Metals Economics Group
P.O. Box 2206
Halifax, Nova Scotia B3J 3C4
CANADA
Phone: (902) 429-2880
Fax: (902) 429-6593
meg@meginformation.com
www.metalseconomics.com
According to Metals Economics Group's 1998 edition of Corporate Exploration Strategies, after exploration budgets for this decade peaked at an estimated $5.1 billion in 1997, the trend dramatically reversed in 1998, showing a decline of approximately 31%.
At a $2.9 million cutoff, MEG estimates that its 1998 analysis of 182 company exploration budgets totaling more than $2.83 billion covers approximately 81% of worldwide expenditures for commercially oriented nonferrous metals exploration. Total 1998 expenditures are therefore estimated at about $3.5 billion ($5.1 billion last year). (This estimated total includes a few budgets of more than $3 million that MEG was not able to obtain, exploration spending by private companies that do not publish their figures, and exploration by companies spending less than $2.9 million in 1998.)
The Asian financial crisis and the resultant spreading of economic weakness, low metals prices, and the current difficulty in raising equity, all combined to reduce budgeted exploration spending in every region of the world this year. The accompanying graph illustrates the regional distribution of the $2.83 million in exploration allocations by the 182 companies included in this year's study, down 29.8% from $4.03 billion allotted by 279 companies in 1997.
In 1998, Latin America is again maintaining its top position as a destination for exploration spending, with the surveyed companies budgeting $814.1 million (28.8% of the total), followed by Australia at $494.6 million (17.5%), Africa at $494.3 million (17.4%, which rivals Australia's level for the first time), Canada at $308 million (10.9%), the Pacific/Southeast Asia region at $265.7 million (9.4%), and the United States at $242.7 million (8.6%). Spending in the rest of the world is a combined $209.5 million (7.4% of the total, including about $96.9 million for Europe, $53.6 million for the CIS, $42.4 million for Asia, $3.1 million for the Middle East, and $13.5 million for unspecified rest-of-world areas).
| 1998 Worldwide Exploration Spending by Region | |
| (182 Companies' Budgets Totaling $2.83 Billion) | |
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In actual dollar terms, the largest decrease in exploration spending this year is in Latin America, where 1998 budget allocations fell by $356.2 million to $814.1 million from about $1.17 billion in 1997, ending the region's spectacular six-year record of increased exploration expenditures. However, Latin America's percentage of overall spending slipped only slightly to 28.8% this year from 29% in 1997. Although Australia shows the second largest decrease in spending, with a fall of $178.8 million to $494.6 million in 1998 from $673.4 million in 1997, the country's share of total spending rose this year to 17.5% from 16.7% in 1997. In the Pacific/Southeast Asia region, budget allocations fell by $174.7 million to $265.7 million in 1998 from $440.4 million in 1997, and the region shows the largest percentage decrease, dropping to 9.4% this year from 10.9% of the overall total in 1997. Africa, which shows a drop of $168.3 million to $494.3 million in 1998 from $662.6 million in 1997, has the highest percentage increase, to 17.4% from 16.5% last year. Smaller decreases in expenditure are taking place in Canada and the United States, with budget allocations for Canada falling by $127.9 million to $308 million in 1998 from $435.9 million in 1997, raising Canada's share of overall spending very slightly to 10.9% from last year's 10.8%. In the United States, allocations fell by $121.9 million to $242.7 million in 1998 from $364.6 million in 1997 and slid in percentage to 8.6% from 9.1%. MEG's rest-of-world category shows the smallest decrease in expenditure, falling by $73.4 million to $209.5 million from $282.9 million in 1997, but rising in percentage to 7.4% from 7%.
These are some of the conclusions drawn from Metals Economics Group's ninth edition of Corporate Exploration Strategies, published in September 1998.
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