New Australian Bureau of Statistics data has revealed an alarming drop in greenfields exploration, where the future tier one deposits are likely to be found, though S&P Global Market Intelligence analysis has revealed Australia tops the world in overall exploration spend.
The data released on March 5 showed that while the December 2017 quarter's total mineral exploration spend rose 4.4%, or A$20.9 million, over the prior quarter, the total meters drilled on greenfields exploration fell by 9%; brownfields dropped by 5.1%.
This comes despite S&P Global Market Intelligence's World Exploration Trends report predicting that global non-ferrous metals exploration will soar 20% this year having risen from US$7.3 billion in 2016 to US$8.4 billion in 2017.
However, the fact that this was just the first annual increase in exploration spending after four consecutive years of falling exploration investment alludes to a deeper malaise that is worrying both analysts and the industry alike.
S&P Global Market Intelligence Head of Mining Studies Mark Ferguson, whose team produced the World Exploration Report, said that while Canada has enjoyed the most exploration spending for 16 straight years, Australia would have been in front when factoring in iron ore, over at least the last two years.
Even so, the broader sector's longer-term future was not looking too rosy, he said in an interview "When you look at long-term trends of 20-plus years, grass-roots exploration has been on the decline the entire time," Ferguson said.
"At the start of the previous cycle in 2004-05 there was a rapid rise in late-stage allocations compared to grassroots and mine site exploration; then over the last six to 10 years you've seen mine site allocations outpace both grass-roots and late-stage allocations.
"That's not surprising as over the last several years the majors have cash flow so have been able to explore lower-risk, nearby their existing operations or try to find a new zone within a headframe that's much deeper and wider to leverage existing infrastructure."
Given new deposits take 10 to 15 years to bring on stream, that trend leaves industry's long-term pipeline "more barren", Ferguson said.
"There's probably a number of late-stage assets that can come on in several years to offset some of the medium-term supply shortages people are talking about, but how will our long-term view shape up if we're unable to find real new deposits?
"There are some projects like BHP Billiton Group's Escondida that can supply copper for many years, but what's that next batch of big mines that are going to allow supply to be maintained, assuming demand continues at a reasonable rate [is uncertain].
"It's great to see exploration budgets lift in 2017 and we're expecting to see similar rates in 2018 if not more, but industry has a long way to go to offset a lot of the setbacks from the past five or six years."
Association of Mining and Exploration Companies CEO Warren Pearce told S&P Global Market Intelligence that his group was concerned that most exploration in Australia was occurring in areas that have been previously mined or explored, where there is a lower risk in terms of the likelihood of finding some additional resource.
Such brownfields exploration also presents less upside as well, Pearce added.
"There aren't a lot of major projects on the horizon, and really we're going to find out what it looks like in the next 12 months or so when the results come through," he said.
This is why AMEC encourages co-funded drilling schemes across Australia, which he said were crucial in helping bring private investment into greenfields exploration projects which, without government investment, would simply not progress.
Western Australia's Department of Mines, Industry Regulation and Safety launched round 17 of its co-funded drilling program on Feb. 23, which provides funding for under-explored greenfield regions.
Previous rounds have helped success stories in the eastern Pilbara including Antipa Minerals Ltd.'s Minyari copper-nickel-cobalt discovery, Sipa Resources Ltd.'s Paterson North copper-gold project and Encounter Resources Ltd.'s copper and zinc prospects.