MINERS SET TO SPEND US$11B ON EXPLORATION
Companies looking for reserves to replenish project pipelines, overturn industry’s lack of recent success
MINERS and investors are poring over satellite images, tracking drilling rigs and quizzing company executives for clues on whether the sector’s heavyweights are close to a new jackpot discovery.
As Rio Tinto Group searches Australia’s Great Sandy Desert for copper and Anglo American Plc scours a 19,000 sq km package of land in Brazil, they’re among the mining giants stoking excitement over potential reserves that’ll replenish project pipelines and overturn the industry’s lack of recent success in unearthing deposits.
It’s part of a broader global push across the industry that’s driving a revival in exploration spending on key metals, forecast to top US$11 billion (RM44.78 billion) after hitting a low of about US$9 billion in 2016, according to Melbourne-based MinEx Consulting Ltd.
To keep tabs on progress, investors last month pressed Anglo’s chief executive officer (CEO) Mark Cutifani for details on his company’s campaign, while others are monitoring traffic shuttling in and out of Rio’s expanding project in the Paterson district in Western Australia, and consulting satellite imagery of the region in an attempt to deduce the scale of the company’s activities.
“We have some very interesting targets, but we never say too much about exploration — I don’t want my peers to know what I’m doing,” said Rio’s CEO Jean-Sebastien Jacques last week.
“Though they are looking very carefully and using even satellite images to try to see what we’re doing.”
The recent upturn is exploration is also reviving partnerships between the industry’s heavyweights and smaller, specialist companies, said Lynda Burnett, managing director of Sipa Resources Ltd.
“Exploration is certainly a key activity for us,” said Fortescue CEO Elizabeth Gaines. The iron ore producer is searching for copper to lithium in projects spanning two continents.
Small investments in exploration carry less risk than acquisitions with big price tags, and in the case of copper offer an alternative route to growth, according to Camille Simeon, an investment manager at Aberdeen Standard Investments, which holds Rio and BHP shares.
“It can be a sensible approach, rather than buying something,” she said.