By Elizabeth Fabri
GLOBAL mining exploration expenditure has taken a dive for the fourth consecutive year, accounting for less than a third of the record-high 2012 spend and reaching an 11 year low.
In its March Worldwide Mining Exploration Trends report S&P Global Market Intelligence stated the budget for nonferrous exploration in 2016 declined 21 per cent year-on-year to $US6.89 billion; however, it said the past three quarters have brought “signs of optimism” for the long struggling industry.
“Since last March, exploration companies have increasingly been able to raise funds, which represents a marked improvement over recent years,” the report stated.
“Despite recent concern over the availability of finance as we enter 2017, S&P Global Market Intelligence is cautiously optimistic for the near term, and expects corporate exploration budgets this year to be flat.”
Of the countries surveyed, Australian exploration contributed $897 million or 13 per cent to the total.
With total spend 16 per cent below 2015, and share of global expenditure 1 per cent higher,
Australia remained in fifth position behind Latin America, China/Russia, Canada and Africa, but overtook Canada as the top gold exploration destination for the first time since 2003.
“Western Australia was again by far Australia’s most popular exploration destination, with 62 per cent of the country’s total, and gold remained the top exploration target,” the report stated.
“Although allocations were virtually unchanged in 2016, gold’s share of Australia’s total budget jumped to 57 per cent from 48 per cent in 2015.
“The strong showing was mainly due to a 39 per cent decrease in the base metals budget, whose share of the total fell to 25 per cent from 35 per cent in 2015.”
Australia was also the top destination for grassroots gold exploration, making up 16 per cent of the global grassroots budget.
The report called 2016 “a year of two halves” for the global economy, with recession concerns – peaking in June with the Brexit vote – giving way to an emphasis on reflation through fiscal policy, and the subsequent “growth-friendly” election of Donald Trump.
The mining sector, in particular, saw a significant mid-year shift in sentiment, with attention switching from precious metals to industrial metals and minerals.
In the six months to the end of June, gold rose almost 25 per cent to $US1,321/oz before retreating to about $US1,135/oz; an increase over the whole year of just 7 per cent.
This scenario was reversed for iron ore, thermal coal and copper; three of the most important industrial commodities.
Iron ore (62 per cent Fe) was up an impressive 26 per cent by mid-year, but accelerated during the second half to end 2016 up 79 per cent.
Thermal coal had risen 17 per cent by end-June and 69 per cent at year-end.
Similarly, copper was up 3 per cent at the mid-year point but ended the year up 17 per cent.
S&P Global Market Intelligence expected this to translate into a “small uptick” in the majors’ exploration budgets in 2017, while the aggregate exploration budget for junior explorers was expected to remain flat.
Data released by the Australian Bureau of Statistics in February confirmed Australian exploration was looking up, particularly in gold.
“The Australian Bureau of Statistics, Mineral and Petroleum Exploration release for the December 2016 quarter shows that total mineral exploration expenditure increased by 6.1 per cent to $403 million,” Association of Mining and Exploration Companies chief executive Simon Bennison said.
“Western Australia led the growth, with exploration growing by $15 million in the December 2016 quarter to $263 million, a 5.9 per cent increase on the September 2016 quarter.
“The key statistics are brownfield versus greenfield exploration; to find the mines of tomorrow, Australia needs to boost its greenfields exploration.”
Mr Bennison said ABS results showed Australian greenfields mineral exploration had increased.
“Greenfields drilling rose 22 per cent, while drilling in brownfields areas fell by 6 per cent in December 2016 quarter compared to the September 2016 quarter,” he said.
“The increase in greenfields mineral exploration is attributable to a number of factors, including improved commodity prices.
“The Federal Government’s Exploration Development Incentive (EDI) could also be having a positive impact on greenfields mineral exploration as intended.
“AMEC has called on the Government to rollover the funding for the EDI to 2017/18 and the Forward Estimates with the aim of increasing investment in greenfields mineral exploration.
“State and Territory exploration incentive schemes / co-funded drilling programmes also continue to be crucial in encouraging innovative mineral exploration in Australia, and generate significant economic returns for the economy.”