Mining companies increased their spending on exploration this year by some 44% compared with 2009, according to a report published on Thursday by Canada's Metals Economics Group (MEG).
Exploration budgets increased in response to higher prices and more stable market conditions, spending was clearly focused on regions that are viewed as having lower political risk, while exploration in higher-risk jurisdictions showed only slight increases, MEG noted.
Overall, the industry budgeted about $12,1-billion on exploration for what the report labels 'nonferrous metals', which includes precious and base metals, diamonds, uranium and some industrial minerals, but excludes iron-ore, aluminium, coal, oil and gas.
After rising for six years to a record high of $14,4-billion, nonferrous exploration budgets tracked by MEG dropped 42% in 2009, as the industry responded to the global economic crisis and declining prices for almost all commodities.
However, metals prices have since recovered, and companies of all sizes have increased their average exploration allocations this year.
"In particular, the significant improvement in the availability of equity financings for the juniors over the past 12-18 months has allowed this group to account for the largest share of the overall increase in exploration spending this year," MEG commented.
RESOURCE NATIONALISM
The report notes that the industry's appetite for risk has not returned to the levels experienced before the economic downturn, as evidenced by the lower percentage of exploration spending in 'riskier' jurisdictions.
"Companies continue to face the threat of resource nationalism, as more countries openly consider or enact windfall and resource rent taxes, increase royalties, or impose other controls on foreign companies such as revoking or freezing licenses for 'review'," MEG said.
"As a result, exploration in a number of countries considered to be higher risk continued to fall in 2010, despite the sharp rise in overall exploration, while other countries with elevated risk profiles showed only modest increases far below the global average."
MEG's 2010 exploration estimate is based on information collected from more than 3 200 mining and exploration companies worldwide, of which more than 2 200 had exploration budgets in 2010.
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