Amid a global trend of increasing exploration expenditure, China has emerged as the country that spends more on exploration activities than any other country in the world, MinEx Consulting MD Richard Schodde said last week.

“To be fair, however, around half of this is for bulk minerals,” he said during an address at the Geological Society of South Africa’s 2013 GeoForum conference.

This came as Canada’s, Aus-tralia’s and the US’s market shares had halved in the last 20 years, despite global exploration expenditure hitting an all-time high of $29.4-billion in 2012 alone. China’s spend accounted for around 14% of this amount.

While gold remained the primary target, Schodde had observed a major increase in spending associated with bulk minerals, which had accompanied a shift from exploration in developed countries to developing ones.

He added that growing explora- tion spend was driven by commodity prices, emphasising that there was a strong correlation between the gold price and exploration spend.

“Essentially, if the gold price goes up, exploration goes up,” he commented.

Looking ahead, however, Schodde expected exploration expenditure to dramatically decrease in the coming years, anticipating a 35% contraction to $19-billion in 2020.

“While this may change if commodity or gold prices shift, at the moment, it’s a gloomy exploration forecast in direct response to a gloomy price expectation,” he said.

While uranium exploration spend was expected to increase by the greatest margin over the next six years, gold exploration would decrease most dramatically in response to a weakened value for the yellow metal.

Commenting on future sources of exploration funding, Schodde said the junior mining sector was facing “severe” funding problems.

Despite securing large amounts of finance in 2006/7, junior explorers experienced severe cash shortages during the global finan- cial crisis, and, as a result, dramatically reduced exploration expenditure in 2009.

“While funding stabilised again in 2011, it dried up again in 2012, with a key problem for juniors being low starting cash reserves. As a result, I believe that the 2013 ‘bust’ could be more severe than the 2008 financial crisis,” he said, adding that, to survive, junior miners would need to consider extensive consolidation.

In addition, Schodde cautioned that funding challenges would continue to be accompanied by increasing exploration costs and a decrease in the rate of new discoveries.

He attributed this to higher input costs, such as labour, drilling and administrative costs.

“On the upside, however, Africa still offers the best ‘bang for your buck’. “In 2012, for example, explor- ation spend on the continent equalled $17-billion, while there were 116 new discoveries. Compare this to Canada, which spent $22-billion for only 65 discoveries,” he commented.