RESOURCES SECTOR
Exploration spending edges up on firming of commodity prices
Most exploration activity in 2016 was for gold while exploration for base metals reduced the most, says S&P
Resources companies are tentatively increasing exploration budgets in response to firmer commodities prices, but they are still favouring brownfields studies around known deposits rather than high-risk greenfields activity. In a downturn, exploration budgets are among the first to be slashed. If the resources sector does not invest in exploration, known deposits will be exhausted in the next few decades or even earlier, causing shortages and price spikes. For several years analysts have warned the number and size of new unexplored diamond and gold deposits have been dwindling. In S&P Global Market Intelligence’s latest Corporate Exploration Strategies report, presented at the annual Prospectors and Developers Association of Canada conference in Toronto in March, it said 2016’s global budget for exploration for nonferrous metals fell to $7.2bn. It was the fourth successive year of decline and represented a third of the $21.5bn spent in 2012. S&P said that since March 2016, when commo...
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