, US Government Printing Dffice, Washington, DC, pp 1 l-27. l’ Bailey et al, op cit. Ref 4, pp 41 O-41 1; Boyle, and R. Jonasson and I. ‘Geochemistry of mercury and the origins contamination of the natural of the Transactions of environment’,

Mercury: A Materials

Canadian Institute of Mining 8nd Metallurgy and the Mining Society of Nova Scotia, Vol 75, 1972, p 9. l0 I. Robertson, Mercury in Rhodesia, Rhodesia Geological Resources Series No Printer, Salisbury, 1972,

268

Survey, Mineral 17, Government pp 2-3.

The calculation may be further generalized to a global level simply by multiplying the resultant reserve figure by a factor of 17.3, which is the factor by which the world land mass exceeds that of the USA. The resultant figure for mercury, which should represent the summation of identified and undiscovered resources, is the previously quoted value of 9.8 x 10’ flasks (Figure 2). It can be seen, therefore, that even this relatively simple calculation requires the existence of an extensive knowledge base, which draws, perhaps surprisingly, on data from other resource systems. The quantification of resource limits reflects only one side of the knowledge base. The location and, of course, projected location of resources are of considerable importance for prospecting activities. Indeed, the study of the juxtaposition of specific empirical data and broad geological theory from the knowledge base to pinpoint new resource locations, is particularly interesting and instructive in the case of mercury. The accumulation of locational data concerning mercury deposits allowed Bailey in 1959, for example, to compile an extensive map of mercury occurrences in which certain productive belts could be defined.46 The correlation of such mercury-concerned geographical data with information concerning the distribution of a belt of volcanic activity known as the ‘belt of fire’, has enabled geologists to postulate the existence of wide sweeping ‘mercuriferous belts’ as Jonnason and Boyle demonstrated cartographically in 197 1.4’ Furthermore, a comprehensive study of mercury associations by rock type carried out by Moiseyev in 197 1 has emphasized this belt, in the negative as it were, by showing those geographical areas where, in accordance with rock type, mercury deposits would not be expected.48 Added clarification of the geographical occurrence of mercury has derived from the completely separate development of tectonic theory RESOURCES

POLICY December

1979

The resource base and mercury Table

4. Historical world production. Million flasks

Almaden

Source: Based on Sierra, op tit, text Ref 12: and Bailey et al, text Ref 4.

ls Bailey et al, op tit, Ref 4. pp 41 O-4 1 1; and Jonasson and Boyle, op cit. Ref 47, D10. b Ibid. =’ Ibid. Sierra, op cit. Ref 12, p 42 1. mV. Fedorchuk, ‘Genetic and commercial types of mercury deposits’, Primer Congreso lnternacional del Mercurio, op cit. Ref 11, pp 117-l 43. 64Ibid.

62

RESOURCES

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December

(Spain)

ldria (Yugoslavia) Monte Amiata (Italv) Santa Barbara (Peru) New Almaden (CA, USA) New ldria (CA, USA) Other (approx) Total

7.5

3.0 2.0 1.5 1.1 0.6 5.2 20.9

% 36 14 10 7 5 3 25 100

in the late 196Os, which relates crustal instability and volcanism to moving crustal plates. 49 Bailey and his colleagues in 1973 demonstrated that the occurrence of mercury deposits coincides with the existence of subduction zones (a tectonic concept that describes places where one crustal plate is forced downwards under another), particularly where oceanic crust and its associated deposits are swept downwards beneath the continental crust.50 They were able to assert, in fact, that the principles of global tectonics were useful for identifying areas in which new deposits may be found, and, indeed, suggested two such possibilities. 51Thus, it can be concluded, that the fusion of empirical and theoretical data within the knowledge base may play a considerable role in understanding the nature of that base, while at the same time possibly providing opportunities for the quantitative extension of mineable reserves. The historical background of economic production and prospecting also provides an invaluable picture, although retrospective, of the resources base itself. Table 4, for example, which shows the contribution of the world’s six most productive mines to historical world production of mercury, demonstrates significant geographical concentration of productive activity. Indeed, the extent of such concentration for any element appears to be a direct function of geological rarity. s2 It is perhaps surprising to find the potential for cartel activity so closely linked to the resource base. Historical production data may also provide detailed geological information on the qualitative and quantitative nature of commercially significant deposits, and it is the knowledge of such ‘geological signatures’ that may greatly assist prospecting activities. Fedorchuk has recently drawn together a considerable body of such data to help in this manner.s3 Apparently aware, however, that technoeconornic changes may force the descent of the resource quality profile, he has extended his analysis to consider some surprisingly low quality ores as potential economic deposits.54 It has been demonstrated that the knowledge base consists of the aggregation of a surprisingly wide field of data forms and theories, which both help to conceptualize and indeed discover the extent of the resource base. The discussion now turns to the consideration of one specific element of data that is slotted away in the knowledge base in the form of the ‘economic reserve’.

Economic reserves The concept of economic reserves, according to McKelvey, has already been defined, and, indeed, a figure for mercury’s identified economic reserves has been evaluated at approximately 7.2 x lo6 flasks (SI = 25; EI =19). Its position within the context of the

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The resource base and mercury Table 5. World economic reserve figures for mercury (inclusive of categories: measured, indicated and inferred). Country or area

a Source: p 12. b Source:

Bailey, E.

op tit, text

Bailey

and

R.

Ref 46, Smith,

Mercury - Its Occurrence end Economic Trends, Geological Survey Circular 496, Dept Interior, US Government Printing Office, Washington, DC, 1964, p 9. c Source: Cammarota, 60.

op cit. text Ref

1957a ‘000 flasks recoverable at flOll flaske

1962b ‘000 flasks recoverable at f69l f laske

North America Alaska USA Canada Mexico

40 275 300 130

\ 75 _ 125

320 370

200 300

South America

14

20

40

50

1 100 1 500 450 10 1 350 _

700 1 000 400 5 300 -

240 2 600 460 300 10

750 2 500 1 000 15 1 000 -

30

30

400 20 40 100

1 000 60 50 60

Europe Italy Spain Yugoslavia Czechoslovakia USSR Other European countries

d Source: Bailey et a/, op cit. text Ref 4.

Africa

e Price figures per flask in 1963 constant fs derived from exchange rate data in Statistical Abstract of the United States, Commerce, US Department of Government Printing Office, Washington, DC, and an inflation index from Central Statistics Office, London.

Asia China, mainland Japan Philippines Turkey

ss Roxburgh, op cit. Ref 4. w Ibid. STG. Greenspoon, ‘Mercury’, Minerals Facts and Problems, 1970, Bureau of Mines Bulletin 650, Dept Interior, US Government Printing Office, Washington, DC, 1970, p 650. s* Taking price-production relationship: -5roduction

= 1 123 Price + 75 023

finding % change in production at the two price levels, and applying pro rata to the reserve estimates. SeelRoxburgh. op tit, ----Ref 4.

270

Total

-

-

500 80 90 50

400 60 35 40

5 889

3 160

197oc ‘000 flasks recoverable at 61271 f laske

13””

5310

1973d ‘000 flasks recoverable at f94l f laske

1170

7185

resource sector of the theoretical model ensures that its technoeconomic dependence is kept in perspective, while production and prospecting can be seen to respectively drain and top-up the actual reserve figure. It is interesting, then, from this point of view to see whether the consideration of such features may be used to explain the movements of the economic reserve over time. Time series data for economic mercury reserves spanning nearly two decades are collected together in Table 5. The observed variations in the reserve levels at first sight appear surprising, but a plausible attempt at explanation can be made, drawing on data contained in Roxburgh.55 The period prior to the 1957 reserve estimate was, as study of price trends shows, characterized by the persistence of relatively high real price levels which would presumably have acted as a stimulus to prospecting activity and, therefore, have kept reserve levels well topped-up. In contrast the rapid decline in real price levels before the 1962 figures could have been expected to discourage prospecting activities, and thus reserves would presumably have been drawn on by production without replacement. As inclusive production from 1957 to 1962 was 1.4 1 million flasks it might have been expected that reserves would have been depleted by this amount resulting in a lower figure for 1962. The 1962 reserve figure was evaluated at a lower real price level than the 1957 datum and thus it would be expected that some reserves included in the latter figure would have become subeconomic and therefore have been excluded from the 1962 calculations. Basing the evaluation of such reserve losses to the subeconomic category on a derived price-production relationship,56 a technique sometimes employed by the US Bureau of Mines, 57it may be predicated that a loss of 1.12 million flasks would result.5* The combined operation, therefore, of these two considerations could well

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The resource base and mercury

6s ibid. wV. Cammarota, ‘Mercury’, in Minerals Yearbook, 1970, Vol 1, Bureau of Mines, Dept Interior, US Government Printing Dffice. Washinaton. DC. 1970. D 7 14. et ‘Optimistic Yeport on world’ reserves’, Financial Times, March 1974, p 23. a’ Sierra. op cit. Ref 12. p 410: and see R. Prain, Copper: The Anatomy of an Industry, Mining Journal Books, London, 1975, p 2 12 for a justification of Sierra’s remarks in the particular case of the copper industry. a Sierra, op cit. Ref 12, p 428. M Based on figures in ‘Mercury’, Mining AnnuelReview, 1973, p 239.

RESOURCES

POLICY December

have brought about a dwindling of reserves by about 2.53 million flasks, a factor which almost completely accounts for the disparity between the 1962 and 1957 figures. Comparison of the 1962 and 1970 reserve data is initially somewhat confusing. While the price-reserve relationship would have automatically pushed reserves up to about 4.5 million flasks,S9 and the high relative prices prevailing in the late 1960s would no doubt have stimulated sufficient prospecting activity to top-up reserves, the reserve figure remains bewilderingly lower than the 1957 estimate, made at a significantly lower real price level. It appears on examination, however, that the 1970 figures were derived directly from the updating of the 1962 data, at a time when estimates concerning the USSR and China were admitted to be inadequate.60 Reference to the 1973 estimates shows, indeed, that the total reserve estimate has been significantly transformed by the reappraisal of reserve figures for those two countries, and had such figures been included in the 1970 data it is likely that, in accordance with expectations, the reserve figure would have surpassed the 1957 estimate. The 1973 and 1957 reserve estimates, made at roughly the same real price level, support the illusion that no production had taken place from reserves at all in that time instead of the three million or so flasks that were actually recovered. Indeed, the 1973 estimate is about 20% higher. Other commentators, it appears, have noted similar phenomena. Thus, Connelly and Perlman have pointed out that relative to consumption trends, reserves have varied little over the last 40 years,6l while Sierra has suggested that because cost and production levels in the extiactive industry are programmed to guarantee an amortization of investments over time periods rarely greater than 10 or 20 years it is hardly surprising if reserve levels precisely cover the extent of that period.62 In other words reserve levels would be expected to be relatively static for periods, but probably in the long term would increase over time at a rate predetermined by production levels being experienced within the resource-associated industry. A feature of reserve estimates, which will have become evident from the discussion of the data in Table 5, is the essential incompleteness of such figures arising from the partial nature of the resource base. Indeed, the situation with respect to the estimates for the USSR and China in 1970 highlights this well. However, the 1973 estimates should not by comparison be assumed to be complete. Sierra has pointed out, for example, that Algeria, not even mentioned in the world league (Table 5), could have economic reserves totalling some 400 000 flasks,63 while an appraisal of Turkish reserves indicates a potential of some 784 000 flasks from that country.64 Such considerations emphasize the fact that the reserve estimate, even from a geological point of view, must be considered a dynamic concept, which, because of the uncertainties inherent in the knowledge base, may at times exhibit surprising behaviour. At no time may a reserve estimate be considered absolute.

Proven reserves The proven, or ‘measured’, fraction of economic reserves is the only physical certainty in the whole resource base, and only then, of

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The resource base and mercury

course, if technological and economic conditions permit. Such proven reserves have only been stated separately for the 1957 figures, of the data sets mentioned in Table 5, and in this case constituted more than ten years supply at the then prevalent production rates.65 Such an estimate would appear high, however, in view of the fact that, with the exception of Spain and Yugoslavia, few mines estimate ore reserves within the accuracy limits of the proven category for more than one year of operation ahead .66 Thus, a figure of one year’s world production, as was implicitly assumed in Figure 2, may be employed for the quantification of the proven reserve. This accounted for a mere 290 000 flasks in 1970, which represented only 4% of the total economic reserve. It can be seen, therefore, that the margin of resource that the extractive industry can in any sense rely on is surprisingly slight.

Conclusion

” Bailey, op tit, Aef 46, p 12. 6e Bailey et al, op tit, Ref 4. e7 See Ref 36. m See Roxburgh, op cit. Ref 4.

272

Much of this paper has been devoted to the development of a more meaningful conceptualization of the resource base than is frequently provided in the resource debate, and the provision of a perspective with which to view the individual elements of the resource sector in the theoretical model.67 The degree of uncertainty that surrounds many of the elements due to the incompleteness of the knowledge base is, in some cases, quite surprising. It appears that much of what is regarded, for example, as the economic reserve has a relatively low probability of occurring at all, and even then its quantitative estimation is bounded by wide margins of error. Furthermore, the economic reserve forms a relatively small part of the total resource picture, about which even less appears to be known. While attempts to extend the knowledge base to cope with the undiscovered resources such as McKelvey’s have been made, and the development of theories of the tectonic variety have helped pinpoint potential resource locations, there still remains a considerable degree of ignorance concerning the ultimate qualitative and quantitative form of the resource base itself. Until sufficient empirical data have been collected to give form to the sort of resource profile function discussed above, scenarios concerning the degree and timing of pressure placed by the resource base on the extractive sector are bound to be coarse. This necessarily poses problems from the point of view of the resource model, but it is argued elsewhere 6* that historical trends sufficiently illuminate the nature of the constraints imposed by the resource base for scenarios, based on less subtle conceptions of the resource limit, to be meaningfully sketched.

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