Global Mining Exploration Plunges for Fourth Consecutive Year
(Kitco News)- Mining companies around the world slashed their exploration budgets for the fourth year in a row in 2016, according to the recently published report by S&P Global Market.
“The 2016 exploration budgets by 1,580 companies totaled only U.S. $6.89 billion, a year-on-year drop of 21% and barely one-third of the level budgeted in 2012,” stated S&P Global Market Intelligence’s Corporate Exploration Strategies (CES) report.
One of the main factors for the continued budget cuts are due to the fact that companies have been attempting to reassure investors at an uncertain time, the report said. “The steep plunge . . . can be attributed to investor wariness of exploration and a significant reduction in spending by producing companies as they sought to improve profit margins,” noted CES.
Despite the downward move, gold remained the top-explored commodity globally. The yellow-metal’s share of budgets expanded by 3% in comparison to 2015.
“Gold accounted for 48% of the global exploration budget in 2016, matching the record high of 2011,” said the report.
Canada was the most popular national target, accounting for 14% of the global exploration budget. Australia came in the second place with 13% and the U.S. in third at 7%.
CES added that exploration budgets improved as 2016 progressed, but the totals were not enough to make a significant dent. For the short-term, S&P Global Market Intelligence estimated a slight increase in 2017 exploration budgets, but warned that the overall numbers are likely to remain flat.
“Commodity markets are delicately poised,” CES explained, noting that even though the infrastructure-fueled metals boom in the U.S. is creating optimism, Chinese economy and Trump administration’s tariff plans are triggering uncertainty.