Resource potential and the economic assessment of extractive industry projects

Calculating the economic viability of deposits

In many partner countries of German development cooperation, the mining sector is a potential driving force for sustainable economic development. In the respective countries, the development and management of the mining sector is the responsibility of the national mining authorities. These authorities often lack the necessary expertise to be able to assess the actual value of a mining project. The value of a metal in the ground is an insufficient indicator of the actual economic viability of mining it. Therefore, mining authorities need to be able to make a rough economic assessment of known mineral deposits. This is where the Toolkit comes into play, which was developed as part of the "Extractives and Development" Sector Programme (Sector Programme) together with experts from the German Federal Institute for Geosciences and Natural Resources. It provides the mining authorities with a tool for the rough economic assessment of potential mineral resource projects, which can be used both in an early stage of development and in the subsequent feasibility study phase.

In the early stages of project development, the Toolkit can be used to assign a monetary value to mineral deposits and make them comparable to each other. In addition to the economic evaluation, other factors such as environmental and social impact, infrastructure and geologic potential of the region must be determined for a final assessment. Without these economic prerequisites, however, mining will not be possible. At the stage of the feasibility study of a mineral resource project, the Toolkit can be used again to check the plausibility of the profitability analysis. This means to examine whether the costs and profits given in the feasibility study are in the same order of magnitude as the results of the Toolkit. If they are not, it is important to check why this is not the case.

In 2016, the Toolkit was successfully implemented for the first time in the Main Department of Geology of Tajikistan. After two intensive training sessions with the Department's working group for economic geology, the project partners are now using the Toolkit independently and successfully for the economic reassessment of known mineral resource deposits.

After successful implementation in other partner countries of the Federal Ministry for Economic Cooperation and Development, the Toolkit has been digitalized and published now here on the website of the Sector Programme. It is now available to all interested stakeholders, namely geological experts from state authorities, companies, educational and scientific institutions.

Lecture 1 - From Exploration to a Mine

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Lecture 2 - Mineral Resources and Reserves

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Lecture 3 - Economic Appraisal of Mineral Resource Projects

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