MERCHANDISER
Worldwide Exploration Trends 2013
SNL Metals Economics Group’s (SNL MEG) 23rd edition of Corporate Exploration Strategies (CES) calculates
that the industry’s estimated total budget for nonferrous metals exploration increased to $21.5 billion in 2012. Despite ongoing uncertainty in Europe and the United States, and concerns about waning demand in China, most metals prices remained well above their long-term averages in 2012, giving varying levels of support to the industry. Led by higher budgets among the major producers, exploration budgets documented in the study increased by $3.3 billion (19%) to $20.53 billion to set a new all-time high.
Figure 1 shows SNL MEG’s estimate of annual nonferrous exploration allocations since the early 1990s relative to a weighted annual metals price index. The graph indicates the cyclical nature of exploration investment and the correlation between metals price
trends and exploration
spending. Rising metals prices fuelled an initial increase
in worldwide exploration from 2002’s low, while the emergence of China’s appetite for resources led to a multi-year bull run culminating in the worldwide exploration budget total hitting a new high of $13.75 bn in 2008 – a 677% increase from the bottom of the cycle in 2002. In 2012, despite a slowdown in China’s economy,
the threat of economic collapse in Europe, and political and economic uncertainty in the US, worldwide exploration allocations rose a further 19% to $20.53 bn, setting a new all-time high. Looking forward, uncertainty continues
to overhang global markets, as each sign of improvement is seemingly contradicted by new concerns. However, as ‘the new normal’ still holds the potential for growth and slow improvement, most analysts forecast a modest improvement in metals consumption and prices in 2013. Although SNL MEG do not expect producers to increase exploration spending in 2013 as they have over the past few years, they believe their continued commitment to replacing and upgrading reserves organically will support this group’s combined 2013 exploration budget at about the 2012 level.
Estimated Global Nonferrous Exploration Budget Totals, 1993-201
Nonferrous Exploration Total
$24 $20 $16 $12 $8 $4 0
93 95 97 99 01 03 05 07 Top Exploration Destinations 2012 09 11 12 SNL MEG Annual Indexed Metals Price
5 4 3 2 1 0
Russia 3% Canada 16% Europe 4% United States 8% Mexico2% 6% Colombia Peru Chile 2% 5% 5% Argentina 3% Other locations account for about 4%. Corporate Exploration Strategies
SNL MEG’s Corporate Exploration Strategies is the industry’s benchmark for exploration trends and strategic analysis, and a comprehensive source of global mining exploration budgets. The 2012 exploration estimate is based on information collected from almost 3,500 mining and exploration companies worldwide, of which more than 2,500 had exploration budgets reported in the study. These companies (each budgeting at least $100,000) together allocated $20.53 billion for nonferrous exploration, which SNL MEG estimate covers about 95% of
worldwide commercially oriented nonferrous exploration spending. Adding their estimates of budgets that they could not obtain, the 2012 worldwide total exploration budget reached $21.5 billion.
www.SNLMetalsEconomics.com March 2013 19
Brazil 3%
West Africa 7%
9%
Sub-Saharan Africa
Australia 12% Mongolia FSU/ 3% China 4%
Pacific 6% Islands
SNL MEG Annual Indexed Metals Price (1993=1)
Nonferrous Exploration (US$ bn)
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