Global spending on the search and exploration of non-ferrous metals decreased for the second year in a row. In 2024, they fell by 3% to 12.5 billion dollars. And this is when demand for battery and critical metals increases, according to the S&P Corporate Exploration Strategies 2024 survey.
The main problems are related to the financing of junior companies, which raises concerns about the industry's ability to discover new deposits.
"Juniors compensate for the price increase by reducing the cost of search projects, which are the most risky, and in the struggle for financing, the junior sector is shrinking," says S&P expert Eileen Grace Dela Cruz. "Less search work can lead to serious problems."
She believes that as companies invest in existing deposits and projects with lower risks, the potential for breakthrough discoveries decreases, at a time when fundamental market factors indicate an urgent need to find new resources.
The share of exploratory exploration has reached an all—time low, a trend that could lead to a reduction in future supplies of critical metals.
Gold accounts for 44% of the total budget for exploration of non—ferrous metals, 26% - copper, 9% — lithium.
In 2024, the gold market showed historical price peaks, exceeding $ 2,700 per ounce. However, precious metal exploration budgets decreased by 7%, with more than 80% of the decrease coming from junior companies.
The junior sector's search budget decreased by 21% to $1.8 billion, following the trend of declining funding over the past two years. On the contrary, the majors collectively allocated more than $3 billion for gold, which was the third largest amount in the history of observations.
Canada took the first place in terms of investments in gold, although its costs were 16% lower compared to the previous year — $ 1.3 billion. This drop was primarily due to the juniors, who cut $125 million from gold exploration budgets. The number of companies with gold mining budgets decreased to 1,235 from 1,342 in the previous year.
Australia is in second place with costs of $ 913 million.
The United States is on the third place — 845 million dollars.
Despite the rise in prices in 2024 for some commodities, including gold, funding levels do not match these dynamics.
Investing in gold exploration projects this year will be crucial in order to understand whether capital markets can reverse the downward trend. Sustained high prices can improve financing conditions for junior and medium-sized companies and lead to increased budgets for their projects.
