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J^ 8887
Bureau of Mines Information Circular/1982
x^^^'
The Bureau of Mines Minerals
Availability System: An Update
of Information Circular 8654
By Herbert R. Babltzke, Aldo F. Barsotti,
Joseph S. Coffman, Jerrold G. Thompson,
and Harold J. Bennett
UNITED STATES DEPARTMENT OF THE INTERIOR
'v>?''e,^;S
Information Circular 8887
r8
The Bureau of Mines Minerals
Availability System: An Update
of Information Circular 8654
By Herbert R. Babitzke, Aldo F. Barsotti,
Joseph S. Coffman, Jerrold G. Thompson,
and Harold J. Bennett
UNITED STATES DEPARTMENT OF THE INTERIOR
James G. Watt, Secretary
BUREAU OF MINES
Robert C. Horton, Director
0^'^
%n
As the Nation's principal conservation agency, the Department of the Interior
has responsibility for most of our nationally owned public lands and natural
resources. This includes fostering the wisest use of our land and water re-
sources, protecting our fish and wildlife, preserving the environmental and
cultural values of our national parks and historical places, and providing for
the enjoyment of life through outdoor recreation. The Department assesses
our energy and mineral resources and works to assure that their development is
in the best interests of all our people. The Department also has a major re-
sponsibility for American Indian reservation communities and for people who
live in Island Territories under U.S. administration.
This publication has been cataloged as follows:
The Bureau of Mines minerals availability system.
(Information circular ; 8887)
Bibliography: p. 26.
Supt. of Docs, no.: I 28.27:8887.
1. MAS (Computer system). I. Babitzke, Herbert R. II.
Series:
Information circular (United States. Bureau of Mines) ; 8887.
TN295.U4 [TN153] 622s [025'.06553] 82-600099
AACR2
PREFACE
The Minerals Availability System (MAS) was formally established by the
Bureau of Mines in May 1975 to provide current appraisals of the engi-
neering and economic availability of nonfuel minerals for consideration
in the formulation of both domestic and foreign minerals policy.
The Bureau of Mines has been involved in both mineral commodity sur-
veys and property evaluations for many decades, although these earlier
assessments of minerals availability were generally limited in scope to
either specific sites or, at best, domestic occurrences. The Bureau of
Mines earlier efforts were summarized in Information Circular 8654, "The
Bureau of Mines Minerals Availability System and Resource Classification
Manual," published in 1974.
With the advances in data processing technology and through the con-
solidation of the Bureau's data collection and analysis expertise since
the publication of Information Circular 8654, several changes have been
made in the system. It has also been expanded to include foreign min-
eral deposit data. This report summarizes these improvements in the
Minerals Availability System.
All publications described in this report are available from the
Superintendent of Documents, Washington, D.C. 20402. Requests for MAS
data and/or computer programs should be directed to the Division of Min-
erals Availability, 2401 E Street, N.W., Washington, D.C. 20241.
D
ill
CONTENTS
Page
Preface 1
Abstract 1
Introduction 2
Mission 3
Program plan 3
Organization 3
Division of Minerals Availability 4
Minerals Availability Field Office 4
System procedures 5
Deposit Identification and selection. 5
Data collection 6
Domestic 7
Foreign 7
Resource and deposit description. 7
Engineering and cost evaluation 9
Deposit report 12
Data base 12
Data utilization 14
Verification 14
Economic evaluation 14
Sensitivity analysis 16
Products 18
Mineral Industry Location System (MILS) 18
MAS data base 20
Mine map repository 20
Cost estimating system 24
MINSIM 24
MAS publications 24
Technical services 24
Bibliography 26
Appendix A. — Glossary 27
Appendix B. — MAS data base organization 28
Appendix C. — MINSIM Input parameters 38
Appendix D. — MAS data base printout 41
ILLUSTRATIONS
1 . Generalized organization chart 4
2 . MAS program workflow 5
3 . Bureau of Mines field operations centers 7
4 . Classification of mineral resources 8
5. The MAS data base — a deposit description 13
6. Sample availability curves 16
7 . Sensitivity analysis curves 17
8. MILS entry form 19
9. Clustered MILS locations — sample Mylar overlay 21
10. Leadvllle, Colo., 1:250,000 scale quadrangle 21
11. Partial listing of MILS locations 22
12. Partial listing of complete MILS data 23
13. Surface mining operating costs 25
TABLE
1. Time frame for determining worldwide availability of selected strategic
minerals .
3
THE BUREAU OF MINES MINERALS AVAILABILITY SYSTEM: AN UPDATE
OF INFORMATION CIRCULAR 8654
By Herbert R. Babitzke, 1 Aldo F. Barsotti, l Joseph S. Coffman,2
Jerrold G. Thompson, 3 and Harold J. BennetfS
ABSTRACT
The Minerals Availability System (MAS) was formally established by the
Bureau of Mines in May 1975 to provide current appraisals of the engi-
neering and economic availability of nonfuel minerals for consideration
in the formulation of both domestic and foreign minerals policy. Domes-
tic mineral property reports are developed by the Bureau's four Field
Operations Centers, and foreign data are obtained under contract. This
site-specific information is subsequently subjected to engineering veri-
fication and economic evaluation, and the results are analyzed and pub-
lished as Minerals Availability System Appraisals.
The deposit-specific data are also entered into the computerized MAS
data base, where a subset of this information, the Mineral Industry
Location System (MILS) , is available to the public in the form of com-
puter graphics and listings. Other MAS products are also described.
The Bureau's MAS personnel are frequently involved in special engi-
neering and mineral economic projects for other Federal and State agen-
cies. MAS personnel also work closely with the private sector, both in
the area of mining and processing cost estimation, and as a source of
nonproprietary mineral deposit information,
-
'Physical scientist. Division of Minerals Availability, Bureau of Mines,
Washington, D.C.
■'Physical scientist. Minerals Availability Field Office, Bureau of Mines,
Denver, Colo.
■^Supervisory physical scientist. Minerals Availability Field Office, Bureau of
Mines, Denver, Colo.
INTRODUCTION
The United States is vulnerable to
interruptions in both domestic and for-
eign minerals supply that could adversely
impact its economy. Formulating meaning-
ful minerals policy options requires a
comprehensive knowledge of the many fac-
tors affecting mineral supply; accurate
appraisals of the distribution and avail-
ability of the world's mineral resources
are essential to such knowledge. Accord-
ingly, the Interior Department's Bureau
of Mines, to provide a reliable source of
such appraisals, established the Minerals
Availability System. This system is
designed to measure and classify known
domestic and foreign mineral resources
according to each deposit's engineering
and economic availability. The informa-
tion is used in the compilation of
comprehensive worldwide minerals availa-
bility studies. These determinations
provide guidance to the development or
modification of national minerals policy,
and can be of direct benefit to programs
concerned with mineral stockpile assess-
ment, minerals exploration, extraction
technology research, tax restructur-
ing, substitute material studies, land
utilization, etc.
A number of Minerals Availability Sys-
tem overviews, as well as detailed
descriptions of portions of the MAS Pro-
gram, have been published in the past;
however, this report provides the first
comprehensive description of the overall
Bureau of Mines MAS Program.
The Bureau of Mines has been involved
in both mineral commodity surveys and
property evaluations for many decades,
although these earlier assessments of
minerals availability were generally
limited in scope to either specific
sites or, at best, domestic occurrences.
The MAS concept, which addresses the
importance of determining availability
through concentrated engineering and min-
eral economic evaluations conducted on a
current worldwide basis, was conceived by
the Bureau of Mines in the late 1960's.
Formal recognition of the Minerals Avail-
ability System as a viable program
occurred in May 1975, when existing field
efforts to gather and systematically
store in-depth mineral deposit data
(11) , ^ and personnel involved in the eco-
nomic evaluation of mineral properties
(J^-_2, 6^]_) were brought together. As
data collection efforts continued in the
Bureau's four Field Operations Centers, a
small System Operations Group was formed
in the Denver, Colo., field office to
coordinate the data gathering function,
institute economic evaluation procedures,
and develop more efficient methods of
handling the volume of information enter-
ing the system.
Initial data collection efforts empha-
sized domestic mineral properties, but
the effort was soon expanded to give pro-
portional emphasis to the gathering of
foreign mineral deposit data. While the
collection of domestic data continued to
be accomplished by the Bureau's four
Field Operations Centers, foreign infor-
mation was initially acquired through
university grants; these grants were sub-
sequently replaced by contracts with
private mining engineering firms obtained
through competitive bidding, with the
first contract of this type being awarded
in September 1977.
The operational requirements of the MAS
necessitated that the initial sequential
computer system using punched card input
( 11 ) be replaced by an online data base
management system with remote batch data
entry and real-time retrieval capabil-
ities; this new system was implemented in
1977.
The General Accounting Office (GAO)
conducted an audit of the Minerals Avail-
ability System in 1977, and subsequently
issued a report on July 17, 1978 (13).
One GAO recommendation was that the
Bureau of Mines should recognize the Min-
erals Availability System as a priority
program. Accordingly, the Division of
Minerals Availability was created on
October 1, 1979.
'Underlined numbers in parentheses
refer to items in bibliography preceding
the appendixes.
I
MISSION
The mission of the Minerals Availabil-
ity System is to provide current apprais-
als of the engineering and economic
availability of nonfuel minerals for con-
sideration in the formulation of both
domestic and foreign minerals policy.
Since this is accomplished through the
systematic engineering and economic
evaluation of significant mineral depos-
its throughout the world, it has been
necessary for the Bureau of Mines to
develop both a repository of in-depth,
on worldwide
reservoir of
site-specific information
mineral occurrences, and a
professional engineering and mineral eco-
nomic expertise required to accomplish
these minerals availability appraisals.
In addition to the compilation of miner-
als availability studies, the Bureau's
MAS personnel are frequently involved in
special engineering and mineral economic
projects for other Federal and State
agencies.
PROGRAM PLAN
The 1981 MAS 5-year plan involves the
determination of the worldwide availabil-
ity of 23 strategic nonfuel minerals
within a specified time frame. These
mineral commodities, and the projected
completion dates for their initial avail-
ability appraisals, are given in
table 1.
TABLE 1 . - Time frame for determining worldwide availability
of selected strategic minerals
Commodity
Fiscal year
Domestic
Foreign
Commodity
Fiscal year
Domestic
Foreign
Copper
Aluminum
Chromium
Cobalt ,
Manganese. . . . <
Phosphate. . . . .
Lead and zinc,
Nickel
Platinum
Iron
Tin ,
1979
1981
1981
1981
1981
1981
1982
1982
1982
1983
1983
1981
1981
1982
1982
1982
1982
1983
1982
1982
1983
1984
Potash
Fluorine
Tungsten
Asbestos
Titanium
Columbium and tantalum
Mercury
Gold
Silver
Molybdenum
1984
1984
1983
1984
1983
1984
1984
1983
1983
1984
1984
1984
1983
1984
1983
1984
1984
1983
1983
1984
The selection and prioritization of
these minerals was influenced by the
Council on International Economic Policy
(CIEP) 1974 Special Report entitled
"Critical Imported Materials" (the Bureau
of Mines participated in the development
of this report). Although the CIEP
report identified 33 critical mineral
commodities, the Bureau included only
23 commodities in the 1981 5-year plan.
The ultimate objective of the MAS program
is to maintain current assessments on the
engineering and economic availability of
all nonfuel mineral coimnodities.
ORGANIZATION
The MAS program is an activity of the
Assistant Director — Mineral Data Analysis
of the Bureau of Mines. Direction and
coordination are provided by the Divi-
sion of Minerals Availability (DMA)
in Washington, D.C., with all minerals
availability studies and appraisals being
accomplished by the Division's Denver,
Colo., facility — the Minerals Availabil-
ity Field Office. Primary domestic data
gathering and deposit evaluations are
accomplished by the Bureau's four Field
Operations Centers, while foreign mineral
property information is collected through
external contracts. An organization
chart of the mineral Data Analysis func-
tion appears in figure 1.
Division of Minerals Availability
The Division of Minerals Availability
has formal responsibility for the manage-
ment and coordination of the overall Min-
erals Availability System. The Division
Chief provides direction and control of
all MAS activities, performs management
functions including resource allocation,
establishes operational relationships
with outside organizations, and performs
budget justification, acquisition, and
distribution. Within DMA there are three
principal staff elements (Supply Technol-
ogy and Costs, Mine Evaluations, and
Supply Analysis), and the Minerals
Availability Field Office located in
Denver, Colo.
The principal functions of the Supply
Technology and Costs staff are management
of the Division's financial resources,
maintenance of operational and technical
standards, and quality control of the
computer network. The Mine Evaluations
staff is responsible for the coordination
of deposit evaluation progress, including
foreign data collection through external
contractors, and liaison with the
Bureau's commodity and country special-
ists. The Supply Analysis Manager is
responsible for managing mineral economic
and sensitivity analysis activities as
well as data base utilization within the
MAS.
Minerals Availability Field Office
Under the direction of the DMA, the
Minerals Availability Field Office (MAFO)
is responsible for the engineering feasi-
bility verification and economic evalua-
tion of all site-specific data received
from the Field Operations Centers and
Assistant
Director —
Mineral Data
Analysis
Division of
Minerals
Availability
HEADQUARTERS
FIELD
Division of
Minerals Policy
and Analysis
State
Liaison
Office
Minerals
Availability
Field Office
Alaska
Field Operations
Center
Eastern
Field Operations
Center
Intermountain
Field Operations
Center
State
Liaison
Field Offices
Western
Field Operations
Center
FIGURE 1. - Generalized organization chart.
private contractors, and the compilation
of these data into commodity specific MAS
appraisals. The review and quality con-
trol of the MAS data base and the design
and implementation of the analytical
methods and products needed for economic
and supply-availability analysis, are
performed with the computerized sys-
tem support of the WANG VS^ and the
Burroughs 6800 system. In order to
accomplish these studies, the MAFO per-
sonnel have strong backgrounds in the
disciplines of mining engineering, metal-
lurgy, geology, and mineral economics.
Because of this expertise, the office has
been involved in numerous special assist-
ance projects relating to mining engi-
neering and mineral economics for other
Federal, State, and municipal agencies.
SYSTEM PROCEDURES
The sequential MAS procedures required
to accomplish availability appraisals
can be grouped into three categories:
(1) deposit identification and selec-
tion, (2) data collection, and (3) data
utilization. Activities within each of
these major functions are in themselves
sequential, thus forming the components
of the MAS program workflow shown in
figure 2.
Deposit Identification and Selection
Input from a consortium that included
contributors from Federal and State
Governments, industry, educational insti-
tutions, and other mineral-related organ-
izations was used in the deposit
identification and selection process.
This widely varied input was valuable in
the identification of all significant de-
posits for a given commodity, and was
initiated and coordinated by the Program
Manager, Mine Evaluations, and staff.
Typically, deposit identification began
with literature search combined with
meetings and/or correspondence with com-
modity and country specialists of the
Bureau of Mines, commodity geologists of
the U.S. Geological Survey, State Geolo-
gists, and other government and nongov-
ernment geologists or mineral special-
ists. A preliminary list of deposits was
developed, and further refined through
several iterations of this activity,
until a reasonable assurance was achieved
by all participants that the list was
inclusive.
Identification
and selection
Data
collection
Data
base
Data
utilization
Identification
and
selection
Mineral |
I Industry |
1 Location 1
1 System 1
1 (MILS) 1
1 data
1 1
MAS
computer
data
base
of deposits 1
Tonnage
and grade
determination
'
Engineering
and cost
evaluation
•
\
Deposit
report
preparation
MAS
permanent
deposit
files
♦
1
Data
verification and
validation
Taxes.
royalties.
cost indexae .
prices, etc. . .
Economic
evaluation
y
Data
Variable and
parameter
adjustments
Sensitivity
analysis
Availability
curves
Analytical
reports
^
Data
Availability
curves
Analytical
reports
FIGURE 2. - MAS program workflow.
'Reference to specific equipment does not imply endorsement by the Bureau of Mines.
Concurrent with the development of the
list of identified deposits, abbreviated
deposit records were computerized for the
purpose of documenting the selection and
monitoring the progress of these deposits
in subsequent MAS activities. This mon-
itoring system, which contains data on
property names, ownership, location, type
of mining, production status, principal
commodities present, and resource ton-
nages and grades, is called the Advanced
Deposit Information and Tracking (ADIT)
system; it resides on a Wang 2200 VS
minicomputer system in the DMA offices in
Washington, D.C. Other fields included
for each deposit record in the ADIT sys-
tem pertain to the funding and evaluation
status of that deposit, and the tracking
of the evaluation progress.
Having thus developed a list of depos-
its along with the required information,
certain general criteria were then used
to determine which of the identified
deposits for a given commodity should be
selected for further evaluation. These
criteria include the following:
While a reasonable attempt was made to
adhere to the assessment of at least
85 percent of the production or known
resources of a particular mineral commod-
ity, these guidelines are of necessity
flexible in order to accommodate special
circumstances of resource potential. The
guidelines for the lower limits at which
a mine or deposit would be evaluated are
adjusted to the total content of con-
tained commodity, the grade of the com-
modity, and possible byproducts.
Since the ADIT system is considered to
be fundamental in the identification of
significant mineral properties for evalu-
ation, it is constantly being maintained
and updated in preparation for potential
revisions in MAS appraisals. As part of
the subsequent data collection effort, it
is occasionally discovered that a se-
lected deposit no longer meets the gen-
eral selection criteria, resulting in the
removal of that deposit from further
evaluation; or that a deposit not previ-
ously considered should be incorporated
into the evaluation process.
Producing properties accounting for
at least 85 percent of the commodity pro-
duction; that is, 85 percent of the cumu-
lative domestic production or 85 percent
of the cumulative world production.
Developing deposits where the demon-
strated reserve-resource quantity (con-
tained commodity) is equivalent to at
least the lower limits of the reserve-
resource quantity of the identified pro-
ducing deposits.
- Explored deposits where the demon-
strated reserve-resource quantity (con-
tained commodity) is equivalent to at
least the lower limits of the reserve-
resource quantity of the identified pro-
ducing deposits.
- Past producing properties where the
remaining demonstrated reserve-resource
quantity (contained commodity) is equiv-
alent to at least the lower limits of the
reserve-resource quantity of the identi-
fied producing deposits.
Data Collection
Following the identification and selec-
tion of all mineral deposits to be in-
cluded in each availability study, the
next step was to acquire site specific
geological and engineering data on each
identified property. The type of data
collected on an individual deposit basis
includes those required to make grade and
tonnage determinations, describe and
develop a mining and benef iciation plan
for a specified annual rate of produc-
tion, estimate the associated capital
and operating costs, and perform an
economic evaluation using a discounted
cash flow rate of return (DCFROR)
method.
Sources of the information range from
literature search to onsite visits, dur-
ing which all available information (for
example, maps, private reports, and
resource data) is obtained from the owner
or operator.
Domestic
Foreign
Domestic deposit data collection and
evaluations are performed by evaluators
in the Bureau of Mines four Field Opera-
tions Centers (FOC's), following sched-
ules established by the Program Manager,
Mine Evaluations. The four Field Centers
involved in the domestic data collection
process are the Alaska Field Operations
Center (AFOC) located in Juneau, Alaska,
the Eastern Field Operations Center
(EFOC) in Pittsburgh, Pa., the Intermoun-
tain Field Operations Center (IFOC) in
Denver, Colo., and the Western Field
Operations Center (WFOC) in Spokane,
Wash. Figure 3 identifies the Centers
and their respective geographical areas
of responsibility.
Foreign deposit data collection and
evaluations are performed by contractors
selected through the Government's com-
petitive procurement procedure. The
preparation of technical specifications
and the monitoring of contract progress
is performed by the Minerals Availability
Field Office under the oversight of the
Program Manager, Mine Evaluations.
Resource and Deposit Description
Resources are described in terms of the
geology, mineralogy, grade, tonnage, eco-
nomics, and reliability of the data (8) ^
and are classified according to the
system defined jointly by the Bureau
Juneau
Alaska Field Operations Center
FIGURE 3. - Bureau of Mines field operations centers.
of Mines and the U.S. Geological Sur-
vey (12) , illustrated in figure 4. If
reliable resource estimates are not
available in publications or through com-
pany contacts, deposit geometry is out-
lined in order to calculate volumes and
tonnages .
The resource or deposit must be
described to the extent that a mining and
benef iciation plan can be established
using current industry practices. Ele-
ments that must be addressed in the
resource and deposit description include
the following:
Identification
Property name
Type of operation
Current status
Ovmership
Location by coordinate
Resource description
Type of deposit
Shape of deposit
Attitude and structural fea-
tures affecting ore controls
and mining.
Type of mineralization
Economic minerals
Deposit dimensions, thickness of min-
ing horizons, veins, or zones.
Reserve-resource quantity, commod-
ity assay, and year of estimate.
The assay must include all
commodities that are current-
ly or potentially recoverable or
that may affect the recovery
or marketability of recoverable
commodities.
Cumulative
production
IDENTIFIED RESOURCES
UNDISCOVERED RESOURCES
Demonstrated
Measured Indicated
Inferred
Hypothetical
Probability range
(or)
Speculative
Economic
Marginally
economic
Sub-
economic
Reserve
base
Inferred
reserve
base
+
+-
other
occurrences
Includes nonconventional and low-grade materials
FIGURE 4. - Classification of mineral resources.
Engineering and Cost Evaluation
Realistic development plans using the
resource and deposit description data are
prepared in sufficient detail to allow
the estimation of the capital and operat-
ing costs required to produce and market
the contained minerals. The type of data
collected or developed by the individual
preparing the engineering cost study is
as follows:
Surface Mining
Design capacity (metric tons per
24 hours — ore and waste).
Operation schedule (shifts per day,
days per year) .
Average annual production rate (met-
ric tons of ore and waste and
year(s) used for average), destina-
tion of ore and waste.
Year of initial production, ore pro-
duction for prior 15 years or
years since startup, whichever is
less.
Specific mining methods and percent
of production from each method,
thickness of mineralized zone.
Operation schedule (shifts per day,
days per year) .
Average annual production rate (met-
ric tons of ore and waste and
year(s) for average).
Excavation and loading methods and
major equipment utilized, ore and
waste.
Haulage methods, average haul dis-
tances, and major equipment utilized
for ore and waste.
Orebody access and haulage — orebody
access methods and ore haulage
facilities as indicated by the
following:
1 . Underground haulage methods ,
major equipment (size and number)
utilized, and average haul distance
and elevation difference.
2. Hoist(s) identification — desig-
nation, location (placement), type,
use, general area served, height or
depth.
Destination or placement of ore and
waste; that is, stockpile, dump,
tailings dam, etc.
Breakage requirements and major
equipment utilized; powder factor.
Dilution factor, waste: ore ratio,
average thickness of mining horizon.
Water drainage requirements — descrip-
tion of methods, rate, head.
Year of initial production, ore pro-
duction and grade for prior 15 years
or years since startup, whichever is
less.
Underground Mining
Design capacity (metric tons per
24 hours — ore and waste).
3. Inclines and adits — length or
depth.
Rock hardness-abrasiveness, powder
factor, support-lining requirements.
Water drainage requirements — descrip-
tion of methods, rate, head.
Mine diagram and plant layout, if
available.
Benef iciation
Benef iciation methods
Feed grade, each method. Explain any
dilution and/or blending that make
this grade different from the
in situ commodity grades.
10
Design capacity, each method (metric
tons of feed per 24 hours).
Average production rate (metric tons
of feed per year and year(s) used
for average).
Operation schedule (shifts per day,
days per year) .
Commodity recoveries
Beneficiation product identification
Product type
Product grade
Product quantity (metric tons per
year) .
Description of size reduction meth-
ods,, final grinding size.
Tailings disposal — description of
methods, including distance and
methods of transport, pumping head,
and impoundment methods.
Major equipment utilization, size and
number.
Flowsheet
Manpower requirements (mine and mill)
Labor
Technical
Supervisory ^
Fay schedules
Productivity (metric tons per man-
shift or analysis of manpower
efficiency).
Infrastructure^ — Quantification of
the following elements:
Access and haulage facilities
Roads and railroads
Pipelines
Conveyors
Tunnels
Other
Water supply facilities
Power supply
Personnel accomodations
Other
Postmine Processing
Location
Type of process used
Capacity (input and output)
Sources of feed from producing and
potential developments.
Grade of input and output
Estimates of costs, penalties, etc.,
charged to customers.
Ownership
^The purpose of the infrastructure data
is to identify those areas of infrastruc-
ture that a deposit would need in order
to develop the reserve-resource. If this
infrastructure exists, or can be built at
no cost to the deposit, this should be
identified.
11
These engineering and cost evaluation
data items reflect the current or pro-
posed future practices at existing opera-
tions. For the explored and developing
properties, they reflect the development
plans proposed by the corporate entity
controlling the deposit. If a plan is
not available, the evaluator is required
to develop a plan.
To insure that the evaluations are per-
formed on a common basis, guidelines are
developed by DMA for each commodity. In
these guidelines the specifications of
the marketable product are established.
Categories for which capital costs are
developed include acquisition of the
property, exploration, development,
infrastructure, and mine and mill plant
and equipment . Capital expenditures for
the mining and processing facilities
include the costs of mobile and station-
ary equipment, construction, engineering,
facilities and utilities, and working
capital. Facilities and utilities (that
is, infrastructure) cover a broad cate-
gory that includes the costs of access
and haulage facilities, the water system,
fire protection, roads, fences, fuel and
power facilities, etc. Working capital
is a revolving cash fund required for
operating expenses such as labor, sup-
plies, taxes, and insurance.
Total operating cost is a combination
of direct and indirect costs. Direct
operating costs include materials, utili-
ties, direct and maintenance labor, and
payroll overhead. Indirect operating
costs include technical and clerical
labor, administrative costs, facilities
maintenance and supplies, and research.
Other costs developed during the deposit
evaluation are fixed charges including
taxes, insurance, depreciation, deferred
expenses, and interest payments (if
applicable) .
Actual costs associated with a deposit
are used when available; these are usu-
ally obtained from published or company
data. Engineering estimates must be made
where actual costs are either nonexistent
or unavailable. In this instance, the
final results are compared to actual data
obtained from company Annual Report Form
10-K's, published articles, or company
representatives. For those deposits for
which data are not available, a compari-
son is made with the available costs for
deposits having similar characteristics,
such as the mining and benef iciation
methods, and rate of production.
To assist in the estimation of costs,
the Bureau handbook titled "Capital and
Operating Cost Estimating System Manual
for Mining and Benef iciation of Metallic
and Nonmetallic Minerals Except Fossil
Fuels in the United States and Canada"
was developed under contract (4_) . This
cost estimating system (CES), based on an
average of the costs for existing opera-
tions in the United States and Canada,
covers operations of varying sizes. Con-
ditions that were unique to an operation
and influenced the cost were factored
from the actual cost to obtain the aver-
age cost; factors are provided to adjust
the average cost to reflect more severe
situations. Since the objective was to
develop a method for the preparation of
feasibility type estimates for capital
and operating costs of mining and bene-
ficiation of various types of mineral
occurrences using state-of-the-art tech-
nology, the handbook was developed for a
user with knowledge and experience in
both mining and estimating procedures.
The expected variance of the estimated
total capital and operating cost, and the
expected actual cost for an operation, is
plus or minus 25 percent; however, there
may be a wider variance for any single
component (that is, loading, crushing,
etc.) between the handbook-derived cost
and the expected actual cost.
In order to compare worldwide costs on
a common basis it is necessary to convert
the foreign deposit data to U.S. cur-
rency. Also, the cost data require
updating on an annual basis. To accom-
plish this as well as the determination
of costs such as taxes and depreciation,
specific economic indexes, country spe-
cific tax regulations, and monetary
exchange rates are collected and applied.
12
Since CES was developed for use in
estimating U.S. costs, factors have also
been developed so that the derived costs
take into account the differences of pro-
ductivity, labor rates, tariffs, and
items affecting the cost of doing busi-
ness in a specific nation. These data
have been or are in the process of being
collected for 95 foreign countries.
Additional cost data, if required to
market the commodity, are developed for
postconcentration processing and trans-
portation to market.
An economic time diagram (ETD), which
is a complete time sequence of the capac-
ities and grades versus investments and
operating costs required to produce the
marketable product (s) over the life
of the property, is subsequently con-
structed. This is the end product of the
engineering and cost evaluation process,
and it is included in the deposit
report.
Deposit Report
Reporting requirements for the MAS pro-
gram include the preparation of a deposit
report detailing the engineering and cost
evaluation results. All supportive data
items including identification, resource
and deposit description, development
plan, mining and processing methods, and
capital and operating costs are ad-
dressed. In addition, backup files con-
tain all pertinent material collected
during the investigation. These backup
files, for domestic reports, are main-
tained at the appropriate Bureau of Mirtes
Field Operations Center. For foreign
deposits the backup data files are main-
tained at the Minerals Availability Field
Office. Backup files generally con-
tain data relating to the following
categories:
- Deposit file reports for deposits
selected for inclusion in mineral supply
availability study.
- Smelter, refinery, and other post-
mine or postmill processing data.
- Worldwide mining and metallurgical
technological data.
- Worldwide geologic and topographic
maps and various mine maps and plant
flowcharts.
- Mining company proprietary reports.
- Trip reports from property visits
and other information obtained through
personal contact with industry officials.
- Supporting data and calculations
used to derive resource quantities and
materials flow.
- State and foreign country tax and
economic data.
- References and source material used
in the deposit evaluation.
Data Base
As previously described, for each de-
posit evaluated within the MAS program a
large amount of site-specific data are
both gathered and computed. Descriptive
information, along with all geologic and
engineering data pertinent to that
deposit, form the basis for both a
deposit report and for a computer data
base deposit record. While the text of
the deposit report contains details,
maps, tables, and the rationale for engi-
neering and cost estimates, it is the
data that are eventually entered into the
MAS data base which are used, directly or
indirectly, to perform the analytical
functions that allow determination of the
availability of resources from that
deposit.
Deposit records of MAS data reside
on the Bureau's Burroughs 6800 computer
located in Denver, Colo. Although the
structure of the MAS data base has
evolved significantly from its initial
development in the early 1970' s. Informa-
tion Circular 8654, "The Bureau of Mines
Minerals Availability System and Resource
Classification Manual," published in
1974, described in detail the various
13
data elements that still comprise the
bulk of deposit data on the present MAS
data base.
Each property record on the MAS con-
sists of over 418 specific items of data
or "data elements." In some cases indi-
vidual data elements themselves , are com-
posed of a series of values, such as
"capital investments" over time. Orga-
nizationally, the 418 data elements are
grouped into 32 categories or "data sets"
(fig. 5). These 32 data sets are grouped
into the following five major categories
of information:
- Deposit identification
- Deposit definition
- Development plan
- Product definition
- Environmental assessment
Within each of these five major cate-
gories the data sets are of two types:
those which contain information essential
for overall availability assessment of
the deposit, or "base data sets," and
those that contain additional information
used by the deposit evaluator in making
the investigation, or "backup data
sets."
H
H
PLS
*
Deposit
location
Names
Ospoalt
idantification
Owners
MILS
H
H
H
Commodity
Bibliography
Comments
Reserves
—\
Assay |
Deposit
definition
History
-H
Exploration |
Tonnage
and grade
Geometry
H
Production 1
Quantity
-
— [
Assay
Lithology
Mineralogy
Mine description
Surface
Underground
Ocean
Development
plan
Mill
description
Feed 1
Development
schedule
Infrattructura
Capital/Supplies
Investment
description
Labor
requirements
Transportation
description
Equipment
requirements
MINSIM
Engineering
and cost
Product
definition
Smelting and
refining
description
Product
Yield
Market
description
Environmental
assessment
^
Waste
disposal
Environmental
description
Environmentel
regulations
* Indicates
nonproprietary
Information
FIGURE 5. - The MAS data base-a deposit description.
The deposit identification base data
set encompasses location, topography,
name of the deposit, and the commodities
present. The backup data sets for this
category include information on public
land surveys , additional names , owner-
ship, references, and comments. This
category or data set is most important to
the MAS data base, for it is through this
data set that all other data sets on the
MAS are accessed. This data set forms
the basis for all properties on the MAS,
including postmill processing plants and
other mineral related industry sites, and
is referred to as the MILS (Minerals
Industry Location System) data set. To
date there are over 180,000 records in
the MAS data base for which required
information in this MILS data set have
been entered. (A further discussion of
the MILS is given in the "Products" sec-
tion of this report.)
The deposit definition data set con-
tains information on quantities of
resources and the assays of commodities
in the resource. Backup data sets
include published reserve information,
exploration and production histories,
deposit geometry, lithology, and
mineralogy.
The deposit development plan base data
set relates a time frame to the mining
and milling plan(s), and also includes
investment and transportation schedules.
Backup data sets contain mine and mill
descriptions, infrastructure, labor and
14
equipment requirements, and economic
evaluation data.
The product definition data set defines
the type and amount of recoverable com-
modities from the deposit. Its backup
data sets identify further smelting,
refining, and market requirements.
The environmental assessment data set
describes the effect that the development
of the properties has, or would have
(depending on its present production
status), on general environmental condi-
tions. Backup data sets identify
expected waste disposal and environmental
regulations. Appendix B contains the
name of the data elements within each of
the respective data sets.
Domestic deposit data entry is the
responsibility of the Bureau's Field
Operations Centers, where original evalu-
ations are performed and entered into the
MAS data base. Foreign data are received
from contractors by MAFO and are entered
into the MAS data base by that office.
Much of the data in each record is per-
manent, such that it will not change,
while other information is temporal or
subject to change given new information
or perspective on the specific deposit.
Examples of fixed information are lati-
tude, longitude, lithology, mineralogy,
etc. Temporal information includes
development schedules and costs.
Resource data as well as mine and mill
plans are also subject to change when new
information is obtained. Maintenance of
the MAS data base is therefore required
for both the temporal and dynamic infor-
mation, and is the responsibility of both
the Field Centers and MAFO. In addition,
all costs are dated on the data base, so
that through cost update programs values
can be converted to constant time unit
values for analysis.
As previously mentioned, the MAS data
base resides on the Bureau's Bur-
roughs 6800 computer. Management of the
data base is accomplished through the
Burrough's data base management system,
DMS II. Input to the data base is made
through WANG 2200 VS peripheral computers
located in the Field Centers and MAFO,
which interface with the Burroughs
through telecommunications. Data output
from the Burroughs is achieved through
standard input-output devices, including
Tektronix terminals and Cal-Comp plotters
for graphics output.
Becaus
much of
access t
base is
elements
so that
listings
can be
public.
e of the proprietary nature of
the data in the MAS data base,
o the information on the data
restricted. Proprietary data
are "flagged" within the system
security can be maintained and
of nonproprietary information
made available to the general
Data Utilization
Verification
Copies of all deposit reports and sup-
portive data are forwarded to MAFO for
use in developing analyses of the avail-
ability of the contained minerals on a
domestic and worldwide basis. Data
received from the Field Operations Cen-
ters and the contractors are reviewed by
MAFO for feasibility and consistency. In
this verification process, which provides
the first opportunity for all deposits
relating to a specific mineral commodity
to be examined collectively, significant
data items such as costs and recovery
factors are arrayed and compared in order
to identify anomolies; further review of
the anomolous data indicates whether the
variation is warranted, or inconsist-
encies exist in the development of the
plan and/or costs. MAFO personnel use
the supportive backup information, resi-
dent technical expertise (that is, mining
engineers, metallurgists, mineral econo-
mists, and geologists), and CES in the
verification procedure.
Economic Evaluation
Data derived during the engineering and
cost evaluation, and the verification
process, reside in the ETD's; these are
used in an economic feasibility analysis
of each deposit, which indicates the
15
economic availability of the deposit in
terms of the cost (inferred commodity
price) per unit of recoverable mineral
commodity at a specified return on
unamortized capital investment.
In the late 1960's the Bureau of Mines
developed the MINSIM (MINeSIMulator) com-
puter program, which simulates a mining
operation during its productive life
using specific operating characteristics,
costs, and revenues (2^, _7 ) . This program
is a comprehensive economic evaluation
simulator that enables the user to per-
form DCFROR analyses. As an option, this
computer program can also be used to
determine the mineral commodity selling
price required to obtain a specified rate
of return, or net present value of an
operation at a specified rate of return.
A listing of the MINSIM input parameters
is contained in appendix C.
Using the results of MINSIM, discrete
economic evaluation-mineral resource
availability curves were manually assem-
bled. However, because of the growing
need to rapidly analyze the impact of
several factors upon the availability of
a commodity and to modify information
within a defined population of deposits
(for example, domestic phosphate, world-
wide copper), a Supply Analysis Model
(SAM) was developed (5^). This model com-
bines the MINSIM program with peripheral
subroutines and data files, permitting
the modification of deposit data param-
eters either within the total defined
population, or upon selected deposits, as
required. Scenarios can be made to
observe the impact of legislation at the
local. State, or Federal level which may
impact costs either directly or through
taxation. Analyses can also be made by
varying input parameters to determine the
impact of changing grade, recovery fac-
tors, energy costs, labor rates, return
on invested capital, severance taxes,
depletion allowances, investment credits,
tax holidays, and other deposit and eco-
nomic considerations.
The output from SAM is presented in
both tabular and graphic form. Graphic
output consists of individual deposit
tonnage and cost data aggregated as
resource availability curves. Two gen-
eral types of resource availability
curves, based upon degree of certainty
and geographic coverage, are currently
used.
One type of curve (fig. 6, curves A
and B) does not consider time, but is a
representation of the toal available
recoverable quantity of resource at a
unit cost (price) and at a specified rate
of return on unamortized invested capi-
tal. Curves of this type, developed
through the economic evaluation of
worlwide deposits, define the worldwide
reserves for particular commodities as a
function of cost. The unit cost on the
curve, compared with current market unit
cost, permits the classification of each
deposit's material as economic, subeco-
nomic, or marginally economic at a spe-
cific point in time. The deposit infor-
mation also is categorized as to the
degree of certainty of the geologic
knowledge concerning the resource, (that
is, measured, demonstrated, or identi-
fied). The system further permits updat-
ing for inflation, production, and price
changes, in order to provide an availa-
bility assessment for a future time per-
iod (for example, 1979 data can be
updated to reflect the situation in
1981).
The total availability curve is a dis-
continuous function relating the level of
average total cost for individual depos-
its to the cumulative level of production
from the deposits throughout their lives.
This type of curve is different from a
traditional economic supply curve. It is
the sum of total potential production
from each deposit at incremental commod-
ity costs, which covers the full (rather
than the marginal) cost of production for
each deposit. It is assumed that the
given price and associated level of out-
put (or capacity) remain constant over
the entire producing life of the prop-
erty. The curve shows the availability
of a commodity at specified long-run
costs.
16
1.76 -
Coat* include 15% rat* of return
T 1 1
1—
*
on invastsd capital
_r
-
-
-
-
-
-
y^
.
/•
_r
®
-
2.00
Cpsts Include 15% rate of return
on Invested capital
10 2030405060708090
TOTAL RECOVERABLE COPPER, million metric tons
100 110
80 120 160 200 240 280 320
TOTAL RECOVERABLE COPPER, million metric tons
360
2.7S
2.50
2.25
2.00
1.75
1.50
1.25
1.00
.75
.50
.25
Costs include 15% rate of return
1980 ;1982 |1984 Il990
-
on invested capital
1 1 )
-
-
J
1 ! 1
-
_
-
-
r
-
I 6
1
I 1
1 I
to $2.00 .
— ._ to $1.25
®
Copper price is in January 1980 dollars per pound, costs
include 15% rate of return on invested capital
2 4 6 8 10
ANNUAL RECOVERABLE COPPER, million metric tons
12
0»—
1980
1988
YEAR
1990
1992
FIGURE 6. - Sample availability curves.
Other types of curves (fig. 6, curves
C and D) are disaggregations of the total
curve data on an annual production basis.
All coproduct and byproduct credits are
also considered in the economic evalua-
tion process.
All curves
assumptions:
are based on the following
- Preproduction development for feach
nonproducing deposit begins in January of
the year of the study.
- Production starts immediately after
completion of development regardless of
demand.
- Each operation will produce
capacity throughout its life.
at full
- Competition and demand conditions
are such that each operation will be able
to produce all of its output at the
derived cost (price).
Sensitivity Analysis
Using the SAM, sensitivity analysis can
be performed on selected input variables
to measure their significance to the
costs and availability of resources from
a deposit or group of deposits. Input
values that have been measured include
taxes (State and Federal), depletion
allowance, byproduct credits, energy
costs, transportation, payment schedules,
capital costs, operating costs, proposed
grants or loans, and labor costs. Exam-
ples of sensitivity analysis using the
MAS can be seen in figure 7. Four input
factors to the SAM -were tested (under
separate runs) to determine if they had
any significant economic impact on the
17
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