Discussion on the Classification of Solid Mineral Reserves

(1) The Background Behind the Current Classification and Grading of Resource Reserves

(2) Revised Implementation Plan for the "Inner Square, Outer Circle" Technical Approach

(3) New Concepts for the Revised Plan

(4) Properly address the issue of aligning with international standards.

(1) The Background Behind the Current Classification and Grading of Resource Reserves

The original intention behind the formulation of the Classification of Solid Mineral Resources/Reserves (GB/T17766—1999, hereinafter referred to as the 1999 Classification) was to align with the market economy system and international standards. Therefore, it adopted a technical approach that drew upon the United Nations International Framework for Mineral Reserves/Resources Classification. At the time when the classification, grading, and standardization system had just been established in 1992, in 1994 the National Technical Committee for Geological and Mineral Standardization (hereinafter referred to as the Landmark Committee) drafted the “Solid Mineral Resources Classification and Grading Standards (Draft for Comments),” which aimed to “break away from the Soviet model and refer to the U.S. classification.”

Switching decisively to the 3P system would likely deviate from China's national conditions.

In 1995, we received the reserve classification scheme drafted by Professor Dietmar Kelt from Germany, as recommended by the United Nations Economic Commission for Europe, and sought to determine its compatibility with China’s reserve classification system.

This scheme is the predecessor of the “United Nations International Framework for Resource Classification” published in 1997.

This proposal has an exceptionally distinctive feature: its framework-oriented nature. It explicitly states that its aim is to develop a framework that facilitates international comparisons while, at the same time, preserving each country’s own classification systems—because these national classifications are deeply rooted in their respective historical, ethnic, and cultural backgrounds.

It does not force one system to submit to another; rather, it seeks common ground while respecting differences, draws on the strengths of both, and builds a framework system that transcends them.

The “framework” is the soul of the 1997 version and has paved a successful path for international standardization efforts. What it strives to create is merely a universally recognized framework that facilitates communication and comparison among countries—within this framework, there remains ample room for each country to further classify its standards in ways that reflect its own national conditions and characteristics.

The UN Classification Framework has three distinctive features. The first is its framework nature. It provides an internationally recognized comparative framework while still allowing each country to retain its own unique characteristics. As explicitly stated in the first sentence of the second paragraph of Chapter One of the final text: “The primary purpose of the UN Classification Framework is to enable national-level terms to be retained and mutually comparable.” The UN Classification Framework Task Force has consistently upheld this principle, which is precisely what has enabled this globally inclusive system to achieve success.

Main achievements of the 1999 classification and the 2002 standard:

First, we adhered to the direction of adapting to the socialist market economic system with Chinese characteristics and incorporated the innovative achievements made in adjusting and standardizing requirements since the reform and opening-up.

Second, the concept of alignment with international standards and the economic attributes of reserves have been strengthened.

Third, we have chosen a technical approach that aligns with the United Nations classification framework and international standards.

Fourth, it has resolved the issue of homonyms with different meanings in the classification and grading of coal and other minerals.

Fifth, by adopting a method similar to the consolidation of mineral types, we have streamlined the length of the individual mineral-type specifications.

At the same time, there are also obvious shortcomings: First, the G-axis alignment in the three-dimensional classification is misaligned.

Second, certain essential features of Chinese standards have not been adequately preserved.

Third, the content of mineral species regulations is rough and lacks strong operability.

The revisions to reserve classification, the restandardization of mineral types, and the current survey on the utilization of mineral resource reserves—all were carried out according to the 1999 classification system that was originally designed with specific issues in mind, giving rise to some new challenges.

Work to revise the 1999 classification and standardization criteria has been ongoing.

(2) Revised Technical Approach for the Inner Square and Outer Circle Design: 1. Focus on addressing the root cause—the misalignment of the G-axis connection.

In China, the classification of geological reliability is structured in two levels. The first level, measured at the mine area (exploration area) unit, corresponds to the exploration stages—ranging from prospecting, through detailed exploration, general exploration, and preliminary exploration—in descending order. The second level, measured at the block segment unit, represents reserve grades, ranging from A to B to C to D to E, also in descending order. Connecting these two levels is the concept of a reasonable exploration degree, which encompasses the composition and scope of application for each reserve grade at each exploration stage.

The G-axis of the UN classification framework is based on the exploration-stage level. During the drafting of China’s classification standards, there was ambiguity, and in actual implementation, the standards were mistakenly applied at the reserve-level.

2. Internal square, external round technical approach

At the 2009 academic conference, the author proposed the “inner square, outer circle” technological approach: inheriting and developing China’s distinctive features from within, while addressing the issue of aligning with international standards through an outwardly flexible and adaptable framework.

The core content of the Internal Standard is to restore the resource reserve classification—A, B, C, D, and E—based on block-based measurements, and to revise it in light of new requirements for mineral exploration. Since the 1999 classification lacked this specific content, it was proposed to revise the 1992 classification as a basis. The 1992 classification is documented in the "General Specifications for Geological Exploration of Solid Mineral Deposits" (National Standard GB/T13688-1992).

The external circle fully adopts the 1997 edition of the United Nations Three-Dimensional Classification Framework, aligning it with international standards.

3. Following the technical approach of “inner square, outer circle,” the author has proposed the “Revised Classification Scheme for Reserves of Solid Mineral Resources 1999.”

(2) Revised Implementation Plan for the "Inner Square, Outer Circle" Technical Approach

Adhere to the correct direction of the 1999 classification (GB/T17766—1999), with a focus on addressing its deficiency in the confusion of levels within the G-axis (geological reliability).

The first-level classification is clearly defined for overall assessment, categorized by exploration stage, and is consistent with the United Nations’ 1997 three-dimensional classification framework.

The second level is graded by block segments, still using English letters such as ABCDEF, thus preserving the essence of China’s resource reserve management.

Simplify and streamline—combine the E-axis 2S and 2M into one.

Replace “exploration” with “detailed investigation.”

This revised scheme is simple and clear, aligned with the United Nations classification framework, facilitating international comparisons and exchanges while retaining the distinctive features of China’s mineral reserve management system.

Resolved the complex “classification coding” issue from 1999;

The same project has been categorized as belonging to different feasibility study stages;

The confusing hierarchy of classification and grading significantly downplays China's reserve issues.

and the issue of organically linking resource reserve evaluation with feasibility studies;

It can be aligned with the current management system and smoothly transitioned to the 1999 classification.

(3) New Concepts for the Revised Plan

Today, the UN classification system used for crude oil reserves is no longer reliable, as the UNFC-2009 has fundamentally altered the UNFC-1997.

The internal proposal to adopt the 1992 classification and restore ABCD was never adopted, as it was avoided due to concerns about retrogression and misinterpretation, and lacked the courage to set things right.

Faced with no other choice, we propose a new idea.

1. Meaning of the 3D coding: From left to right, the first digit indicates economic significance: 1—economic; 2—potentially economic; 3—intrinsically economic—consistent with the 1999 classification;

The second digit indicates the project status: 1—mines that have developed mining and beneficiation design plans or are being mined according to formal designs; 2—mines that have conducted geological exploration and performed technical and economic evaluations in compliance with standards; 3—mines whose status remains unconfirmed, with only preliminary geological, technical, and economic information available.

The third digit indicates the geological reliability rating, which ranges from Level 1 (highest) to Level 3 (lowest). The terms "proven," "controlled," and "indicated" are no longer used. Predicted resource quantities that have not yet been verified are classified as Level 4.

2. According to their geological reliability, mineral resources are categorized into two major types: proven reserves and resource quantities. Proven reserves at Level 1, Level 2, and Level 3 are collectively referred to as “proven reserves.” The term “proven reserves” originated from the 29th meeting of the Central Leading Group for Comprehensively Deepening Reform, chaired by President Xi Jinping on November 1, 2016. At this meeting, the “Measures for Unified Registration of Property Rights over Natural Resources (Trial)” were reviewed and adopted. The meeting pointed out that we must adhere to the principles of public ownership of resources, statutory property rights, and unified registration of property rights. It emphasized that ownership of natural resources—including water flows, forests, mountains, grasslands, wastelands, tidal flats, and mineral resources with proven reserves—should be uniformly registered and confirmed, thereby establishing a property rights system for natural resources characterized by clear ownership, well-defined rights and responsibilities, and effective oversight. Here, the proven reserves explicitly subject to registration and confirmation clearly extend beyond just the group of “proven resource reserves” under the 1999 classification; they also encompass controlled and inferred reserves. Therefore, in alignment with the Central Leading Group for Comprehensively Deepening Reform, we propose replacing the 1999 classification’s term “identified mineral resources” with “proven reserves” to clearly define the scope of natural resource property rights registration. At the same time, we discard the terms “proven,” which have the same name but different meanings, as well as less clearly defined hierarchical terms such as “controlled” and “inferred,” and instead adopt clearly hierarchical terms like Level 1, Level 2, and Level 3.

3. Use “resource amount” instead of “potential mineral resources.” There are only two types of resource amounts:

◎The off-balance-sheet resource quantity of 223 has been delineated through exploration efforts (the second digit, “2”). Currently, these resources cannot be economically developed; however, in the foreseeable future, they may become economically viable due to changes in market conditions or advances in technology (the first digit, “2,” indicates potential economic value). Since these resources are currently not economically exploitable, they inevitably have technological vulnerabilities. Therefore, regardless of the density of the control network, their geological reliability is rated as Level 3 (the third digit, “3”). The term “off-balance-sheet resource quantity” is used because the concept of off-balance-sheet encompasses all technological vulnerability factors, not just low-grade resources.

◎The predicted resource amount is 334, which remains unverified and has a reliability rating of Grade 4—thus lacking the conditions for a feasibility study. However, it holds theoretical research and strategic planning significance.

Why can geological exploration reserves be deemed economically viable and thus referred to as “reserves”? Because China has a rigorous system for dividing exploration stages and managing industrial indicators for mineral deposits. During the reconnaissance stage, general industrial indicators are adopted—these are based on the accumulated experience from numerous mineral deposit cases, rather than the personal experience of just a few individuals. In the detailed exploration and prospecting stages, industrial indicators must be substantiated through specific assessments tailored to each individual deposit. Such assessments represent a comprehensive feasibility study involving collaboration among geological exploration agencies, design institutes, and mining enterprises. The fundamental principles underlying these studies are technical feasibility, economic rationality, and ecological and environmental acceptability. The exploration stages progress in a stepwise manner, from lower to higher levels; each stage involves a systematic process of geological survey, technical evaluation, and economic assessment. Consequently, once the prospecting (detailed exploration) stage is completed and the in-situ resource estimates are calculated, these estimates attain a high degree of reliability and become ready for economic exploitation and development. This approach has stood the test of time through numerous long-term projects—unlike certain Western countries, where stage divisions are unclear and indicator controls are lax, leading to a final reckoning only at the financing stage.

II. Advantages of the New Concept and Solutions to the Main Issues in the 1999 Classification

1. Concise and to the point. The 1999 classification, originally comprising 16 categories, has been merged and simplified into 8 categories.

2. Adhere to the reform approach of inheriting and developing, preserving the distinctive features and strengths of the original classification system while addressing its major existing issues, and avoid disruptive, radical overhauls. The basic structure and three-dimensional coding format of the 1999 classification have been largely retained. This makes it easy to compare and align with the longitudinal historical classification system, eliminating the need for specialized adaptation or conversion.

◎ More consistent with the classification terminology for lateral oil and gas resources and water resources.