JOHANNESBURG (miningweekly.com) – When looking at global exploration budgets for copper, which reached $11-billion in 2010, it is evident that the nonferrous metal carries perennial importance, mining analysis company SNL Metals & Mining says in its 'Copper Discoveries 1990-2014' report, released on Monday.

“After almost doubling by 2012, the total nonferrous metals exploration budget returned to 2010 levels again in 2014. Over those five years, the copper budget increased more or decreased less as a percentage year-on-year than the total budget; and more remarkably, copper's share of the total budget increased in each of the five years, even as budgets were shrinking.

“In 2014, copper accounted for fully a quarter of the [nonferrous] industry's total budget, a 15-year high for the red metal,” the group reported on Monday.

Further, SNL Metals & Mining noted that it was “no surprise” that acquiring companies paid more for copper in mineable reserves than they paid for resources, since reserves could either immediately increase a company's production, or add to its pipeline of potential production, without the expenditure and time otherwise required to prove up reserves.

“The prices paid per pound for copper in reserves and copper in total reserves and resources generally moved in tandem from 2005 to 2009,” it noted.

However, these prices diverged sharply after the 2008/9 financial crisis, with the reserves price soaring close to 50c/lb by 2011 – the highest price paid in the ten-year period – while the price paid for combined reserves and resources increased much more slowly.

“The divergence partly reflects most major producers' then strategy of increasing production. With recovering copper prices seemingly headed for the stratosphere, adding mineable reserves seemed like a good investment at the time,” SNL Metals & Mining highlighted.

However, the copper price started declining in 2012, and “angry investors” started forcing the major companies to curb spending and focus on increasing value.

As a result, mergers and acquisitions (M&A) spending in 2013 dropped by three-quarters from a record $30-billion in 2012, and the price paid for copper reserves fell to 30c/lb in 2013 – on par with the ten-year average through 2014.

M&A activity revived somewhat in 2014, with the price paid for copper reserves perking up slightly and the total price paid in copper acquisitions jumping 45% from the 2013 price.

The report outlined 201 copper discoveries over the past 25 years, each containing at least 500 000 t of copper, and included the relationship between corporate exploration budgets and discovered copper, and separate sections for discoveries by year, by location, by company type and by classification as greenfield or brownfield.