According to preliminary results from SNL Metals Economics Group’s (MEG) 24th edition of Corporate Exploration Strategies (CES), the estimated worldwide total budget for nonferrous metals exploration dropped to $15.2 billion in 2013 from $21.5 billion in 2012 — a 29% decrease.
SNL MEG’s 2013 exploration data and analysis are based on information collected from almost 3,500 mining and exploration companies worldwide, of which more than 2,100 had exploration budgets for 2013.
Since early 2012, junior companies have struggled to attract investor interest, and have been forced to rein in spending as their coffers become depleted; in 2013, the juniors’ total exploration budget fell 39% year on year, dropping their share of the overall total to 34% from a high of 55% in 2007. Although most metals prices remain at or near 10-year averages, higher operating and capital costs, along with pressure from activist shareholders, have required major companies to focus on a return to healthy margins after years of growth-oriented spending. The majors’ cutbacks in capital projects and exploration led to a 24% drop in their exploration budget total in 2013.
Despite lower allocations for most countries, companies continue to explore across the globe, with exploration planned for 127 countries in 2013, down from 129 in 2012. This includes a continued willingness to explore in high- or medium-risk jurisdictions, which accounted for more than half the annual budget total for the past several years. In contrast, the share of budgets allocated to mature mining regions such as Canada and the United States fell in 2013. Canada’s total budget was down 41% year on year due to weakness in the country’s junior sector, while the United States’ total declined 38% as many gold majors scaled back exploration programs. Canada and Australia remained the top countries overall, with the United States, Mexico and Chile rounding out the top five.
For more information on the CES study, visit: www.snlmetalseconomics.com