Halifax, Nova Scotia — MININGREVIEW.COM — 27 November 2009 – International mining companies have cut their spending on exploration for nonferrous metals by a substantial 42% this year, resulting in a turnaround which has ended six successive years of increases.
A study by the Metals Economics Group, which is based here, revealed in an e-mailed report that global spending had fallen to US$7.7 billion (R58 billion) from US$13.2 billion (R99 billion) in 2008, as commodity prices had plunged earlier this year and the global economic crisis had eroded demand. The drop was the steepest since the study began in 1989, the group added.
“The global economic crisis and declining prices for almost all mineral commodities took their toll on the industry,” Metals Economics continued. “Most of the decline stems from cuts at so-called junior mining companies,” it added.
Producers including Rio Tinto Group “’ the world’s third- largest mining company “’ have trimmed or delayed exploration projects in a bid to reduce costs. Based on London Metal Exchange trading, copper fell 54% last year, while zinc dropped 49% and nickel sank 56%.
This year, prices have rebounded. Copper has doubled since the end of December as demand boomed in China in the first half, and the dollar declined, boosting the appeal of commodities as hedges against inflation.
“If recent metals price and financing trends persist through the remainder of the year and into early 2010, it could stop the fall in global exploration spending,” Metals Economics suggested.