General Kinnematics

Global exploration budget for metals jumps 35 percent year-on-year to $11.2 billion

October 19, 2021

As the world continues recovery efforts from the COVID-19 pandemic it appears that global exploration has emerged from the downturn well. S&P Global Market Intelligence's Corporate Exploration Strategies series shows a stronger than expected recovery for exploration with an increase of 35 percent in the aggregate annual global nonferrous exploration budget year over year to $11.2 billion, up from $8.3 billion in 2020.

Gold and base metals dominated the exploration focus with Canada being the top jurisdiction in 2021 according to the report.

“While the gold price has varied over recent months, its August 2021 average of $1,784 per ounce was 14 percent higher than its January 2020 average of $1,560/oz,” said the report. “Base metals have had even more impressive gains, with copper's August 2021 average of $4.25 per pound up 55 percent from January 2020.”

Canada has attracted a particularly large share of the global budget with an increase of $800.5 million year over year to $2.1 billion, hitting its record high since 2012. Africa underperformed with allocations up just 12 percent to $1.1 billion, returning the region to its 2019 level.

“A faster-than-expected recovery in market conditions and easing of lockdowns allowed explorers to reactivate programs by mid-2020, which caused some programs to carry over into 2021,” Kevin Murphy, principal analyst with the Metals & Mining Research team at S&P Global Market Intelligence, said. “Along with higher metals prices and increased financing activities, this has led to a strong budget recovery in 2021. As we move into the last quarter this year, metal prices and financings remain robust, and the risk of further pandemic-related shutdowns has declined. As a result, we expect the aggregate exploration budget to increase between 5 percent and 15 percent year over year for 2022."

Other key takeaways include junior budgets surge but majors still drive exploration: The junior sector has increased their planned allocations by 62 percent year over year to a total of $4.1 billion. Despite this increase, the majors continue to account for half of global exploration budget at a total of $5.6 billion.

Early-stage exploration budget hits all-time low: In 2020, grassroots share of allocations hit an all-time low of 24 percent while mine site hit an all-time high of 41 percent as the pandemic made large scale programs more difficult. While grassroots share recovered modestly this year due to increased activity in Australia and Canada, its global budget share is the second lowest on record at 26 percent.

 

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