GATE Mining Engineering Mineral Economics Syllabus

Mineral Economics syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Mineral Economics in GATE Mining Engineering, not a summary of it.

1. 1

   Mineral resource classification

   1 topic

   • Classification Criteria
2. 2

   Discounted cash flow analysis

   1 topic

   • Concepts and Applications
3. 3

   Mine Valuation

   1 topic

   • Valuation Methods
4. 4

   Mineral Taxation

   1 topic

   • Taxation Policies

Mineral Economics flashcards for GATE Mining Engineering

20 of 51 cards from the Mineral Economics deck — real questions with worked answers.

1. In mineral economics, what is a 'mineral resource' as distinct from a 'mineral reserve'?

   A mineral resource is a concentration of naturally occurring solid, liquid, or gaseous material in or on the earth's crust in such form and quantity that economic extraction is currently or potentially feasible. A reserve is the economically mineable part of a measured or indicated resource, demonstrated by a feasibility study with modifying factors applied.

2. What are the two principal criteria used to classify mineral resources/reserves under the McKelvey (USGS) box diagram?

   Geological assurance (degree of certainty of existence) on the horizontal axis — measured, indicated, inferred — and economic feasibility (economic, marginally economic, sub-economic) on the vertical axis.

3. Define 'Proved (measured) reserves' in resource classification.

   Reserves whose tonnage and grade are computed from dimensions revealed in outcrops, trenches, drill holes, and workings, with sampling so closely spaced and geology so well defined that size, shape, and grade are established with high confidence (lowest geological risk).

4. Distinguish between 'Probable' and 'Possible' reserves.

   Probable (indicated) reserves are estimated from data partly from measurement and partly from reasonable geological projection, with moderate confidence. Possible (inferred) reserves are estimated from limited sampling and assumed geological continuity, carrying the highest uncertainty.

5. Under the UNFC (United Nations Framework Classification), what are the three axes (E, F, G) used to classify mineral resources?

   E = Economic and social viability, F = Field project status and feasibility, G = Geological knowledge. Each is given a numerical code (e.g., E1F1G1 = highest assurance), producing a three-digit classification.

6. What is the difference between 'in-situ' reserves and 'recoverable' (extractable) reserves?

   In-situ (geological) reserves are the total mineral present in the ground. Recoverable reserves are the portion that can actually be extracted after applying mining recovery factor and accounting for dilution, pillar losses, and processing losses.

7. Define 'cut-off grade' and state its basic economic significance.

   Cut-off grade is the minimum grade of ore that can be mined and processed at a profit (or at break-even). Material above it is ore; material below it is waste. It separates economic from sub-economic material and directly controls reserve tonnage.

8. Give the break-even cut-off grade formula in terms of costs and price.

   $$g_{c} = \frac{C}{(P - S)\, R}$$ where $C$ = total cost per tonne of ore (mining + processing + G&A), $P$ = metal price per unit, $S$ = selling/refining cost per unit, and $R$ = recovery (fraction).

9. What is the 'stripping ratio' in surface mining, and how is it expressed?

   The stripping ratio is the amount of waste (overburden) that must be removed to extract one unit of ore, expressed as $$SR = \frac{\text{tonnes (or volume) of waste}}{\text{tonnes of ore}}.$$ It is a key economic criterion for open-pit feasibility.

10. Define the 'break-even stripping ratio' (BESR).

    The maximum stripping ratio at which mining remains economic: $$BESR = \frac{(\text{Value of ore per tonne}) - (\text{Cost of ore mining \& processing})}{\text{Cost of removing one tonne of waste}}.$$ Mining is profitable while the actual SR is below the BESR.

11. What does the principle of 'mineral conservation' encompass in mineral economics?

    The optimum utilization of mineral resources to avoid waste — including blending low and high grades, recovering by-products, minimizing dilution and losses, recycling, and timing extraction so that depletable resources yield maximum long-term social and economic benefit.

12. State Hotelling's rule for the optimal extraction of an exhaustible (non-renewable) mineral resource.

    Along an optimal extraction path the net price (royalty/scarcity rent) of the resource must rise at a rate equal to the rate of interest: $$\frac{\dot{p}}{p} = r,$$ so that the present value of the marginal resource unit is the same in every period.

13. Why are minerals described as 'wasting (depleting) assets', and what economic implication follows?

    Because mineral deposits are finite and non-renewable — extraction permanently reduces the stock. The implication is that a portion of mining revenue represents depletion of capital (not income), justifying depletion allowances and the concept of user cost/scarcity rent.

14. What is meant by the 'user cost' (depletion cost) of mineral extraction?

    User cost is the opportunity cost of extracting a unit of an exhaustible resource today rather than in the future — the present value of forgone future profit. It is added to direct extraction cost to obtain the true economic cost of present mining.

15. Define 'ore' versus 'gangue' versus 'tenor' in mineral economics terminology.

    Ore is a mineral aggregate from which one or more metals can be profitably extracted; gangue is the valueless rock/mineral associated with the ore; tenor (grade) is the metal content/concentration of the ore, usually expressed as a percentage or g/t.

16. What is 'ore dilution', and how does it affect the delivered grade?

    Dilution is the contamination of ore with waste during mining, lowering the mill feed grade. Diluted grade $$g_{d} = \frac{g_{o}\,T_{o}}{T_{o} + T_{w}}$$ where $g_o,T_o$ are ore grade/tonnage and $T_w$ is waste tonnage mined with the ore.

17. What is the basic distinction between metallic, non-metallic (industrial), and energy (fuel) minerals?

    Metallic minerals are sources of metals (Fe, Cu, Au, bauxite). Non-metallic/industrial minerals are valued for physical/chemical properties (limestone, gypsum, mica). Energy/fuel minerals provide energy (coal, lignite, petroleum, uranium).

18. In India, how are minerals classified as 'major' versus 'minor' minerals?

    The distinction is administrative/legal: minor minerals (e.g., building stone, gravel, ordinary sand, ordinary clay) are notified under the MMDR Act and regulated by State Governments; all others are major minerals regulated primarily by the Central Government.

19. What is the 'present value' (PV) of a future cash flow, and give its formula?

    PV is the current worth of a future amount discounted at the required rate of return: $$PV = \frac{C_{t}}{(1+i)^{t}}$$ where $C_t$ is cash flow in year $t$ and $i$ is the discount (interest) rate.

20. Write the Net Present Value (NPV) formula used in mine project valuation.

    $$NPV = \sum_{t=0}^{n} \frac{C_{t}}{(1+i)^{t}} - I_{0}$$ where $C_t$ is the net cash flow in year $t$, $i$ is the discount rate, $n$ the mine life, and $I_0$ the initial capital investment. A project is accepted if $NPV > 0$.

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