Economic Filters for Evaluating Porphyry Copper Deposit Resource Assessments Using Grade-Tonnage Deposit Models, with Examples from the U.S. Geological Survey Global Mineral Resource Assessment

Abstract

An analysis of the amount and location of undiscovered mineral resources that are likely to be economically recoverable is important for assessing the long-term adequacy and availability of mineral supplies. This requires an economic evaluation of estimates of undiscovered resources generated by traditional resource assessments (Singer and Menzie, 2010). In this study, simplified engineering cost models were used to estimate the economic fraction of resources contained in undiscovered porphyry copper deposits, predicted in a global assessment of copper resources. The cost models of Camm (1991) were updated with a cost index to reflect increases in mining and milling costs since 1989. The updated cost models were used to perform an economic analysis of undiscovered resources estimated in porphyry copper deposits in six tracts located in North America. The assessment estimated undiscovered porphyry copper deposits within 1 kilometer of the land surface in three depth intervals.

The results of the updated engineering cost model analysis for open-pit porphyry copper deposits are in agreement with the grade-tonnage boundary defining positive economic returns for copper deposits developed between 1989 and 2008. This correspondence demonstrates that the updated engineering cost equations are performing well and appear to be appropriate to evaluate the economic status of open-pit porphyry copper mines under current, and potentially future, economic conditions. Economic filters based on these simplified engineering cost models provide a method for estimating potential tonnages of undiscovered metals that may be economic in individual assessment areas.

One implication of the economic filter results for undiscovered copper resources is that global copper supply will continue to be dominated by production from a small number of giant deposits. This domination of resource supply by a small number of producers may increase in the future, because an increasing proportion of new deposit discoveries are likely to occur in remote areas and be concealed deep beneath covering rock and sediments. Extensive mineral exploration activity will be required to meet future resource demand, because these deposits will be harder to find and more costly to mine than near-surface deposits located in more accessible areas. Relatively few of the new deposit discoveries in these high-cost settings will have sufficient tonnage and grade characteristics to assure positive economic returns on development and exploration costs.

First posted November 1, 2012

Revised March 2014