Mining exploration. CREDIT: Adobe Stock.
Global nonferrous exploration spending declined for the second straight year due to financing challenges for junior miners, S&P Global said.
Global spending dropped 3% to $12.5 billion, S&P’s Corporate Exploration Strategies 2024 report, released Friday, shows. The decline raises concerns over the industry’s capacity to discover new deposits when demand for battery and critical metals is rising.
Less grassroots exploration could lead to serious problems, S&P project lead Eillen Grace Dela Cruz warned.
“Junior companies offset the rise in prices by scaling back their expenditures in early-stage, higher-risk projects,” she said in the report. “With the junior sector continuing to struggle to access funds, causing its allocations to decrease again.”
She suggests that as companies retreat to lower-risk investments, the potential for breakthrough discoveries diminishes even as market fundamentals suggest an urgent need to find new resources.
The report highlights a broader shift as the share of grassroots exploration hit a record low. Companies are playing it safe by focusing on established deposits instead of risky projects – a trend that might reduce future supplies of critical metals.
Reserve replacement
Exploration spending in 2025 will likely drop too, S&P says. This is due to the 2024 budgets being tight and junior companies having a hard time getting capital.
The current retrenchment poses tough questions about the long-term ability of the sector. Mining companies need to replenish dwindling reserves to meet the growing global demand for nonferrous metals.
Regional dynamics further illustrate a tightening market. Latin America continues to command the largest share of exploration funding, while juniors in Canada and Australia face significant budget cuts. In the United States, small increases — particularly in copper allocations — hint at cautious optimism despite broader challenges.
Funds raised by junior and intermediate mining companies fell 12% in 2024 to $10.3 billion, the lowest in five years, according to an earlier S&P report. Monthly figures also slumped, with December’s fundraising dipping 21% to $890 million, highlighting a tightening financing climate for gold juniors.
In contrast to the junior sector, big companies, backed by steady internal revenues, kept spending on later-stage projects.
Exploration budgets
Gold exploration budgets fell 7% overall to $5.6 billion despite prices topping $2,700 an oz. last year. Junior gold funding dropped 21% to $1.8 billion.
Canada ranked first among regions for gold investment, though its $1.3 billion allocation dropped by 16% from the prior year. Also, the number of gold-focused companies fell about 8% to 1,235.
Copper spending increased 2% to reach $3.2 billion, driven by a 12% rise in mine site exploration — the highest total since 2013. Lithium exploration budgets surged 30%, breaking the $1 billion threshold for the first time. Junior funding for lithium, meanwhile, nearly halved from 2023 levels.
Nickel exploration budgets dropped 30% to $534 million while cobalt budgets fell 35% to $51.1 million. Weak market conditions and oversupply hurt investor confidence.
Uranium exploration rose by 33% to $331 million. The increase came from a renewed focus on nuclear power as part of decarbonization efforts.