Reserves Versus Resources- a Cautionary Tale

Many of the Malthusian predictions of shortages or materials limitations we hear as nirvana fallacy arguments against the transition away from wasting fossil resources as fuels, are based on a common misunderstanding. People hear the words "reserves" and "resources" used, and think they know what these terms actually mean- but don't.

https://www.dhirubhai.net/pulse/part-3-lithium-cobalt-risky-materials-paul-martin/

My article about the critical battery minerals lithium and cobalt, contains a quote from the Appendix of the US Geological Survey Reports, that more people should read. It is very instructive:

USGS Mineral Commodity Summary: Appendix C- Reserves

“ Reserves data are dynamic. They may be reduced as ore is mined and/or the extraction feasibility diminishes, or more commonly, they may continue to increase as additional deposits (known or recently discovered) are developed, or currently exploited deposits are more thoroughly explored and/or new technology or economic variables improve their economic feasibility. Reserves may be considered a working inventory of mining companies’ supply of an economically extractable mineral commodity. As such, the magnitude of that inventory is necessarily limited by many considerations, including cost of drilling, taxes, price of the mineral commodity being mined, and the demand for it. Reserves will be developed to the point of business needs and geologic limitations of economic ore grade and tonnage. For example, in 1970, identified and undiscovered world copper resources were estimated to contain 1.6 billion metric tons of copper, with reserves of about 280 million metric tons of copper. Since then, almost 500 million metric tons of copper have been produced worldwide, but world copper reserves in 2015 were estimated to be 720 million metric tons of copper, more than double those of 1970, despite the depletion by mining of more than the original estimated reserves. Future supplies of minerals will come from reserves and other identified resources, currently undiscovered resources in deposits that will be discovered in the future, and material that will be recycled from current in use stocks of minerals or from minerals in waste disposal sites. Undiscovered deposits of minerals constitute an important consideration in assessing future supplies. USGS reports provide estimates of undiscovered mineral resources using a three-part assessment methodology (Singer and Menzie, 2010). Mineral-resource assessments have been carried out for small parcels of land being evaluated for land reclassification, for the Nation, and for the world.

Reference Cited: Singer, D.A., and Menzie, W.D., 2010, Quantitative mineral resource assessments—An integrated approach: Oxford, United Kingdom, Oxford University Press, 219 p.”

Just as often, we hear people talking about daft ideas for producing materials or energy that we need. The flavour of the month seems to be "natural hydrogen"- nearly pure hydrogen that we can produce merely by drilling holes in the right places in the earth.

Well, here's a very little thought experiment which will help people to understand, at least a little, the difference between "reserves" and "resources" in a mining/materials recovery context.

The oceans are vast. A rough estimate of the volume of the earth's oceans is 1.33 million cubic kilometres.

And the oceans have gold in them. The average concentration is very low - 0.05 parts per billion, i.e. 0.05 micrograms per kilogram of seawater.

Multiply that volume times that mass, and take today's spot price of gold of $88/gram, and you get a "value" for the gold in the oceans of about $6 trillion. Wow- that's a tremendous resource, isn't it?!

Is it a resource? Well, most people would disagree with even that characterization- but it is real gold, and we know where it is. So in a sense, it is a resource.

But for that gold in the ocean to be considered a "reserve", it has to be practical to mine it economically. There has to be a practical path by which that gold could be concentrated from vast quantities of seawater to produce gold ingots or gold compounds we could sell. And the value of the gold we recover has to pay for everything- capital, energy, and other operating costs. If we make other products from our process, we can take credit for their value too. So whether or not it's a reserve, depends on the value of the material in the market, and the cost of production and transport to market.

But all we need is to answer a question I remember being asked in a Chem Eng 101 homework question in 1st year. I can't remember people's names, but sure, my brain is full of useless artefacts like this- go figure!

The homework question was exactly this one: figure out if the gold in seawater can ever be monetized. No guidance at all was given, though before the internet was available on every computer, I believe they did give us the average concentration to help us avoid a trip to the library.

My solution was simple: assume that we have a magic apparatus which causes gold to jump out of a swimming pool into an ingot, requiring no other labour or materials or energy. All we need to do is to raise the seawater 20 metres above sea level to our swimming pool using a pump, to overcome frictional losses etc.

Take a basis of 1 m3 or ~ 1000 kg of seawater. 1 significant figure is good enough- we're doing a Fermi level estimate here!

1000 kg x g x 20 metres is 196 kJ of potential energy increase. We'd need to feed ~0.1 kWh of electricity to a 60% efficient pump to make that happen. At 5 cents per kWh, that would cost us about 0.5 cents.

That's almost exactly the same as the spot price of the entire average amount of gold in that m3 of water. The gold wouldn't even pay for the energy to run the pump, much less also pay for the pump, and the swimming pool, and whatever "magic" device we put in there to cause the gold to jump out of its own volition.

It's quite clear to me, even from that Fermi level calculation, that no process which has real operating and capital costs, can ever turn the gold in seawater into an economically recoverable resource, i.e. a reserve.

Of course some will turn around and say, "C'mon! You could use some kind of magical sorbent which pulls gold out of the seawater. That would take even less energy than pumping the water 20 metres in elevation!". And you'd be quite wrong about that. I'm confident that the energy required to overcome entropy alone would cost you more than the value of the gold you'd recover. Things don't jump up a concentration gradient by 11 orders of magnitude of their own accord- the 2nd law frowns on that.

What you'd need to do is to find some seawater, or freshwater, with a concentration quite a few orders of magnitude higher than that. Or, you'd need to look at other things that are present in seawater at much higher concentrations.

Magnesium, for instance. 1 m3 of seawater contains about 1.3 kg of magnesium metal.

https://magratheametals.com/

Is seawater a resource for magnesium? It has been in past. Dow Chemical made magnesium from seawater at a commercial scale for decades. Do the same calculation as we did for gold, and the resource of magnesium available on earth is orders and orders of magnitude more than we could ever possibly use.

Metal without mining. How cool is that?

Of course it's not quite fair to call the ocean a resource for magnesium today. Nearly all the world's magnesium today is made by a dirty, labour-intensive, GHG-emissive ferrosilicothermic reduction called the Pidgeon process, in China, and the starting material for that is dolomite (Mg + Ca carbonate) rock. Magrathea is intent on changing that though!

Now: back to "natural" hydrogen for a moment. It's apparently quite common to find hydrogen in the subsurface. It can be produced by the gamma radiolysis of water by naturally occurring radioactivity, and by reaction of a variety of iron-containing minerals with water in the deep subsurface.

Are these naturally occurring hydrogen deposits, considered a hydrogen resource? Well, that's debatable.

There's one well, in Mali, which is producing substantially pure hydrogen. Its output is, depending on who you believe, somewhere between 0.3 and 3 barrels of oil equivalent (BOE) per day. That's a tiny amount of energy.

According to Dr. Arnout Everts, an experienced geologist:

"None of the H2 finds to date are observed in “reservoirs”, that is, in rocks with significant storage capacity (porosity or molecular adsorption like in coalbed methane) where H2 can be stored in material quantities at excess pressure. Instead they are like natural H2 "seeps", background readings of H2 in fractured/fissured but otherwise tight rocks. Such settings lack pressure support or “drive” and consequently, production rates would inevitably be low."

To be of "reserve quality", a resource needs to have good estimates of quantity, known producibility (i.e. we need to know how fast it can be drawn from a well, in the case of a gas or liquid), and it must be possible to produce at a cost which is lower than the current price for the product.

So far, no meaningful reserves of natural hydrogen have been discovered. Is a resource which contains no reserves, actually a resource?

While I do hope we find lots of it- in reserves large enough to supply even a single ammonia plant or direct iron reduction facility for the ~ 30 years necessary to make such an investment worthwhile, I'm not confident that we will find any such reserves. I sincerely doubt that we've missed such a reserve with every well we've ever drilled for gas, oil, water, geothermal power, or to explore for other minerals in past.

It is actually quite reckless for people to be claiming that there have been "discoveries" of natural hydrogen "resources", before any of these has been proven to be of reserve quality. In fact, depending on who is making that claim, they may be in violation of rules which were set up to prevent people from being duped by false "gold rushes". We must remember that Mark Twain quipped that the definition of a "mine" is "a hole in the ground with a liar standing next to it". Per a recent post by investment advisor Patrick Portolano:

As is the case with other mining exploration ventures, all commercial claims should be backed by an ??independent qualified?person??(QP) statement (see for instance Toronto Stock Exchange regulations - https://lnkd.in/dCrGXVkj)

Food for thought, the next time you hear about a "massive find" of natural hydrogen!

Disclaimer: This article has been written by a human, and humans are known to make mistakes. Show me where I've gone wrong, with a good reference, and I will correct this material with gratitude.

If you're just mad because I've taken a dump on your pet idea, feel free to contact my employer, Spitfire Research Inc., which will be happy to tell you to piss off and write your own article.