Building on buoyant year-over-year exploration spending, S&P Global Market Intelligence forecast a 20% increase in 2018 exploration expenditures in its World Exploration Trends report.
Estimated exploration budgets, tracked by S&P Global Market Intelligence, picked up in 2017 after four years of declines. In 2017, estimated budgets for nonferrous metals grew to US$8.4 billion from US$7.3 billion in 2016.
The trend may continue. Estimated budgets spiked in the final quarter of 2017, reflecting investor hunger in the metals and mining market.
One caveat to the forecast is possible market uncertainty. This has been underscored recently by Trump administration plans to enforce a 25% tariff on steel and 10% tariff on aluminum imports, which has deepened fears in global markets of trade retaliation as some U.S. trading partners threaten the administration with consequences.
Another caveat is that exploration spending is still relatively muted. "We still have a long way to go," Mark Ferguson, associate director and head of mining studies at S&P Global Market Intelligence, said on the sidelines of the Prospectors & Developers Association of Canada international convention March 5. He pointed to bull market spending in the past decade that was more than double recent years.
Still, renewed investor interest in the metals and mining market is clear. Resurgent metal prices have underpinned a return of investment to the sector. Canada and Australia lead the way with about US$5.6 billion of combined exploration budgets, according to S&P Global Market Intelligence data.
Strong metal prices have driven gains, notably in gold and battery metals, Ferguson said. S&P Global Market Intelligence data shows the spend on lithium budgets doubled in 2017 year over year, with similar increases for cobalt.