The 25th edition of SNL Metals & Mining’s Corporate Exploration Strategies shows that 39 larger mining companies budgeted a total of $4.33 billion for worldwide non-ferrous exploration spending in 2014 and accounted for 40% of the $10.74 billion total budgeted by an overall group of 1,961 companies. Each of the 39 larger companies budgeted at least $50 million for exploration during the year.
Antofagasta, Vale and Fresnillo reported the three largest mining company exploration budgets. Antofagasta’s 2014 program emphasized late-stage and feasibility work, along with strong grassroots programs in the Americas, Europe, Africa, and Australia. Vale also emphasized late stage work. Fresnillo directed almost all of its spending to Mexico and spread it fairly evenly among all stages of exploration, with a slight emphasis on advancing several pipeline projects.
On a commodity basis, budgeting by the 39 largest companies went toward gold, 41%; base metals, 41%, of which 32% was for copper; diamonds 7%; and other targets, including silver, potash, phosphates, and manganese, 7%. Two of the larger players, Alrosa and De Beers, accounted for 69% of worldwide diamond exploration. The 25 larger players that had gold exploration budgets were responsible for 39% of worldwide gold allocations. The 39 largest explorers accounted for just more than half of worldwide copper budgeting.
The SNL press release stated: “Conven-tional wisdom holds that the major companies leave grassroots exploration to the juniors. It may therefore be surprising that the larger players contributed 40% of all greenfields allocations in 2014. A persistent financing drought has squeezed juniors’ budgeting to the point that the majors have become the biggest drivers of early-stage exploration.
“Similarly, the larger players traditionally dominate mine-site spending; in 2014, however, they accounted for only 51% of the near-mine work as their investors demanded improved returns over growth. It is also interesting to note that the larger players were responsible for just 32% of late-stage exploration and feasibility work.”
Geographically, the larger players allocated their budgets somewhat differently than the overall group of 1,961 companies. The top 10 target countries for the larger players were the same as for the overall group; however, Chile replaced Canada as their primary exploration destination (12%), reflecting the significant presence of major copper miners in the relatively secure Latin American country. Canada (10%), Mexico (9%), Russia (9%), the United States (8%), and Australia (8%) rounded out the top six.
Russia moved up in the rankings, from eighth to fourth place, with 79% of its total allocations coming from seven larger players. Conversely, in China, 56 companies with allocations of less than $20 million contributed 53% of the total, while the country dropped from sixth to 10th place in overall spending.
The SNL study includes allocations for gold, base metals, platinum group metals, diamonds, uranium, silver, rare earths, potash/phosphate and many other hard-rock metals. Exploration budgets for iron ore, coal, aluminum, oil and gas and many industrial minerals are excluded.