CHRIS HINDE A workshop will be presented jointly by SNL Metals & Mining’s reports director Dr Chris Hinde and consultant director Mark Fellows
Professional services firm SNL Metals & Mining will host a three-hour preconference workshop that will provide a comprehensive overview of the mining sector on the Monday prior to the official start of the Investing in African Mining Indaba, which will take place at the Cape Town International Convention Centre from February 9 to 12.
The session, titled Mining Insight: An Industry Explained, will be presented jointly by SNL Metals & Mining’s reports director Dr Chris Hinde and consultant director Mark Fellows.
Several issues will be discussed including the size and shape of the global industry, an overview of the largest players, geological processes, methods and metals recovery.
It will also tackle the influences on metals demand and supply, costs, and the long-term price behaviour of commodities.
Larger Mining Companies Focus
In December 2014, SNL Metals & Mining published the ‘Larger Players Account for 40% of Global Exploration Budgets’ report, which states that 39 larger mining players budgeted $4.33-billion and accounted for 40% of the $10.74-billion worldwide exploration total that year.
The top three explorers in 2014 were Chile-based copper producer Antofagasta, diversified major Vale and precious metal producer Fresnillo, according to the report.
SNL Metals & Mining states that Antofagasta had the world’s largest nonferrous exploration budget in 2014.
“The company’s programme was growth- orientated and emphasised late-stage and feasibility work. A strong grassroots effort included programmes in the Americas, Europe, Africa and Australia,” the report states.
In second place, Vale was the largest explorer among the diversified majors and also emphasised late-stage work.
“Vale continues to challenge Russian mining major Norilsk for the title of the world’s top nickel producer. Vale’s output of 260 200 t in 2013 was just 25 000 t short of the 285 000 t produced by the Russian miner,” states SNL Metals & Mining.
The report further notes that Vale also considers copper one of its core commodities, although production growth has been more gradual.
“Significant exploration spending is also directed to fertilisers in Brazil and Peru.”
Rounding out the world’s top three is Mexico’s Fresnillo.
The report highlights that third-placed Fresnillo is the world’s largest primary silver producer and one of Mexico’s largest gold producers.
Fresnillo’s $225-million exploration budget, almost entirely directed towards Mexico, is spread fairly evenly among all the stages of exploration, with a slight emphasis on advancing several pipeline projects, the report states.
Meanwhile, SNL Metals & Mining points out that the share of worldwide exploration, of the larger miners, last year, stood at 41% for gold, 32% in copper, 41% for base metals, and 7% each for diamonds and other mineral resources including silver, potash, phosphates and manganese.
Two of the larger diamond players, Russian diamond major Alrosa and Anglo American Southern African and Canadian diamond mining arm De Beers, accounts for 69% of global diamond exploration.
The 25 larger players with gold exploration budgets are responsible for 39% of global gold allocations, while copper explorers that form part of the 39 larger players account for just more than half of the total global copper budget.
“Conventional wisdom holds that the major companies leave grassroot exploration to the juniors. It might, therefore, be surprising that the larger players contributed 40% of all greenfield allocations in 2014.
“A persistent financing drought has squeezed juniors’ budgeting to the point that the majors have become the biggest drivers of early-stage exploration,” the report states.
Similarly, the company also notes that the larger players traditionally dominate mine site spending.
However, the company points out that last year, these companies accounted for only 51% of the near-mine work, as investors demanded improved returns over growth.
“It is also interesting to note that the larger players are responsible for only 32% of late-stage exploration and feasibility work,” the report highlights.
SNL Metals & Mining states that, for the larger players, Chile has replaced Canada as the primary exploration destination, as Chilean budgets account for a much larger share (12%) than the entire industry’s share (6.6%), reflecting the significant presence of major copper miners in the relatively secure Latin American country.
Two of the mature jurisdictions, Canada (10%) and Australia (7.5%), have garnered much smaller percentages from the larger players’ budgets (14%) than the shares allocated by the entire industry (12%), as junior and intermediate companies contribute a considerable portion of the exploration dollars spent in these countries.
The US has also dropped in the rankings, although budgets by the larger players account for a greater share (8.4%) of the total than the share (7.1%) allocated by the other 1 961 global mining companies that each have budgets of at least $50-million for exploration.
Russia has moved from eighth to fourth place in the rankings with 79% of its total allocations being accrued from seven larger players.
“Conversely, China, where 56 companies with allocations of less than $20-million are contributing 53% of the total, drops from sixth to tenth place,” the report concludes.