If anything, the Russian invasion of Ukraine and the surge in key commodity prices, as well as the continuing push into renewables, will add to the continuing rise in exploration spending in Australia in the next year or so.
Already we are seeing major new finds such as Chalice mining’s fabulous Julimar nickel, copper, cobalt and PGE prospects near Perth, the rise in new gold and copper finds and mines from the likes of Newcrest, Rio Tinto, BHP, Newmont, De Grey Mining, IGO and Evolution and Impact Minerals (near Broken Hill). Extra work in the new lithium areas of WA have uncovered major new deposits of potential.
The coming year will see accelerated spending on many of these and existing areas at the expense of the previous solid levels of spending on coal and iron ore.
There’s an old adage in finance – follow the money to keep track on what buyers, sellers, investors etc are doing, or not doing. In resources there’s something similar – follow the exploration spending by companies large and small to get an idea of what they are doing, or more accurately, what they like.
The figures tell us what is ‘hot’ among miners and specs of all sizes, and what is not.
Last year with the boom in all things green in business and especially resources – it was green metals that grabbed the attention – and spending boomed as cashed up companies stepped up their exploration work after the Covid-depressed 2020.
As a result, Australian exploration spending surged in 2021 to its highest level ever, hitting a record of $3.58 billion in the year to December, despite a fall in drilling by iron ore companies in the final quarter and overall weak levels of spending by coal miners.
That compares to Covid-depressed spending of just over $2.8 billion in 2020, according to the annual exploration spending data from the Australian Bureau of Statistics.
The $787 million or 28% jump in total exploration spending was thanks to the continuing the resources boom which now boosted by growing spending by companies in the so-called ‘green metals’ space looking for lithium, copper, lead, zinc, nickel, cobalt, rare earths and PGE-type metals.
In fact, spending on copper exploration in 2021 hit an all-time high for the year and the final quarter and was up 55% while exploration for nickel and cobalt – two other key green metals saw spending jump 30%, also to new highs.
And even though quarterly spending dipped $13.3 million in the three months to December to $921.5 million it was the still the second highest quarterly spend after September’s record $934.8 million, the ABS data showed.
Gold again led the way both annually and quarter on quarter. For the year to December gold exploration spending (which also covers some copper, nickel and associated minerals) totalled $1.6 billion, up 14% from just over $1.3 billion in 2020.
December quarter exploration spend for gold totalled $393.1 million, down 6% from September’s $418 million and June’s all time high of nearly $430 million and only $10 million ahead of the spend in the December, 2020 quarter.
While gold remains the most looked for mineral in the country, iron ore recorded the largest fall of 25% to $130.9 million in the final quarter.
Copper recorded its highest exploration expenditure for the December quarter of $172 million. That was an all-time high and more than double the $78.7 million spent in the final quarter of 2020.
All up, copper exploration spending topped the half a billion level at $561 million and was number two after gold.
That saw spending on looking for selected base metals hit a record $265.4 million in the December quarter and a record $859 million for all of 2021- that was up more than 50% from 2020’s $561 million.
Spending jumped from just $161 million in the March quarter of last year to $265 million in the final quarter of the year, such has been the boom in companies looking for a widening range of base metals, especially copper, nickel and cobalt.
Exploration spending for nickel and cobalt totalled $237 million in 2021, up 30% from $181 million in 2020, while exploration for other metals hit a high of $354 million in 2021, up $134 million from 2020.
Even though iron ore exploration spending fell in the December quarter to $130.9 million from $174.6 million in the three months to September, it still totalled $557 million for the full year, up $163 million from 2020’s depressed level.
Exploration spending for coal totalled $53.2 million in the December quarter, down from the $87 million spent in the June, 2020 quarter (the most recent peak) but not as low as the $36 million spent in the March 2019 quarter.
Meanwhile the ABS data shows that greenfield mineral exploration (spending on looking for new deposits) set a record of $1.207 billion in 2021, topping the previous high of $1.138 billion in 2012.
The record came despite a slower December quarter which saw exploration for new deposits fall 9.6% ($32.4 million) to $305.9 million compared to the September quarter.
Covid Delta and Omicron helped explain the slowdown in the final quarter’s spending on new and existing mines and deposits, with labour shortages for exploration contractors as well as in house mining company groups – especially in WA, South Australia and the Northern Territory.
