A new report by SNL Metals & Mining has shown exploration activities shrinking dramatically globally.
In its World Exploration Trends report SNL showed that miners “cut their exploration activity sharply in 2013 in response to lower metals prices, uncertain demand, and poor market conditions”.
In a similar vein to its report last year, SNL reported a 29% decrease year on year for global non-ferrous metals exploration budgets compared with 2012.
Its report last year, where SNL surveyed almost 3500 mining companies around the world it showed major miners recorded a 24 % drop in exploration spend, whilst juniors took a bigger hit, with exploration budgets falling 39%over 2012.
In the most recent report the group found total non-ferrous exploration budgets fell to $US 15.2 billion, down from the US$21.5 billion recorded in 2012.
In Queensland alone explorers’ market capitalisation fell 31% in 2012-13 to $732 million.
Access to equity capital was listed as a significant problem with companies exploring in Queensland announcing $63 million in capital raisings in 2012-13, down 76 % in comparison to 2011-12.
Nationally, the amount of raisings was down 60% in 2012-13 from $853 million to $342 million.
The latest IBISWorld report predicts the sector will continue to decline, falling another 7.5% over 2014.
“These adverse global conditions have suppressed world prices for the major commodity groups upon which the exploration industry depends,” IBISWorld general manager (Australia) Karen Dobie said.
“The fall in investment in exploration also follows established miners shifting their focus from exploration to production.”
This massive plunge across the board is due to a combination of investor uncertainty and miners taking the knife to their exploration budgets as a cost cutting measure.
BHP Billiton hacked into its exploration budget and is predicting a 25% decline in its costs in this sector for the 2014 financial year.
Rio Tinto tore US$250 million out of its exploration budgets and evaluation spending year on year as well.
In the latest SNL report is stated that Australian exploration budgets dropped by 25%, leaving the country accounting for 13% of all exploration globally.
However it should be noted that exploration budgets were at a record high in 2012, with 2013 budgets falling to levels similar to 2008, prior to the Global Financial Crisis.