# Reserves, stocks and depletion: Key terms, quiz and sources

Source page: https://www.materialinsights.org/learn/commodities/reserves-stocks-depletion/review/

[Understanding Commodities](https://www.materialinsights.org/learn/commodities/) / [Module 4: Reserves, stocks and depletion](https://www.materialinsights.org/learn/commodities/reserves-stocks-depletion/) Wrap-up

## Reserves, stocks and depletion: review

### Key terms

**Resource**
: A concentration of material in or on the Earth's crust from which economic extraction is currently or potentially feasible (USGS).

**Identified resources**
: Resources whose location, grade and quantity are known or estimated from specific evidence, subdivided into measured, indicated and inferred.

**Reserves**
: The part of the demonstrated resource that could be economically extracted at the time the estimate is made.

**Resource base**
: All of an element contained in the Earth's crust, whatever its grade or cost of recovery.

**McKelvey box**
: A diagram classifying mineral deposits by geological certainty on one axis and economic feasibility on the other.

**JORC Code and NI 43-101**
: The Australasian and Canadian codes that set minimum standards for listed companies reporting exploration results, resources and reserves.

**Reserve life (R/P ratio)**
: Reserves divided by a year's production; a snapshot of an inventory, not a countdown to exhaustion.

**By-product**
: A metal recovered from ores mined mainly for another metal, so its supply is capped by the host metal's output.

**Fixed-stock paradigm**
: The view that each mineral is a finite stock that demand must eventually exhaust.

**Opportunity-cost paradigm**
: The view that depletion is measured by what society gives up for an extra unit, tracked through real prices, marginal costs and the value of reserves.

**User cost (Hotelling rent)**
: The present value of future profit forgone by extracting a unit of a finite resource today rather than later.

**Hotelling rule**
: Under strict assumptions, the net value of a resource in the ground rises at the rate of interest.

**Cumulative availability curve**
: A curve showing how much of a mineral can be recovered profitably over all time at each price.

**In-use stock**
: Materials embodied in buildings, infrastructure, machines and durable goods that are still in service.

**New scrap and old scrap**
: New scrap arises in manufacturing and is almost all recycled; old scrap comes from products at the end of their lives and is costlier to recover.

**End-of-life recycling rate**
: The share of metal in discarded products that is recovered.

**Recycling input rate (recycled content)**
: The share of metal entering use that comes from scrap.

**Convenience yield**
: The net benefit of holding the physical commodity rather than a futures contract, which falls as inventories grow.

**Stocks-to-use ratio**
: Ending stocks of a crop divided by its use in the same year; low values signal a tight, volatile market.

### Try it in the table

- Open [Copper](https://www.materialinsights.org/commodities/copper/), [Zinc](https://www.materialinsights.org/commodities/zinc/), [Lithium](https://www.materialinsights.org/commodities/lithium/) and Phosphate and divide reserves by mine production for each. Then recompute at 5 per cent growth with ln(1 + N x 0.05) / ln(1.05). Which ranking changes most, and which tile's reserves are most concentrated in one country?
- Open [Crude oil](https://www.materialinsights.org/energy/crude_oil/) and compare OPEC's share of proved reserves with its share of production. Look at Venezuela in particular, and ask what a reserves ranking tells you about who will supply oil in ten years.
- Open [Lead](https://www.materialinsights.org/commodities/lead/), [Copper](https://www.materialinsights.org/commodities/copper/), Aluminum and [Lithium](https://www.materialinsights.org/commodities/lithium/) and compare their end-of-life recycling input rates. Use product lifetimes and the growth of in-use stocks to explain why lead is near 83 per cent and lithium near zero.
- Open [Wheat](https://www.materialinsights.org/commodities/wheat/), [Maize](https://www.materialinsights.org/commodities/maize/) and [Rice](https://www.materialinsights.org/commodities/rice/) and recompute each stocks-to-use ratio without China's stocks. Which market is tightest for an importer that cannot buy Chinese grain?
- Open [Rare earths](https://www.materialinsights.org/commodities/rare_earths/) and [Cobalt](https://www.materialinsights.org/commodities/cobalt/) and read the government stockpile and policy lines. Connect the US purchases of neodymium-praseodymium oxide and Congo's cobalt stockpile to the export restrictions each tile describes.
- Open [Steel](https://www.materialinsights.org/commodities/steel/) and [Iron ore](https://www.materialinsights.org/commodities/iron_ore/) and compare where each tile says the stock that matters sits. Why does a fast-growing steel producer depend more on ore than a mature one?

### Final quiz

World copper reserves were about 280 million tonnes in 1970. About 712 million tonnes were mined afterwards. What does the USGS report for 2024, and why?
 Reserves are a working inventory. They grew to 3.5 times the 1970 figure despite mining far more than the 1970 total.

A government report lists a country's reserves as 'Economic Demonstrated Resources'. Compared with company JORC reserves for the same deposits, this figure will usually be:
 EDR combines JORC reserves with measured and indicated resources, which is why Australia's USGS copper reserves (accessible EDR) of 100 million tonnes exceed JORC reserves of 27 million.

Between 1985 and 1988 Saudi, UAE, Iranian and Iraqi proved oil reserves jumped by large amounts while non-OPEC reserves stayed flat. What is the soundest interpretation?
 The revisions came in single-year steps, during the period when OPEC was negotiating quotas, and the Energy Institute warns that national figures need not meet company reporting standards.

Which statement best captures Tilton's opportunity-cost view of depletion?
 The paradigm focuses on what an extra tonne costs society. History shows long periods when technology won the race, but the outcome is not guaranteed.

Why did the Hotelling rule fail as a guide to oil prices in the 1980s?
 Radetzki and Wårell call the 1980s use a perversion: analysts applied a rule about in-ground values to market prices, under assumptions that exploration and technology violate.

Yaksic and Tilton's cumulative availability curve for lithium suggests that long-run lithium prices are capped because:
 Seawater holds tens of billions of tonnes of recoverable lithium. Once land deposits are exhausted, that horizontal segment of the curve sets a ceiling on price.

Smil reports that the global steel to pig iron ratio fell from 1.48 in 2000 to 1.39 in 2010. What does this show?
 When in-use stocks grow fast, little steel is reaching the end of its life, so primary iron must supply most inputs regardless of how well scrap is collected.

In August 2010 Russia banned wheat exports after a drought, and wheat prices more than doubled between June 2010 and February 2011. Why was the effect so large?
 Price spikes come from the interaction of a shock with low tradable stocks. The ban removed a major source of exports, and importers' extra buying deepened the shortage.

[Next module: Prices and cycles →](https://www.materialinsights.org/learn/commodities/prices-and-cycles/)

### Sources for this module

- U.S. Geological Survey (2026). Mineral Commodity Summaries 2026: Appendix C, Reserves and Resources; Introduction; and the Cobalt, Copper, Lead, Lithium, Phosphate Rock, Rare Earths and Zinc chapters. [web ↗](https://pubs.usgs.gov/publication/mcs2026) · pdf pp. 13, 75-77, 119, 123, 147, 157, 217, 221-224
- Tilton, J.E. & Guzmán, J.I. (2016). Mineral Economics and Policy. RFF Press / Routledge. · pdf pp. 76-84, 136-137, 141, 221-241
- Tilton, J.E. (2003). On Borrowed Time? Assessing the Threat of Mineral Depletion. Resources for the Future. · pdf pp. 30-34, 72
- Radetzki, M. & Wårell, L. (2021). A Handbook of Primary Commodities in the Global Economy, 3rd ed. Cambridge University Press. · pdf pp. 110-111, 136-138, 157, 172-186, 210-214, 235
- Conway, E. (2023). Material World: A Substantial Story of Our Past and Future. W.H. Allen. · pdf pp. 210-220
- Krausmann, F. et al. (2017). Global socioeconomic material stocks rise 23-fold over the 20th century and require half of annual resource use. PNAS 114(8): 1880-1885. [web ↗](https://doi.org/10.1073/pnas.1613773114) · pdf pp. 1-5
- Smil, V. (2016). Still the Iron Age: Iron and Steel in the Modern World. Butterworth-Heinemann. · pdf pp. 136-144, 227-230
- Yergin, D. (1991). The Prize: The Epic Quest for Oil, Money, and Power. Simon & Schuster. · pdf pp. 675-676, 703, 1322
- Humphreys, D. (2015). The Remaking of the Mining Industry. Palgrave Macmillan. · pdf pp. 13, 41, 68, 76, 142-143, 231-232
- Blas, J. & Farchy, J. (2021). The World for Sale: Money, Power and the Traders Who Barter the Earth's Resources. Random House Business. · pdf pp. 81-82, 231-239
- Geman, H. (2005). Commodities and Commodity Derivatives: Modeling and Pricing for Agriculturals, Metals and Energy. Wiley. · pdf pp. 36-37, 154-155, 163, 173, 195-196
- Morgan, D. (1979). Merchants of Grain. Viking Press. · pdf pp. 486-489
- Pitron, G. (2020). The Rare Metals War: The Dark Side of Clean Energy and Digital Technologies. Scribe. · pdf p. 64
- Scheyder, E. (2024). The War Below: Lithium, Copper, and the Global Battle to Power Our Lives. Atria. · pdf p. 113
- Pirrong, C. (2014). The Economics of Commodity Trading Firms. Trafigura. · pdf p. 14
- European Commission (2023). Study on the Critical Raw Materials for the EU 2023: Final Report. [web ↗](https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials_en) · pdf pp. 34-36, 122
- Energy Institute (2024). Statistical Review of World Energy, data workbook. [web ↗](https://www.energyinst.org/statistical-review) · Oil - Proved reserves; Oil - Proved reserves history
- U.S. Department of Agriculture (2026). World Agricultural Supply and Demand Estimates, WASDE-676, October 2026. [web ↗](https://www.usda.gov/oce/commodity/wasde) · WASDE pp. 8, 18-19, 22-25

## Other sections

- [Module overview](https://www.materialinsights.org/learn/commodities/reserves-stocks-depletion/index.md)
- [What a reserves figure measures](https://www.materialinsights.org/learn/commodities/reserves-stocks-depletion/p1/index.md)
- [Reserve life and why it misleads](https://www.materialinsights.org/learn/commodities/reserves-stocks-depletion/p2/index.md)
- [Depletion: fixed stock or rising cost](https://www.materialinsights.org/learn/commodities/reserves-stocks-depletion/p3/index.md)
- [The stock above ground: materials in use and recycling](https://www.materialinsights.org/learn/commodities/reserves-stocks-depletion/p4/index.md)
- [Inventories: the buffers between harvest, mine and market](https://www.materialinsights.org/learn/commodities/reserves-stocks-depletion/p5/index.md)