Alcoa 2012 Annual Report Download - page 16

information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill
holes. Bauxite reserves represent the economically mineable part of resource deposits, and include diluting materials
and allowances for losses, which may occur when the material is mined. Appropriate assessments and studies have
been carried out to define the reserves, and include consideration of and modification by realistically assumed mining,
metallurgical, economic, marketing, legal, environmental, social and governmental factors. Alcoa employs a
conventional approach (including additional drilling with successive tightening of the drill grid) with customized
techniques to define and characterize its various bauxite deposit types allowing Alcoa to confidently establish the
extent of its bauxite resources and their ultimate conversion to reserves.
The table below only includes the amount of proven and probable reserves controlled by the Company. While the level
of reserves may appear low in relation to annual production levels, they are consistent with historical levels of reserves
for our mining locations. Given the Company’s extensive bauxite resources, the abundant supply of bauxite globally
and the length of the Company’s rights to bauxite, it is not cost-effective to invest the significant resources necessary to
establish bauxite reserves that reflect the total size of the bauxite resources available to the Company. Rather, bauxite
resources are upgraded annually to reserves as needed by the location. Detailed assessments are progressively
undertaken within a proposed mining area and mine activity is then planned to achieve a uniform quality in the supply
of blended feedstock to the relevant refinery. Alcoa believes its present sources of bauxite on a global basis are
sufficient to meet the forecasted requirements of its alumina refining operations for the foreseeable future.
Bauxite Resource Development Guidelines
Alcoa has developed best practice guidelines for bauxite reserve and resource classification at its operating bauxite
mines. Alcoa’s reserves are declared in accordance with Alcoa’s internal guidelines as administered by the Alcoa Ore
Reserve Committee (AORC). The reported ore reserves set forth in the table below are those that Alcoa estimates could
be extracted economically with current technology and in current market conditions. Alcoa does not use a price for
bauxite, alumina, or aluminum to determine its bauxite reserves. The primary criteria for determining bauxite reserves
are the feed specifications required by the customer alumina refinery. In addition to these specifications, a number of
modifying factors have been applied to differentiate bauxite reserves from other mineralized material. Alcoa mining
locations have annual in-fill drilling programs designed to progressively upgrade the reserve classification of their
bauxite.
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