Exploration Budget Cuts: The Shift from New Discoveries to Established Deposits
In recent years, the focus of exploration budgets has shifted significantly, with less money allocated to grassroots exploration. This change has negatively impacted the discovery rate of new mineral deposits.
“Based on our discovery series, we have consistently observed a downward trend in both the number of discoveries and the amount of contained metal over the years for both copper and gold exploration,” stated Cesar Pastrana, a data analyst at S&P and author of the report.
Growing Caution in Exploration
This shift reflects a pattern that often happens as projects advance in maturity. However, following the drop in metal prices after 2012, the investment climate worsened. This change has forced explorers to become more cautious and alter how they allocate their budgets, Pastrana noted.
“This shift has led to an increased emphasis on extending known deposits, which tends to boost company-held resources but limits opportunities for new discoveries. Although there has been an increase in reserves over the years, these gains predominantly come from older deposits or existing mines rather than new discoveries,” he explained.
In parallel to reduced spending on grassroots exploration, there has been a notable increase in the budgets for late-stage and near-mine projects over the past decade compared to the late 1990s and early 2000s. Since 2017, these two categories have competed for the largest share of exploration budgets, according to the S&P report.
However, late-stage exploration is expected to end a three-year streak of rising budgets, with a projected decrease of $4.71 billion in 2024. This decline would reduce its share of the global budget to 38%, still the second-largest portion among all exploration stages.
Only mine site exploration recorded an increase in 2024, growing by a modest 2% from the previous year. “This positions it as the favored category in 2024 amid a challenging capital environment, with gold and copper driving the growth,” Pastrana noted.
Australia’s Influence on Exploration Spending
S&P data highlights that Australia’s mineral wealth has played a significant role in the reduction of grassroots and late-stage exploration spending.
In the case of grassroots exploration, Australia cut its funding for gold and copper projects by 32% and 25%, respectively. Leading explorer Rio Tinto significantly reduced its budget for the region by 57%, indicating a major shift in investment focus.
The decline in late-stage allocations in Australia corresponds to decreased funding for copper and gold initiatives.
Additionally, several Latin American nations, including Ecuador, Mexico, and Chile, trimmed their grassroots exploration budgets by more than $20 million each.
As Pastrana remarked, these developments “underscore the industry’s cautious approach, heavily influenced by volatile metal prices and a challenging financing environment.”
He also warned that the trend of prioritizing known deposits over new discoveries raises concerns about the long-term availability of resources.
“As the exploration landscape evolves, the balance between risk and reward will be crucial for explorers aiming to revitalize discovery rates while navigating financial constraints,” Pastrana added.
