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Probable or indicated reserves represent material that can be
extracted at a profit under existing economic conditions and with
available technology, and which has been calculated by extrapolation based on geologic information and judgment, outward from drill holes or
other openings that have penetrated commercial concentrations of the
material. There is, in other words, substantial evidence that these
reserves exist, but the calculated quantities are subject to considerably greater uncertainty than those for proved reserves.
Possible or inferred reserves represent material that could be
extracted at a profit under existing economic conditions and with avail
able technology, which may lie beyond the boundaries of the reasonable
projection of probable reserves in areas of established production.
Speculative reserves are of two kinds: geologic, representing
material of a grade that could be extracted at a profit under existing
economic conditions and with available technology, which may exist in
areas of no present production and little geologic information,
economic, representing calculations based on assumptions of higher prices
or cheaper extractive technology, or both, but involving known concentra
tions of material too lean, too far from market, or in reservoirs too
refractory to allow economic exploitation under existing economic and
technologic conditions. This speculative category allows wide latitude
for geologic, economic and technologic judgment. Of the three reserve
categories it represents by far the least certainty. When geologic inference and technological forecasts are combined optimistically, very
large "reserve" figures may be promulgated.
Potential reserves include all categories of reserves except
proved. The term is logical but has led to the unfortunate practice
of adding together estimates of possible, probable, and speculative
Because these categories represent greatly differing ranges
of uncertainty, they must stand separately. Adding them together is
a little like adding numbers of apples, oranges, and hogs; the resulting number is essentially meaningless and unusable. In planning, the
categories of potential reserves need to be treated separately, with
the uncertainty factors sedulously evaluated.
Depletion is the diminution by extraction of the ultimately recoverable valuable material in a mineral deposit, or in an oil or gas field.
In a numerical sense, depletion equals production, but the term means
more than that; it relates production to the total ore, oil, or gas that
will be produced; if that latter figure could be known during production,
depletion could be expressed as a percentage of the total, rather than
in current production figures.
Exhaustion is the point reached when all proved reserves have been
Exhaustion is the end point of depletion.
It is retarded
by additions to reserves and hastened by production.
Secondary recovery is the process of salvaging scrap and obtaining from it a mineral commodity, generally metallic, essentially identical
to that produced by plants operating on mine products.
demand for a metal is that portion of the demand not satisfied by
In any time period, say a year, the total domestic
demand for a mineral commodity must be satisfied by some combination of:
(1) primary production from domestic and foreign ores (2) secondary recovery, (3) imports of processed material, and (4) withdrawals from
Primary consumption is the amount of material used or consumed
which has not been recycled.
Demand forecasts and their relation to depletion forecasts
The life of any mineral deposit or group of deposits depends,
as previously pointed out, on two factors only: the total amount of
economically recoverable material, and the rate of extraction.
greater the demand for a mineral commodity, the greater will be the
incentive for rapid extraction from mines or wells producing that
commodity or its ores.
Consequently, increased demand tends to shorten
production-history curves, while decreased demand tends to lengthen
In a place or period of relative abundance of mineral resources,
demand is encouraged, a stee
rising demand curve can be an instru
ment for planning, and planning is directed mainly toward increasing
supply. In a place or period of relative scarcity of mineral resources,
however, the demand side of the picture becomes much more important in
Until recently, most forecasts of U.S. demand for mineral resources
have been based on simple projections of recent consumption trends
occasionally modified by an assumption of technologic or political
change. The fact that the steep upward projections shown on many
charts could not continue indefinitely was ignored or denied.
Now, these projections are beginning to be challenged; by analysts
who regard the assumptions as naive, by economists who suspect that
rising prices for mineral commodities will curtail demand, by geologists
and engineers who doubt the existence of the resources necessary to
meet some of the projected demands, by environmentalists who foresee
more pollution and land-use problems from rising mineral exploitation
mineral and energy resources.
Good demand forecasts cannot be made independent of supply forecasts, for the cost of the supply will affect the demand, but they cannot be simple projections of consumption histories. It seems to have been overlooked
that a consumption curve is a demand curve only for the historic range of prices; a projection of a consumption curve can be used as a demand curve only if it reflects carefully reasoned price projections; this latter
requirement dictates a further requirement:
that demand and supply pro
jections be carried out simultaneously, and not separately. To regard demand for any commodity as independent of the supply available seems hazardous to planning, but especially is this true for nonrenewable resources, where supplies are limited by physical factors and susceptible to constraint by political action.
Demand forecasts require knowledge of the reasons for current consumption trends. The effects on consumption of population growth, of changes in life style and social goals, and of the availability of new technology and new consumer items, need to be differentiated and analyzed. Demand forecasts should reflect evaluations of technological change, as well as of government intervention in the supply-demand system.
An example of a widely used demand forecast that satisfies none of the above requirements is the demand forecast for natural gas in the United States published by the Future Requirements Committee in October 1971. Their projection to 1995 of national gas requirements
was based on a poll of every public and private organization that could
be identified as a supplier of gas, and two of the assumptions on which
it was predicated were:
(1) that a supply of natural gas adequate to
meet all requirements would be available during the entire period
covered by the projection, and (2) that the then current relations of
the cost of gas to other fuels would remain the same in the future!
projection based on such assumptions is rather difficult to find a good
Other examples of demand forecasts which appear to neglect both
predictable supply constraints and foreseeable technologic impacts on
consumption are readily available in the energy literature, where demand
curves tend to be simplistic projections of recent portions of consumption
It is predictable that increases in the cost of electricity,
already rather startling, will decrease potential demand, especially in the industrial sector. It is predictable that sharp increases in the
cost, on a per-mile basis, of gasoline and diesel fuel for automobiles,
will stimulate the demand for more economical vehicles which consume
less energy per mile.
It is predictable that demand curves for specific
energy materials will be strongly affected by new environmental require
ments that limit their use.
Demand curves for petroleum should somehow
reflect the probability that the gasoline-powered internal-combustion
engine within the next 20 years may be declared an unacceptable urban
citizen; if it is, not only will the demand curve for petroleum be
affected, but also the demand curve of the energy source for the re
It is predictable that increases in the cost of energy
will encourage energy conservation on many fronts, through better thermal