Just as the mining boom continues, so does the precursor to mining, exploration.
Impressive as the surge in spending on developing new deposits is, the growth in exploration in the past one to two years has been nothing short of breath taking.
Figures from the Australian Bureau of Agricultural and Reserve Economics show the extent of the boom, as do the latest figures from the Australian Bureau of Statistics on forward spending plans in the economy, especially mining.
ABARE says that mineral exploration expenditure in Australia is estimated to total $6.1 billion in 2007-08, a 50% increase on 2006-07 expenditure.
By looking at these figures, you can get a feel as to where the next big strikes or announcements might come.
Iron ore, oil and gold are major targets; with uranium exploration also up sharply.
"In real terms, mineral exploration expenditure in 2007-08 is the highest on record and two and a half times above the average annual expenditure on mineral exploration over the past 25 years," ABARE said in its latest report looking at exploration and development projects.
It said the dramatic increase in exploration expenditure is a response to higher world prices for most mineral and energy commodities as supply struggles to keep pace with growth in demand. It also reflects the trend toward developing projects with higher production capacities, which generally require larger resource delineation programs.
In recent years, expenditure on brownfield exploration, that is exploration around existing or known deposits, has accounted for an increasing proportion of total exploration expenditure.
This is partly explained by companies reassessing reserves at current and depleted deposits which are more economic to extract at higher world prices.
Further, mining in brownfield locations is attractive for companies because mineral extraction can start sooner and generally requires lower capital expenditure than that of greenfield projects because of existing infrastructure.
In 2007-08, exploration expenditure on all major mineral and energy commodities is expected to increase.
Petroleum exploration expenditure is estimated to rise by 41% in 2007-08 to around $3.2 billion.
Expenditure on petroleum exploration (in 2007-08 dollars) is estimated to be the highest on record, encouraged by high global oil prices.
Exploration expenditure on iron ore is estimated to increase by 76% to $503 million in 2007-08 and has accounted for an increasing proportion of total mineral exploration expenditure over the past seven years.
High contract prices and the prospect of continued strong demand in China over the medium term are the principal drivers behind this significant increase in expenditure.
Gold exploration expenditure in 2007-08 is estimated to increase by 40% to around $660 million, the highest since 1997-98.
The increased expenditure reflects the higher Australian dollar denominated gold prices forecast to average A$932 an ounce in 2007-08, an increase of 14% from 2006-07.
In 2007-08, exploration expenditure on base metals, including copper, silver, lead, zinc, nickel and cobalt, is estimated to rise by 66 % to around $945 million.
Expenditure on exploration for all base metals is estimated to increase, particularly for nickel and copper, reflecting continued high global prices. In real terms, exploration expenditure on base metals in 2007-08 is expected to be more than three times the 25 year average.
Uranium exploration expenditure is estimated to more than double in 2007-08 to around $285 million. This reflects relatively high uranium prices and an increased interest in uranium for use in nuclear power globally.
Over the medium term, exploration expenditure is expected to be influenced by a common set of factors in each of the main exploration sectors.
These include the outlook for prices over the medium to longer term, prospectivity, expected future costs of exploration and development — including costs of labour, fuel and other inputs — and Australia’s relative attractiveness for mineral exploration and extraction.
