Open-pit strip ratios deceptive

Most depictions are more realistic in three dimensions than in two. The grade and tonnage figures of a newly discovered orebody may look like a bonanza but only by including the depth of the orebody below surface can the bonanza be scaled down to reality.

A million tons grading 15% combined lead and zinc, 10 metres below surface, is a valuable plum. At a depth of 1,000 metres, it is no more than a geological teaser. Perspective requires three dimensions.

So, too, with open-pit operations. In place of “depth of the orebody,” the third dimension is the stripping ratio.

Usually publicized by mining companies and consequently reported in the technical press, the stripping ratio is the tonnage of waste that must be mined to gain access to one tonne of ore.

It is uncommon for different orebodies to have the same grade. Thus, a stripping ratio of 1.5-to-1 for a given orebody will usually denote a quite different impact on costs compared with another, even though the latter has the same 1.5-to-1 ratio.

For example, Cerro Colorado, the Chilean copper deposit of Rio Algom (TSE), has almost the same stripping ratio, 2.6-to-1, as the Mission mine in Arizona of Asarco (NYSE). Yet, the former has a copper grade of 1.39% and the latter, 0.67%. Obviously, the stripping ratio, as quoted, has little value for cost comparison.

A better method is to compare the amount of metal made accessible by the mining of one tonne of waste. For Cerro Colorado and Mission open pits, this works out to 13.9 kg and 6.7 kg copper per tonne of waste (27.8 lb. and 13.4 lb. copper per ton of waste), respectively.

Despite the improved representation of one of open-pit mining’s parameters, the investor should never lose sight of the fact that these ratios are little more than a rule of thumb. Only detailed, mining and financial analyses can produce hard cost data from the host of variables involved.

For the curious, the stripping ratio factor was first introduced in the period between the First and Second World Wars. It was developed so that investors and engineers could compare the relative merits of a given strip mine in, say, Alabama, and another one in West Virginia. Coal from either location was by and large the same value. The difference in the cost of mining was mostly made up from the difference in stripping ratios (consequently demonstrating the factor’s usefulness).

Unfortunately, nothing remains the same. Modern day coal miners are as adept at confusing matters as hard-rock miners. When a coal miner talks of stripping ratios today, he is talking about cubic metres of waste versus one tonne of clean coal.