Global Mine Exploration Budgets Up

A rise in metal prices and more stable market conditions prompted mining companies across the globe to boost their exploration budgets by more than 40% in 2010, said a report issued by the Metals Economics Group on Thursday.

The report, based on input from more than 3,200 mining companies, estimates that the total of 2010 budgets for nonferrous metals exploration reached $12.1 billion.

After rising for six straight years to a record high of $14.4 billion in 2008, nonferrous exploration budgets collapsed in 2009 to slightly above $8 billion as the global economic meltdown and declining metal prices hurt the industry.

Metals prices—the primary driver of exploration spending—have since improved markedly and metals have traded well above the long-term trendline throughout 2010, leading to a rebound in spending, the MEG report said.

However, the report notes that the mining industry's appetite for risk has not returned to levels seen before the economic downturn as mining companies continue to face the threat of increased royalties, resource nationalism and windfall-profit taxes in many jurisdictions.

Exploration in a number of countries considered to be higher risk continued to fall in 2010, the MEG report said.

The report includes input from companies that mine base metals, precious metals, diamonds, uranium and a few other industrial minerals.