Global miners have been constantly cutting back on early-stage exploration since the early 2000s, when grassroots’ share of global budgets was at its height. But now, it has fallen to its lowest point ever, S&P Global says in its latest report.
According to S&P, allocation towards grassroots exploration (nonferrous metals) continued its downward trend in 2024, down 8% to a new record low of 22%, totalling $2.79 billion. This represents a sharp contrast to the period of 1997-2004, during which exploration companies concentrated on new discoveries, with grassroots projects receiving nearly half of the annual global budgets.
Since then, however, the share allocated to grassroots exploration has gradually diminished, as explorers shifted focus from generative, early-stage programs to late-stage and mine site exploration. Consequently, this trend has adversely affected the rate of new discoveries.
“Based on our discovery series, we have consistently observed a downward trend in both the number of discoveries and the amount of contained metal over the years for both copper and gold exploration,” says Cesar Pastrana, data analyst at S&P and author of the report.
While this transition is partly natural, as assets are expected to mature over time, the decline in the investment climate following the drop in metal prices after 2012 has “compelled explorers to adopt a more risk-averse stance” and re-prioritize their budget allocations, Pastrana adds.
“This shift has led to an increased emphasis on extending known deposits, which tends to boost company-held resources but limits opportunities for new discoveries. Although there has been an increase in reserves over the years, these gains predominantly come from older deposits or existing mines rather than new discoveries,” he writes.
In tandem with explorers’ decreasing allocation toward generative programs, both late-stage and near-mine exploration budgets have increased over the past decade compared to the late 1990s to early 2000s. Since 2017, these two stages have been in constant competition to be the largest allocation, the S&P report shows.
However, late-stage exploration is set to break a three-year trend of growing budgets, recording the largest decrease ($4.71 billion) among all stages of development in 2024. This would result in a slight decline in its share of the global budget to 38%, the second-largest share of all stages.
Of the three stages, only mine site exploration saw growth in 2024, at a modest 2% over the previous year. This, Pastrana notes, is sufficient to position it as the preferred stage in 2024 amid a tight capital environment, with gold and copper being the primary drivers.
According to S&P data, the mineral-rich Australia has been a key driver behind the decline in spending in the grassroots and late-stage exploration stages.
For grassroots exploration, Australia’s allocation towards gold and copper decreased by 32% and 25%, respectively. Rio Tinto, the leading grassroots explorer, slashed its allocation for the region by a significant 57%, highlighting a major shift in investment strategy.
The Oceanian nation also contributed to the downturn in late-stage allocations with reduced funding for copper and gold projects.
Elsewhere, several Latin American countries — including Ecuador, Mexico and Chile — cut their budgets on grassroots exploration by more than $20 million each.
These trends, as S&P’ Pastrana writes, “underscores the industry’s cautious approach, heavily influenced by volatile metal prices and a challenging financing environment.”
“The trend toward prioritizing known deposits over new discoveries raises concerns about the long-term sustainability of resource availability,” he adds.
“As the exploration landscape evolves, the balance between risk and reward will be crucial for explorers aiming to revitalize discovery rates while navigating financial constraints.”
