Mineral and Energy Resources

Transcription

1 Mineral and Energy Resources

2 Overview Introduction Definition Physical volume Net present value Price Cost Production and resource life Discount rate Challenges Results

3 Introduction The ABS has measured the value of Australia s subsoil natural resources for a number of years. Estimates begin in and are published annually. Mineral and energy resources (Subsoil natural resources) are included as a non-financial nonproduced asset on Australia s national and sectoral balance sheets

4 Mineral and energy resources Defined in 2008 SNA to consist of - "Subsoil resources of coal, oil and natural gas, metallic minerals or non-metallic minerals that are economically exploitable given current technology and relative prices." Defined in SEEA to consist of - "Mineral and energy resources are defined as known deposits of oil resources, natural gas resources, coal & peat resources, non-metallic minerals and metallic minerals.

5 Economically demonstrated resources In the Australian System of National Accounts (ASNA), the volume of mineral and energy resources available for production is more accurately reflected by the term 'economically demonstrated resources' (EDRs) EDRs are those resources which have a very high probability of existence, and are economically feasible to extract, given current technology and relative prices EDR = proven plus probable resources

6 Joint Ores Reserves Committee (JORC) Code mineral resource categories Source: Geoscience Australia

7 Australia s national mineral resource classification system Source: Geoscience Australia

8 Net present value Net present value calculation for individual minerals NPV = ($P - $C) * N r / (1-((1+r)^-RL)) Where $P = price/unit $C = cost/unit (incl. normal return to capital) N = production r = discount rate RL = resource life = economically demonstrated reserves / N

9 The unit price represents the price paid for unprocessed minerals as at June 30 th Data sources: Price Commodity market prices Bureau of Resources and Energy Economics United States Geological Survey (USGS) State and Territory mining departments ABS published and unpublished data

10 Cost Mineral extraction costs are provided by a private consulting firm and are derived using company reported financial information from a sample set of mines and industry trends. Normal returns to capital are included to cover the cost of risk and uncertainty in exploration and development, and an overall long-term risk premium to cover price volatility and the general level of inflation.

11 Production and Resource life Production of mineral resources in Australia are published annually by Geoscience Australia in Australia's Identified Mineral Resources. Resource life is calculated as: Economic Demonstrated Resource Production This is a measure of how many years the resource can be mined for at the current rate of production. It does not take into account future discoveries.

12 Discount rate The discount rate chosen is based upon the Reserve Bank of Australia s (RBA) large business variable lending rate. The ABS assumes that a company's decision to commit resources is significantly influenced by costs of borrowing.

13 Iron Ore example Net present value calculation for Iron Ore NPV = ($P - $C) * N r / (1-((1+r)^-RL)) Where $P = $100 per tonne $C = $65 per tonne N = 600 tonnes per year r = 4.5% RL = 60,000 tonnes / 600 tonnes per year = 100 years NPV = ($100 - $65) * / (1-(( )^-100)) = $460b

14 Challenges Challenges for Australia include: Sourcing appropriate data Purchasing the cost estimates

15 Value of mineral and energy resources $B 1,200 1,000 Other minerals Petroleum products Iron Ore Copper, Gold and Antimony Coal

16 Mining Industry GOS $B Mineral and Energy Resources modelled GOS 120 Australian System of National Accounts Mining GOS

17 Value of depletion and additions $B Depletion 30 Net Additions Additions

18 Thank you