(656 Companies' Budgets Totaling $2.34 Billion)
(670 Companies' Budgets Totaling $2.56 Billion)
Metals Economics Group
P.O. Box 2206
Halifax, Nova Scotia B3J 3C4
CANADA
Phone: (902) 429-2880
Fax: (902) 429-6593
meg@meginformation.com
www.metalseconomics.com
(all dollar figures are US$)
According to Metals Economics Group's recent edition of Corporate Exploration Strategies, total spending allocated for worldwide nonferrous exploration steadily increased from 1993 through 1997, when the total peaked at an estimated $5.2 billion. The upward trend dramatically reversed in 1998, when allocations declined by approximately 29%, and then decreased again in 1999 by 24%. However, this year's 7% decrease (to $2.6 billion from $2.8 billion) indicates a much slower pace of decline. MEG estimates that this year's analysis of 656 companies' exploration budgets totaling about $2.34 billion covers approximately 90% of worldwide expenditures for commercially oriented nonferrous metals exploration; therefore total 2000 expenditures are estimated at about $2.6 billion.
The accompanying graphs illustrate the regional distribution of the $2.34 billion in exploration allocations by the 656 companies included in this year's study, compared with $2.56 billion allotted by 670 companies in 1999.
Metals Economics Group expects exploration budgets to continue at a reduced level in the near term, but it appears that we are nearing the bottom of the cycle. Although the gold price continues to languish, base metals and platinum group metals prices have shown signs of significant upswings since mid-1999. With the world's economies showing vitality and robust growth in metals consumption (demand for copper increased by 8% through the first half of 2000), base metals prices are expected to continue to show strength. Because budget increases tend to lag improved metals prices by a year, it will take some time to undo the effects of lost liquidity in the equity markets for junior explorers, and to reverse the effects of exploration budget cuts and departmental downsizings by most majors.
| 2000 and 1999 Worldwide Exploration Spending by Region | |
|
2000 (656 Companies' Budgets Totaling $2.34 Billion) |
1999 (670 Companies' Budgets Totaling $2.56 Billion) |
|
|
|
Latin America is again maintaining its top position as a destination for exploration spending, with the surveyed companies budgeting $661.9 million this year (28.3% of the total). Australia is next at $404.8 million (17.3%), followed by Canada at $348 million (14.9%), Africa at $293.1 million (12.6%), the United States at $234.5 million (10%), and the Pacific/Southeast Asia region at $199.2 million (8.5%). Spending in the rest of the world is a combined $196.7 million (8.4% of the total), including about $90.1 million for Europe, $34.9 million for Asia, $33.9 million for the CIS, $8 million for the Middle East, and $29.8 million for unspecified rest-of-world areas.
Canada, which is going against the worldwide trend of lower exploration spending, is the second-largest destination for exploration spending on a regional basis. Canadian projects are receiving $348 million this year, a $38.1 million (12.2%) increase over the $309.9 million allocated in 1999. Canada also shows the largest percentage increase, rising to 14.9% of the overall 2000 total from 12.1% in 1999. These increases are mainly due to stepped-up efforts in pursuing diamond and platinum exploration. Allocations for the Pacific/Southeast Asia region also increased slightly (by $3.1 million) to $199.2 million (8.5% of the worldwide total) from $196.1 million (7.7%) in 1999.
Although Australia is the top ranking country in the world for exploration spending in 2000, exploration allocations for Australia this year show the largest decline of any country or region. Compared with allocations totaling $495.3 million in 1999, this year Australia's allocations totaled $404.8 million, a decrease of $90.5 million (18%), well above the 8.8% average decrease worldwide. Australia's percentage of overall spending decreased 2% to 17.3% this year from 19.3% in 1999. Africa shows the second largest decrease in spending, with a fall of $84 million to $293.1 million from $377.1 million in 1999, but the continent's share of total spending shows the largest percentage decrease, dropping to 12.6% from 14.7% of the overall total in 1999. Latin American allocations, which dropped by $57.5 million to $661.9 million in 2000 from $719.4 million in 1999, also show a very small percentage increase from 28.1% in 1999 to 28.3% this year.
Smaller decreases in expenditure are taking place in the United States and our rest-of-world category. Budget allocations for the United States fell by $17.6 million to $234.5 million from $252.1 million in 1999, but the country's share of overall spending increased slightly to 10% from last year's 9.8%. MEG's rest-of-world category shows the smallest decrease in expenditure, falling by $16 million to $196.7 million from $212.7 million in 1999, with the region's share of overall spending increasing by only 0.1% to 8.4% this year.
These are some of the conclusions drawn from Metals Economics Group's eleventh edition of Corporate Exploration Strategies, published in September 2000.
 More Info |
|
Copyright by Metals Economics Group 2002. All rights reserved. Reproduction in whole or in part without written permission is prohibited. MineSearch and Corporate Exploration Strategies are registered Canadian trademarks. |