Reserves, stocks and depletion: What a reserves figure measures
Understanding Commodities / Module 4: Reserves, stocks and depletion Part 1 of 5What a reserves figure measures
Every mineral tile quotes a reserves figure, and most readers take it as the amount left in the ground. It is something narrower. This part explains how deposits are classified, why reserves behave like an inventory that companies choose how far to fill, and why national figures follow different rules.
1.1 Reserves sit in one corner of a two-way classification
The US Geological Survey sorts mineral deposits along two axes at once. One is geological certainty: how well a deposit's size, grade and shape are known. The other is economic feasibility: whether it can be worked at a profit with today's prices and technology. The scheme grew out of work by Vincent McKelvey, a former USGS director, and the diagram is called the McKelvey box.
On the certainty axis, identified resources are deposits whose location, grade and tonnage rest on specific evidence such as drill holes, trenches and samples. They divide into measured (sampling so close that the body is well defined), indicated (wider spacing, but enough to assume continuity) and inferred (extrapolated beyond the sampled zone). Undiscovered resources are only postulated, either in districts that already produce or in settings where nothing has yet been found.
On the economic axis, material is economic, marginal or subeconomic. Reserves are the part of the demonstrated (measured plus indicated) resource that could be extracted profitably when the estimate was made. The USGS also defines restricted reserves, which would qualify except that a law forbids mining them.
Tilton and Guzmán add the resource base: all of an element in the Earth's crust, at any grade. For copper they put it at about 1.5 million billion tonnes, against reserves of 0.7 billion tonnes in 2015.
The box makes one point plain. Material can cross from subeconomic to reserves without anyone touching the rock, if prices rise or a cheaper process appears, and it can cross back if costs rise. Reserves describe where geology, technology and price meet on one date.
1.2 Reserves are a working inventory, so they grow while being mined
The USGS itself calls reserves a working inventory, limited by drilling costs, taxes, prices and demand. Its own example: world copper reserves were about 280 million tonnes in 1970. Some 712 million tonnes were mined over the next half century, yet reserves in 2024 stood at 980 million tonnes, three and a half times the 1970 figure.
Oil tells the same story. Radetzki and Wårell quote the oil economist Morris Adelman: proved reserves were 51 billion barrels in 1944, 605 billion barrels were produced from 1945 to 1998, and 1,035 billion remained. Adelman's point was that reserves grew because of production, not despite it. Producing fields pay for the drilling that outlines more oil around them, and the oil finally recovered from a field has historically been about six times what was booked at discovery.
Why do firms not prove up more? Tilton argues that proving reserves costs money, and ore that will not be mined for three decades is worth little today. Once a company holds 20 to 30 years of output, more drilling rarely pays. Radetzki and Wårell show the result over the long run. Between 1925 and 2000 copper output rose ninefold and oil output 24-fold, yet reserves kept roughly in step, and the reserves-to-production ratio often sat near 30 years. From 1995 to 2018 copper reserves rose from 310 to 830 million tonnes.
A reserves figure therefore measures how much exploration and development the industry has so far found worth paying for. It says little about how much will ultimately be produced.
- USGS Mineral Commodity Summaries 2026, Appendix C web ↗ · pdf p. 221
- Radetzki & Wårell (2021), A Handbook of Primary Commodities in the Global Economy · pdf pp. 174-176
- Tilton (2003), On Borrowed Time? · pdf p. 32
- Conway (2023), Material World · pdf pp. 218-219
1.3 National reserve figures are built on different rules
No one audits world reserves. The USGS does not measure them; it compiles figures from governments, company reports, academic papers and trade journals. Some national numbers are old estimates carried forward for years because nothing new was reported. Others are old figures minus later production.
Listed companies report under codes. Firms on the Australian and New Zealand exchanges must use the JORC Code, written by Australian industry bodies together with the exchange. Firms on the Toronto exchange follow a similar Canadian standard, National Instrument 43-101. Both set minimum standards for public reporting and keep resources (measured, indicated, inferred) separate from reserves (proved and probable). Humphreys explains why this matters: Toronto lists about 1,600 junior explorers and the Australian exchange about 1,000, and their share prices rest on what they report.
Government inventories use other conventions. Geoscience Australia reports Economic Demonstrated Resources, which add measured and indicated resources to JORC proved and probable reserves. The USGS reports Australia's reserves as accessible EDR and the gap is wide: Australian copper reserves appear as 100 million tonnes, but JORC-compliant or equivalent reserves are 27 million. For lithium the figures are 8.4 and 5.1 million tonnes. Russia's system, inherited from the Soviet Union, layers categories A, B, C1 and C2 with balance and off-balance reserves, and it is often unclear which is quoted, or whether a figure means ore or metal.
A country's share of world reserves on any tile therefore depends partly on how generously it counts, and a world total adds up numbers built on different rules, some of them years out of date.
See it in the table
Cu CopperAu GoldLi LithiumCheck your understanding
The copper price rises by half and stays there. No new drilling takes place. What should happen to reported copper reserves?
Reserves are the economic part of identified resources at the time of estimation. A higher price moves material across the economic boundary of the McKelvey box without any new geological information.The USGS lists Australian copper reserves at 100 million tonnes, but JORC-compliant reserves are 27 million tonnes. Why?
Geoscience Australia's EDR combines JORC proved and probable reserves with measured and indicated resources. The USGS reports the accessible part of that broader figure for Australia, so it is not comparable with company-reported JORC reserves.Adelman said oil reserves grew 'not despite interim production but because of it'. What mechanism did he mean?
Reserves are an inventory built by investment. Development drilling around producing fields and better recovery keep adding to what is booked, which is why ultimate recovery has been several times the volume recorded at discovery.