Mining exploration budgets have experienced a double-digit fall in 2020 as the COVID-19 pandemic put activity on hold, according to S&P Global Market Intelligence data.
Despite optimism in the exploration sector in the second half of last year, S&P Global Market Intelligence recorded a drop of 11 per cent to exploration budgets.
S&P Global Market Intelligence surveyed 2500 companies and found that exploration budgets decreased modestly in 2019 due to poor price performance by most metals early in the year.
As COVID-19 lockdowns hit Asia during the March 2020 quarter and quickly spread to other nations, exploration activities were put on hold globally.
Fortunately, S&P Global Market Intelligence stated the mining industry had recovered quickly from the initial shock, with base metals prices trending upward during the June and September quarters, allowing financing to return to pre-pandemic levels.
Regardless of the difficulties, S&P Global Market Intelligence said there was much to look forward to in the exploration sector.
“Despite the challenges 2020 has brought, there are some positive signs,” S&P Global Market Intelligence reported.
“The number of active companies with exploration budgets has increased again, up 3 per cent from 1708 to 1762 in 2019 as dormant companies reactivated themselves late last year before conditions deteriorated.
“Gold allocations have also increased by $51 million to $4.3 billion despite the difficult field season earlier in the year.”
S&P Global Market Intelligence stated it was “cautiously optimistic” for its 2021 budgets, with copper and gold prices well above their prices in the beginning of 2020.
The analyst firm forecasts a double-digit growth in budgets year over year in 2021, potentially in the 20 per cent range, led by gold exploration companies.