Alcoa 2014 Annual Report Download - page 25

feedstock to its refineries, the Company considers both estimates of bauxite resources as well as calculated bauxite
reserves. Bauxite resources represent deposits for which tonnage, densities, shape, physical characteristics, grade and
mineral content can be estimated with a reasonable level of confidence based on the amount of exploration sampling
and testing 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 the Company’s 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
Reserves 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 and resource
classification of their bauxite.
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