Nonfuel Mineral Exploration 2000 D. R. Wilburn U. S. Geological Survey



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Nonfuel Mineral Exploration 2000

D.R. Wilburn
U. S. Geological Survey


(Originally published in Mining Engineering, v. 53, no. 5, May 2001, p. 41-51.)

Gold remained the principal exploration target in 2000, although the exploration budget for gold in 2000 was 18 percent lower in nominal terms than that budgeted for gold in 1999 and much lower than the 1997 estimated budget for gold exploration. This decrease probably reflects the continued depressed gold price, which has declined steadily since 1996 and investor wariness for funding gold exploration activities while gold remained at a low price level. Based on MEG budget estimates, the principal targets for gold exploration in 2000 were in Latin America, Australia, and the United States.



Statistical Interpretation of International Mineral Exploration for 2000

This summary of international nonfuel mineral exploration activities for 2000 draws upon available data from literature, industry, and U.S. Geological Survey (USGS) specialists. The report documents data on exploration budgets by region and commodity, identifies significant mineral discoveries and exploration target areas, discusses government programs affecting the mineral exploration industry, and presents inferences and observations on mineral industry direction based upon these data and discussions.

Two types of information are reported and analyzed in this annual review of international exploration for 2000: 1) budgetary statistics provided by Metals Economics Group1 (MEG), and 2) information on regional and site-specific exploration activities in 2000 compiled by the USGS. The MEG information summarizes planned company budgets for exploration activities in 2000 worldwide, primarily for precious and base metals; however, it does not report figures reflecting actual exploration expenditures. MEG includes information on additional mineral targets where it is available. MEG estimates that their surveys prior to 1999 covered 80 percent of world exploration budgets, post-1999 surveys are estimated to cover about 90 percent of world exploration budgets. Survey statistics were changed in 1999 to include companies with budgets between US$100,000 and US$2.9 million, as well as those companies included in prior studies whose anticipated budgets were above US$2.9 million. The 2000 survey also did not include budgets for those which chose not to participate in the MEG study, for private companies which do not publish figures, and for government-funded exploration activities.

USGS compilations described here cover nonfuel minerals, with an emphasis on precious and base metals and diamond. Analyses are based on information provided by USGS mineral commodity, country, and mineral-resource specialists, as well as industry contacts and trade journals.

Care should be taken when performing temporal interpretations of the MEG exploration data, such as trend analyses, because the number of mining companies surveyed by MEG varies with time and companies included in the survey change on a year-to-year basis. Data from 1999 and 2000 differ from prior year data as a larger number of companies were included in the prior survey results. In addition, significant corporate restructuring took place between the years 1997-2000.

MEG estimated the total 2000 commercial international exploration budget for nonfuel mineral targets (excluding iron ore and aluminum) to be US$2.6 billion, 7 percent lower than the corresponding estimated budget for 1999. For the 656 companies canvassed by MEG in their 2000 study, the total amount reported as budgeted for 2000 international exploration was US$2.34 billion (46.6 percent for gold, 37.9 percent for base metals, 9.6 percent for diamond, and 5.9 percent for other mineral commodities). Figure 1 shows the 2000 planned worldwide exploration budgets, by region.

MEG “regions” reflect a mixture of individual countries, continents, and other groupings, but they are reported consistently on an annual basis and provide a means of indicating the flow of budgeted exploration expenditures from year to year. Regional allocations based on data from companies canvassed by MEG for 2000 were: Latin America, US$662 million; Australia, US$405 million; Canada, US$348 million; Africa, US$293 million; the United States, US$234 million; the Pacific region, US$199 million; and the rest of the world, US$197 million.

MEG data indicate that planned exploration budgets (in current dollars) for 2000 decreased from 1999 levels in all regions except Canada (with a budgetary increase of US$38 million) and the Pacific region (with a US$3 million increase). The general decreasing trend may be attributed to changing exchange rates, continued low commodity prices, investor wariness for funding exploration activities, and tighter company budgets. The planned budget increases in Canada can be attributed to recent exploration successes and aggressive marketing by some Provincial governments. The general decrease in mineral exploration budgets for 2000 continues a downward trend first noted in 1998, and marks a departure from the 1993-97 trend of increases reported by MEG (figure 2).

Figure 2 summarizes MEG exploration budget data for the years 1994-2000, in terms of both regional dollar allocations and regional percentage of the total exploration budget. The largest budget dollar reduction between 1999 and 2000 (US$91 million) took place in Australia, followed by an US$84 million reduction for African exploration. Budget allocations for exploration decreased by US$58 million in Latin America, and by US$18 million in the United States. In spite of a budgetary decrease, Latin America remained the region with the highest exploration budget.

The apparent data gap that is reflected in figure 2 for 1999 reflects the change in MEG data reporting methodology mentioned previously. The 538 companies included in the 1999 MEG study together accounted for about US$400 million in budgeted exploration, or 16 percent of the total exploration budget. Approximately 80 percent of all the companies considered in the 1999 MEG study had annual exploration budgets less than US$2.9 million.



Prices for some metals in 2000 remained near 1999 levels (gold, lead, and silver), and others inched upward from average 1999 prices (copper and zinc). Significant price increases for palladium (>64%) and nickel (44%), and a lower increase for platinum (>3%) resulted in some exploration companies reconsidering the mix of commodities being explored. Table 1 shows the change in price of selected precious and base metals for the years 1994-2000.


Table 1. Prices for selected base and precious metals, 1994-2000




Average price for specified year, in U.S. currency

Commodity

19941

19951

19961

19971

19981

19992

20003

Copper4

1.11

1.38

1.09

1.07

0.79

0.76

0.88

Gold5

385

386

389

332

295

280

280

Lead6

0.37

0.42

0.49

0.46

0.45

0.44

0.44

Nickel7

2.88

3.73

3.40

3.14

2.10

2.73

3.92

Palladium8

156

153

130

184

290

360

590 (9 mo.)

Platinum9

411

425

398

397

373

379

391 (9 mo.)

Silver10

5.29

5.15

5.19

4.89

5.54

5.25

5.25

Zinc11

0.49

0.53

0.51

0.65

0.51

0.54

0.56

1USGS Metal Prices in the United States through 1998, published in August 1999.

2Estimated price reported in USGS Mineral Commodity Summaries 2001.

3Estimated price based on oral and written communication, USGS mineral commodity specialists.

4U.S. producer cathode (99.99%-pure copper), in Platt’s Metals Week, dollars per pound.

5Englehard Corp., published in Platt’s Metals Week, dollars per troy ounce.

6North American producer price, delivered (minimum 99.97% pure), in Platt’s Metals Week, dollars per pound.

7London Metal Exchange cash price for primary nickel (minimum 99.80% pure), in Platt’s Metals Week, dollars per

8New York price (99.9% pure in 100-ounce lots), in Platt’s Metals Week, dollars per troy ounce.

9New York price (99.9% pure in 50-ounce lots), in Platt’s Metals Week, dollars per troy ounce.

10New York price (99.9% pure silver), in Platt’s Metals Week, dollars per troy ounce.

11U.S. Dealers Special High Grade zinc (99.99% pure) delivered price, in Platt’s Metals Week, dollars per pound.

Figure 3 illustrates the distribution of reported mineral exploration budget estimates for 2000 by commodity grouping. The amount budgeted for gold exploration (US$1.09 billion) was 18 percent lower in nominal terms than that budgeted for gold in 1999 and much lower than the MEG 1997 estimate budget for gold exploration of approximately US$2.6 billion (using a smaller sample). This decrease probably reflects the continued depressed gold price, which has declined steadily since 1996 (table 1) and investor wariness for funding gold exploration activities while gold remains at a low price level. According to MEG, the combined market capitalization for junior (capitalized at less than US$200 million) gold exploration companies has fallen from US$26.6 billion estimated for December 1996 to US$9.7 billion as of June 30, 2000 (MEG, 2000), a decline of about 73 percent. Based on MEG budget estimates, the principal targets for gold exploration in 2000 were in Latin America, Australia, and the United States.

Exploration budgets for base-metal projects (MEG includes copper, lead, zinc, and nickel) dropped slightly from US$889 million in 1999 to US$886 million in 2000 due to the general decrease in exploration funding. However, base metals accounted for about 38 percent of the total MEG world exploration budget in 2000, compared to 35 percent in 1999, 33 percent in 1998, and 27 percent in 1997. In times of a low gold price, exploration companies tend to favor the search for polymetallic deposits. Most 2000 base-metal prices remained close to 1999 levels except for nickel, which exceeded the average 1999 price by 44 percent. Copper exploration constituted about 50 percent of the base-metals exploration budget; zinc about 27 percent, and nickel about 23 percent of the base-metal total. Less money was budgeted for copper in 2000 compared to 1999, but more money was budgeted for zinc/lead and nickel targets. In 2000, Latin America continued to receive the greatest share of base metal exploration budgets, followed by Canada, Australia, and the Pacific region.

Exploration budgets for mineral targets other than gold and base metals increased in 2000 to US$362 million, and their percentage of the exploration budget total increased to over 15 percent, compared to 13 percent for 1999. Diamond exploration accounted for 9.6 percent of the total, down slightly from 10 percent of the total worldwide exploration budget reported by MEG for 1999. Diamond-related exploration in Canada increased to about 46 percent of the worldwide diamond exploration budget for 2000, from 27 percent in 1999, as a result of new production and recent discoveries, and the projected drop in African exploration. Africa’s percentage declined to about 25 percent as “diamond wars” and continuing political unrest take their toll. Exploration budgets for the “other” metals and minerals in 2000 were the highest in five years in percentage terms. This may reflect the surge in the palladium price in 2000 (see table 1), and continued strong interest in the search for silver.

Interpretation of Domestic Mineral Exploration in 2000

Exploration activities in the United States continued an apparent decline with a 7 percent reduction in total budgeted exploration expenditures in 2000 to an estimated $235 million according to MEG. However, the U.S. percent share of world minerals exploration remained at about 10 percent in 2000.

The United States (excluding Alaska) is a relatively mature exploration province, generally requiring deep (more expensive) drilling. Stringent permitting standards also add to the cost of exploration. In spite of these higher costs, a recent survey of 132 junior exploration companies and 25 senior exploration companies conducted by the Fraser Institute of Canada suggests that the United States continues to attract interest in minerals exploration. Interest in minerals exploration varies substantially based on location and State regulatory policies [Fraser Institute, December 18, 2000 (http://www.fraserinstitute.ca)]. Nevada was included in the five top-rated regions for its policy climate, but Wisconsin, California, Montana, and Washington were among the lowest rated regions in this category. Nevada and Alaska were included in the five top-rated regions for attractiveness based on geology, while South Dakota, Minnesota, and Wisconsin were among the lowest rated in this category. About 53 percent of all survey respondents investing in the United States expected exploration to drop in 2000, while 30 percent expected it to rise. Survey results suggest that the anticipated exploration expenditures allocated for the United States from both senior and junior mining companies would amount to about 15 percent of total expenditures. It appears that during this period of generally low metal prices, the necessity for some exploration companies to contain costs has led them to shift their exploration focus away from areas where environmental costs may be significant or exploration more expensive, in spite of favorable policy climate or geology.

USGS data suggest Alaska and Nevada had the greatest amount of exploration activity of U.S. States during 2000, primarily for gold, base metals, silver, and platinum-group metals. Interest in Alaska has been attributed to the high geologic potential as well as political and tax stability (Mining Record, November 2000, p. 2). The Alaska Department of Natural Resources reported that an estimated US$52.3 million was spent on mineral exploration, and a further US$33.8 million was spent on mineral development during 1999. Exploration in 2000 focused on expanding gold resources on State and native lands near the Fort Knox and Red Dog mines, as well as on the Goodpaster mining district, where extensive gold mineralization was discovered in 1998. Exploration in Nevada likewise focused on expansion of existing deposits and exploring areas adjacent to operating mines and along major “trends” (Battle Mountain, Carlin, Getchell, and Midas).



Analysis of Exploration Activity

During the years 1994–97, exploration activity shifted away from Australia, Canada, and the United States (highly industrialized areas with extensive past mineral exploration) toward Africa, Latin America, the Pacific, and other regions (largely developing regions with under-explored areas). Figure 4 shows this trend in terms of percentage of planned exploration budgets. During the years 1998–2000, however, this trend apparently reversed, as low commodity prices, regional unrest (central Africa), financial turmoil (Asia-Pacific), and post-Busang investor trauma all seemed to focus investor interest towards areas with established mineral potential and away from areas with more potential “risk”. This trend appears to have stabilized somewhat in the years 1999–2000.

For 2000, information on 1153 exploration targets was gathered from USGS specialists, industry contacts, and trade journals. Regional distribution of these exploration targets is represented in figure 5, based on the number of projects reported for each region. When compared to similar data for 1999, exploration activity appears to have increased in Africa, Australia, and Canada, while exploration activity in Latin America and the United States appears to have decreased.

The number of sites having exploration activity within a country or region does not always correspond to the amount budgeted for exploration. Australia, which ranks second in terms of dollars budgeted but fourth regionally in terms of number of project sites, illustrates a region where a significant amount of exploration activity is related to advanced exploration; budgets for advanced projects are generally higher as companies expend more money per site for feasibility and pre-development work. Canada, on the other hand, represents a region where numerous junior companies are exploring, but few sites have as yet received large capital expenditures. Canada ranks first in terms of number of sites being explored, but ranks third in terms of total dollars budgeted.

Table 2 presents 100 exploration sites considered most noteworthy in 2000, based on available information. Selection was based on the following criteria:


  • The high level of exploration activity at the site, determined either by level of drilling activity or exploration investment;

  • The large amount of resources delineated; and

  • The high potential for near-term development, based upon reported tonnage and grade estimates.

Each of these sites represents a new or recent discovery, delineation of a new ore zone, or a significant increase in resources reported in 2000. Sites undergoing preproduction development or currently producing were excluded from this list, unless significant reserves/resources were delineated in 2000 by exploration activity.

As shown by table 2, gold continues to dominate the list of reported exploration activities in 2000. Of the 100 selected sites reported in table 2, there are 55 gold, 13 copper, 8 nickel, 8 heavy minerals (primarily titanium), 7 zinc, 4 diamond, and 5 other commodity targets. Categorization by commodity was based on consideration of the value of the contained resources at each target. Gold remained the most sought-after mineral commodity in 2000. Interest in base metal deposits remained strong, especially for targets with multi-commodity potential. Interest in nickel and platinum group metal targets increased, perhaps because of higher prices for these commodities (see table 1) in 2000. Interest in titanium-rich mineral sand deposits was high in 2000, particularly in Africa and Australia. These data are consistent with the findings of MEG for 2000.

The estimated resources reported in table 2 reflect various stages of verification, different methodologies, and multiple sources of information. However, should these resources be verified, they would add over 130 million ounces of gold, 1.8 billion ounces of silver, 60 million tons of copper, 28 million tons of zinc, and 13 million tons of nickel to the world’s identified resources for these mineral commodities. The USGS reports a 2000 world reserve base of 77,000 tons (2.39 billion ounces) of gold, 420,000 tons (14 billion ounces) of silver, 650 million tons of copper, 430 million tons of zinc, and 150 million tons of nickel (U.S. Geological Survey, Mineral Commodity Summaries 2001).

Table 3 reports the number of major exploration sites by region for the years 1995–2000, based on the criteria used to develop Table 2 of this report. In terms of the major sites considered, there appears to be an increase in noteworthy exploration projects in Africa during 2000, with a corresponding decrease in highlighted Canadian and Latin American exploration projects. Continued exploration success in Africa may have overshadowed regional political and social unrest when deposits possess significant resource potential.



Table 3. Major exploration sites1 by region, for the years 1995–2000

Region

1995

1996

1997

1998

1999

2000

Africa

8

16

13

20

10

17

Australia

10

9

8

4

11

12

Canada

13

13

24

19

20

15

Latin America2

36

30

26

29

27

24

Pacific3

12

14

10

9

7

10

United States

15

9

13

10

16

14

Other4

6

9

6

9

9

8

1Based on data developed by the USGS and appearing in the Annual Review (May) issues of Mining Engineering for the years 1996–2001.

2Including Central America, Mexico, and South America.

3Including Southeast Asia and islands in the Pacific Ocean.

4Including Asia, Europe, and the former Soviet Union.

Regional Exploration Activities

The level of exploration activity in a region often reflects the impact of significant international events. Exploration-related activities and events within each region are summarized below.



Latin America. Although Latin America continued to have the greatest amount of budgeted exploration dollars, it incurred an 8 percent decrease in 2000, based on MEG data. By commodity, Latin America was targeted for about 24 percent of the total gold exploration budget and nearly 39 percent of the budget for base metals. Chile, Peru, Brazil, Mexico, and Argentina were ranked in MEG’s top 10 countries for 2000 exploration, based on exploration budget. Similarly, an annual survey of executives from leading international mining companies conducted by the Fraser Institute [December 18, 2000 (http://www.fraserinstitute.ca)] ranked the Latin American countries of Chile, Peru, and Brazil at the top of its emerging country rating for exploration investment based on their financial attractiveness for investment in 2000. Investment appeal is reportedly based on the geologic potential, property value, ease of doing business, and political stability of these countries.

Over the past 30 years, exploration in the central Andes in Argentina, Bolivia, Chile, and Peru has had notable success. During the years 1970–1999, 11 copper deposits, 17 precious metal deposits, and 2 polymetallic deposits were developed in this region. Notable exploration and development activities in 2000 included exploration at the Veladero base metals deposit in Argentina, the Magistral copper-molydenum deposit in Peru, and the Tambo Grande polymetallic deposit in Peru, and development activities at Antamina (Peru) and Pascua/Lama (Chile/Argentina). It has been estimated that each dollar spent on exploration in this region has generated 5.6 times its gross value in production, and allowed the discovery of metal resources with a nominal US$96 in-ground value (Mining Journal, June 30,2000, p. 502). The entrance of AngloGold into South America has increased exploration activity in the region .

Countries with the greatest exploration activity, in descending order by number of reported sites, were Mexico, Peru, Argentina, Brazil, and Chile. Gold attracted about 57 percent of total exploration activity, but interest in base metals reached 25 percent and silver achieved about 9 percent of the total. Investment in 2000 was primarily used to further define newly discovered resources.

At the end of 1999, approximately 17,000 exploration titles were active in Mexico. As 2000 began, 486 foreign mining companies were operating in Mexico, up from 444 the previous year, primarily from Canada and the United States (Mexican Chamber of Mines, May 2000). According to the Fraser Institute (cited earlier), about 54 percent of the companies surveyed planned an increase in exploration spending for Mexican sites in 2000.

During 2000, exploration interest in Peru came from a variety of sources, including both senior and junior companies based in Canada, South Africa, and the United States. Recent regulatory reforms in Peru triggered a dramatic diversification into copper and gold from the silver-lead-zinc mines typically exploited in the past, but the Peruvian Congress revised legislation in 2000 that eliminated tax allowances on mining reinvestment profits. Peruvian exploration for 2000 was expected to be down from its peak in 1997. There were still 60 mining and exploration companies operating in the country as of March 31, 2000 (Mining Journal, February 9, 2001, p. 102).

Mineral exploration in Argentina has increased in anticipation of final ratification of an agreement that would allow companies to explore and exploit mineral deposits along its common border with Chile. The agreement will improve access to Argentina’s Andean mineral deposits and to Chile’s Pacific ports. Similarly, Chilean mineral exploration is expected to increase to US$144 million in 2000 from the US$136 million spent in 1999, according to Chile’s state Copper Commission (Mining Journal, November 17, 2000, p. 387). In Brazil, the publication Gazeta Mercantil reports that exploration licenses issued during the first 3 months of 2000 represented a 177 percent increase over the same period in 1999 (Mining Magazine, July 2000, p. 41).



Australia. Exploration budget allocations reported by MEG for Australia in 2000 showed the largest decline of any country or region in dollar terms. MEG reports a decline of 18 percent between 1999 and 2000, while the Australian Bureau of Statistics (ABS) reports a 21 percent decline for 1999/2000 from 1998/1999. Depressed mineral prices, particularly gold, are attributed as the principal reason for the drop in Australian exploration (Western Australia Department of Minerals and Energy, Statistics Digest 2000, p. 29).

The greatest amount of budgeted exploration expenditures (about 62 percent) was allocated for Western Australia, principally for gold and nickel. According to the ABS, gold accounted for 61 percent of Western Australia’s mineral exploration expenditure of A$253 million (US$166 million) in 1999/2000. Exploration allocations for base-metal targets were reported as A$88 million (US$58 million) for the same period. Most of this expenditure was on nickel prospects; copper-lead-zinc exploration was reported to be stagnant or declining. Western Australia accounted for most of the A$30 million (US$20 million) reported for Australian iron ore allocations in 1999/2000. Diamond exploration allocation in Western Australia for 1999/2000 was A$25 million (US$16 million), with activity centered in the Kimberly region. Heavy mineral sands exploration allocations for 1999/2000 were reported at about A$6 million (US$4 million) for three quarters. Exploration budgets for most minerals were down from prior year statistics reported by the ABS.

Exploration for heavy mineral sands in the Murray Basin region of southern Australia has accelerated in the last 5 years. The region covers parts of New South Wales, South Australia, and Victoria, and potentially contains 60 million tons of coarse-grained mineral sands, as well as additional deposits of fine-grained mineral sand (TZ Minerals International Pty. Ltd, 2000 Annual Report, p. 4-6). Development of the Wemen project (a joint venture of RZM Pty. Ltd. and Sons of Gwalia Ltd.) and release of a joint government and industry assessment of the potential of the region during 2000 increased exploration of the area. In the past 12 months, formal resource estimates have been reported for several exploration projects, and active drilling is delineating additional mineral resources in the region. Development of this region could overtake Western Australia as the nation’s largest producer of mineral sands in the next 10 years. Murray Basin deposits have tended to have higher proportions of rutile and zircon than Western Australian deposits, thus giving them a higher value and compensating somewhat for transporting them the extra distance to port (Western Australia Department of Minerals and Energy, Statistics Digest 2000, p. 29).

Native title issues continued to be the predominant issue affecting mineral exploration and development in Australia in 2000. Native title claims (those of indigenous people groups) have delayed the granting of exploration titles and mining leases across Australia. Approximately 56 percent of Western Australian exploration licenses have been processed after a delay of about 6 months, although delays for mining leases have been much greater (Western Australia Department of Minerals and Energy, Statistics Digest 2000, p. 7).



Canada. Statistics released by the Canadian Government (Natural Resources Canada, May 2000 fact sheet) show anticipated 2000 exploration spending at C$502.1 million (US$348 million), almost half of the reported exploration expenditure for 1997. MEG reported budgeted exploration spending in Canada for 2000 at US$348 million, accounting for 14.9 percent of the overall worldwide exploration budget. The Fraser Institute reported that about 35 percent of companies investing in Canada projected an increase, and about 29 percent projected a decrease in exploration spending. Based on spending allocations for 2000, exploration activity was greatest in the Northwest Territories (about 24 percent of Canadian total exploration budget), Ontario (20 percent), and Quebec (15 percent). Approximately two thirds of the exploration budget was allocated for initial exploration (up to and including the first delineation of a mineral deposit). Deposit appraisal activities accounted for the remainder of the exploration budget. Junior companies accounted for about one third of Canadian exploration.

Gold targets accounted for approximately 27 percent of reported Canadian exploration. The greatest amount of gold activity, based on the number of active sites, took place in Ontario, British Columbia, and Quebec. Base metals accounted for about 33 percent (with about equal interest in copper, lead/zinc, and nickel targets) with activity focused in the newly created territory of Nunavut, and in Newfoundland, Ontario, and Quebec. Diamond exploration activity increased in 2000 to about 19 percent of all Canadian exploration targets, mainly in the Northwest Territories, Ontario, and Nunavut. Exploration was encouraged by development approval given for the Diavik project and renewed interest by De Beers in other Canadian diamond projects. Platinum-group metals, primarily in Nunavut, were also targeted in 2000, accounting for about 13 percent of reported Canadian exploration projects.

Canadian highlights for 2000 include discoveries of base metals at Matagami (Quebec) and gold at George Lake (Nunavut); continued resource definition for gold at Hope Bay (Nunavut), heavy minerals at Truro (Nova Scotia), base metals at McIlvenna (Saskatchewan), and nickel and platinum-group metals at Ferguson Lake (Nunavut); and development or extension of resources of the Red Lake (Ontario) and Casa Bernardi (Quebec) gold deposits, the LaRonde and Raglan base metal mines (Quebec) and the Lac des Iles area (Ontario). Exploration in Nunavut continued to be strong. Consolidation of several base metals deposits in the Yukon gave new hope to development in the region. Development of the Voisey’s Bay nickel-copper deposit in Newfoundland continued to be delayed in the midst of controversies over political, technical, and environmental issues.

Africa. As indicated in figure 2, Africa continued its recent decline in exploration activity. MEG reported that Africa accounted for the second largest decline in budgeted exploration expenditure and largest decline in spending share from US$377 million (14.7 percent of world budget) in 1999 to US$293 million (12.6 percent) in 2000. Reasons for the decline include weak commodity prices, delayed implementation of policy reforms, and increased political instability (Mining Engineering, October 2000, p. 11). Renewed outbreaks of civil war seriously interrupted mineral exploration and development in Angola, the Democratic Republic of the Congo, and the Sierra Leone. Neighboring countries sustained negative impacts on their own economies. Côte d’Ivoire and Zimbabwe have experienced an increase in political instability. The increasing incidence of HIV/AIDS in Africa has had a negative effect upon labor supply and discouraged foreign travel and investment in Africa.

In spite of these difficulties, North American, Australian, and African companies are fiercely competing for the more advanced projects on the continent. Following a period of corporate restructuring in South Africa, companies such as AngloGold, Gold Fields Ltd., and Randgold Ltd., along with Ashanti Goldfields Company Ltd. of Ghana, were aggressively competing with foreign companies to expand their exploration and acquisition activities into other parts of Africa. These companies were targeting junior exploration companies who had successfully located drill-identified gold resources during the peak exploration years of 1996-99, during which nearly US$2 billion was spent on African mineral exploration (George Coakley, USGS Africa mineral specialist, oral commun., December 2000).

African countries experiencing the highest levels of exploration activity in 2000, in descending order by exploration activity based on site data collected for this annual review, were Ghana, South Africa, Burkina Faso, and Mali. Gold accounted for approximately 57 percent of the reported African exploration projects and diamond accounted for about 20 percent. Exploration for gold was concentrated in the sub-Saharan African countries of Burkina Faso, Ghana, Mali, and Tanzania, with several projects moving into development or production in the Lake Victoria and Nzega greenstone districts of Tanzania.

Most diamond exploration and development focused on the southern African countries of Botswana, Namibia, and South Africa, and in the northwestern African country of Mauritania. Offshore diamond exploration in Namibia stimulated a mining sector that has declined in recent years. The Corridor Sands project in Mozambique and the Richards Bay area of South Africa also showed promise for heavy mineral potential, and extensive exploration continued in these areas.



United States. Exploration interest in the United States for gold continued to be centered in Alaska and Nevada. Most activity was centered about active mining areas or historic mining districts. While gold was the principal target for 67 percent of the reported exploration sites, the United States has had an increase in exploration for platinum- group and base metals. In 2000, data on 116 U.S. exploration projects were collected and reviewed by the USGS; 42 percent were located in Nevada and 32 percent were in Alaska. Of those considered, 56 projects were not in the 1999 review (i.e., they are new, names were changed, or data were not available in 1999). The 1999 study considered 140 U.S. exploration projects; 2 of these advanced to the feasibility stage and 2 advanced to the development stage in 2000. About 70 percent of the 2000 projects had not yet reached the full feasibility stage of development.

Drilling in close proximity to existing domestic deposits continued to be successful. In Alaska, continued drilling near the Pogo gold project and Red Dog zinc property defined new ore zones. Drilling in Nevada was focused on expansion of active gold mining areas along the Carlin Trend, such as the discovery of the Crossroads zone about 500 meters from the Pipeline open pit. Polymet Mining Corp. continued to extend resources at the NorthMet base and platinum-group metals deposit in Minnesota. High prices for platinum-group metals spurred continued exploration of the Stillwater Complex in Montana. The Teck Corporation announced that they had developed a concentration process for perovskite, allowing them to begin development of the extensive White Earth titanium deposit in Colorado.



Pacific Region. Mineral exploration budget allocations for the Pacific region and Southeast Asia increased about 2 percent in 2000 to US$199 million (8.5 percent of the world total). Spending in Indonesia decreased, although increased spending allocations are reported for the Philippines, New Caledonia, and Papua New Guinea (MEG). Exploration spending is significantly below the 1997 high of US$440 million. Reduced investor confidence, perceived problems with government policy, and continued unrest in the region caused a large number of junior companies, as well as some majors, to discontinue or reduce exploration activities in the region.

Exploration activity was greatest in Indonesia, the Philippines, and Papua New Guinea, mostly in established or developing mining areas. Gold accounted for about half of all exploration interest in the Pacific region, and base metals accounted for 37 percent of the reported activity in 2000. Drilling increased estimates of nickel resources at Halmahera in Indonesia, gold resources at Lihir in Papua New Guinea, and precious metals at Rapu Rapu in the Philippines. Other noteworthy exploration activities include copper drilling at the Sepon deposit in Laos and the Puthep deposit in Thailand, and drilling for base and precious metals at the Phuoc Son deposit in South Vietnam.



Rest of the World. Exploration budgets for the rest of the world (including Europe, Asia, and the former Soviet Union) decreased by a relatively modest US$16 million in the MEG 2000 survey, and remained at about 8.4 percent of world share on a percentage basis. Although exploration in this region accounts for less than 9 percent of the 2000 world exploration budget, the region has been able to sustain interest in certain areas, primarily by junior exploration companies specializing in the region.

In Western Europe, updated mining legislation, deregulation, and tax relief have encouraged mineral resource exploration, primarily for copper, gold, and zinc. Mineral exploration activity in Western Europe during 2000 has focused on Sweden, Ireland, Finland, Spain, Sardinia, and Greenland (in order of decreasing activity). Drilling continued to extend gold resources at the Olympias deposit in Greece and the Skellefte mine in Sweden; exploration for base metals focused on the Rathdowney Trend of Ireland, the Penikat/Portimo deposit in Finland and extensions of the Renstrom mine in Sweden. Gold exploration in Greenland continued, but at a reduced level from that reported for 1997. Many prior mining areas of Europe are being re-evaluated with current technology, after gravity surveying led to the recent discovery of the concealed Las Cruces massive sulfide deposit in Spain (Mining Journal, May 26, 2000, p. 410).

Minerals exploration in the eastern Mediterranean increased in 2000. Iran, Turkey, and Yemen have seen a resurgence in exploration activity for both gold and base metals. Resource estimates have increased based on ongoing feasibility drilling at the Kisladag gold deposit in Turkey.

After an economic winnowing process subsequent to the collapse of the Soviet Union and the restructuring of Central Eurasia, industries that have survived have been increasingly able to attract foreign investment in the industrial minerals and base metals sectors. Exploration and mining ventures in gold and silver have tended to struggle, however, as federal and regional governments have been reluctant to give up claim to such valuable assets in times of financial crisis. In addition, political instability and falling world metal prices have reduced the number of projects reaching the development stage, and foreign exploration companies have shown reluctance to incur sizeable exploration costs in remote areas, unless they are assured of a reasonable chance to receive economic benefits as their discoveries are developed in the future. Companies exploring in Eurasia tend to be smaller companies with an entrepreneurial spirit and willing to form partnerships with domestic companies or government entities. In 2000, Russia attracted the most interest of Eurasian countries for mineral exploration.



Government Programs

Over the past 20 years, mineral exploration has changed dramatically. Improved technology has led to a wider remote sensing capacity and real-time data collection and analysis capability. Land access for exploration has increased in portions of the former Soviet Union and Eastern Europe. Some governments have revised their mining laws or are in the process of doing so, using incentives including privatization, trade alliances, regulatory reforms, foreign investment provisions, and tax relief. Environmental issues have increased both the cost and risks of mining in other areas. The World Bank and other financial institutions have extended their programs to support project finance in emerging countries. In 2000, however, economic recovery following the 1997 Asian financial crisis appeared to stall. Regional strife and economic turmoil have subdued some mineral development efforts. Low mineral commodity prices, continued economic concerns, and increased risk in some areas have further reduced investment for exploration.

For several years, Africa’s mineral riches (particularly gold and diamonds) have reportedly been used to finance civil wars and border conflicts that have destabilized a number of central African countries. This has significantly increased political risks and constrained investment in mineral exploration and development in the region. Revenues from these “conflict” diamonds have supported civil strife in Angola and Sierra Leone and were valued as much as US$255 million in 1999, or about 4 percent of the diamond market (U.S. Geological Survey, Mineral Commodity Summaries 2001, p. 11). Government officials from the United Kingdom, the United States, and other countries have attempted to design boycott strategies, but to date these efforts have been complicated because of the difficulty of establishing the specific origin of these diamonds.

In spite of ongoing conflict, efforts to revise mining legislation were underway during 2000 in Algeria, Congo-Kinshasa, Gabon, Namibia, South Africa, and Tanzania. A draft law to reform the Algerian mining code to “end discrimination between local and foreign investors” was approved (Mining Journal, August 18, 2000, p. 134). A new mining code designed to lighten the tax burden in mining investment was adopted by the Gabonese parliament (Mining Journal, July 11, 2000, p. 45). The Diamond Act No. 13 of 1999 is to become effective April 1, 2000. This legislation, which includes provisions for exploration and mining of offshore diamonds, regulates security-related aspects of mining, prospecting, selling, and exporting of diamonds. The Mauritanian Ministry of Mines has appointed the South African Council for Geoscience to conduct a 5-year, US$16.5 million program to update and generate geological information (Mining Magazine, September 2000, p. 144). The South African Code for Reporting of Mineral Resources and Mineral Reserves, which is an attempt to set rules and guidelines for the reporting of mineral reserves/resources, was finalized after two and a half years of deliberations. Development of policies designed to free up unused mineral rights, which would be made available to new foreign investors or new local black economic empowerment groups may also be completed soon. South African investment abroad continues to accelerate, with some of the smaller South African companies also making their debut on the international scene. The government of Zambia completed the privatization of Zambia’s copper industry that began in the mid-1990s.

Across Australia, native title continues to be the dominant issue affecting exploration and mining, and claims are currently being tested in the courts. Mineral exploration and project development in Western Australia has been delayed from about six months to several years over this issue (Western Australia Department of Minerals and Energy, Statistics Digest 2000, p. 7). Exploration activity in northwest Queensland remained low as no new exploration licences were granted because of the lack of Native Title legislation (Pasminco Ltd. Annual Report, 2000). The government of Tasmania has approved the A$5 million (US$3.3 million) Western Tasmania Regional Minerals Programme to collect and disseminate geologic and geophysical data on the region (Mining Journal, November 11, 2000, p. 393).

The Canadian Institute of Mining, Metallurgy, and Petroleum issued new standards during 2000 that establish definitions and guidelines for the reporting of exploration information, mineral resources, and mineral reserves in Canada. In Ontario, Operation Treasure Hunt, the government’s ongoing 3-year, C$29M (US$20 million) geoscience mapping program, has led to the discovery of 262 anomalies in the Temagami region northeast of Sudbury.

China continues progress away from total central planning with the gradual conversion of State-owned facilities by privatization to a capitalized status involving share ownership by investors, workers, and the State. China’s first equity-owned gold company was established during 2000. The country is carrying out a strategy of developing its western regions and requiring the mining industry to contribute to the development of the regional economy. When compared to eastern and central parts of China, however, mineral exploration and exploitation in the west are still at a low level. Reforms are continuing to stimulate investment in mineral development, including establishing rules for exploration and development rights of foreign companies, developing uniform policies for mineral resource planning and management, and improving procedures for the granting of exploration and mining licenses (China Mining Association, SME Annual Meeting preprint 01-157, 2001, p. 4).

The government of India has given approval for the allowance of foreign ownership for 13 mineral commodities. Some US$32.75 million of foreign investment in India in the mineral sector was approved for 1999 – 2000 (E&MJ, July 2000, p. ww 20).

Reform of mining laws continued in Latin America in 2000. The Argentina-Chile cross-border mining treaty was ratified by Argentina’s parliament in March 2000 and signed by the presidents of both countries in December 2000. The treaty lifts restrictions on property ownership and access rights for exploration and mining along the border, and simplifies customs and taxation procedures (Metal Bulletin Newsletter, January 2, 2001, p. 1). The recent discovery of large natural gas reserves in Bolivia and subsequent power generating initiatives are expected to support the development of new mining ventures within the country and generate additional mineral exploration activity (Metal Bulletin Newsletter, January 15, 2001, p. 3). The Colombian government is in the process of revising the national mine development plan to address environmental protection issues and increase the role of the private sector in exploration and production (E&MJ, January 2001, p. ww 17). Peru has imposed new legislation that suspends tax benefits in the mining sector, with the potential to impact foreign funding for exploration and development (E&MJ, September 2000, p. ww 18). The Venezuela government implemented revised mining legislation in late 1999 which boosts royalties on gold and diamonds and gives the government greater discretion in awarding exploration and mining contracts (E&MJ, January 2000, p. ww 20).

Efforts are under way to stimulate mineral resource development in Saudi Arabia. The Saudi Arabian Mining Company, responsible for overseeing and regulating the mining sector, is continuing efforts to integrate government-private sector partnerships in mining projects, and is developing revisions to the mining code aimed at streamlining administrative processes (E&MJ, January 2000, p. ww 32).

In Indonesia, new laws aimed at clarifying environmental regulations and decentralizing control of such areas as mining and environmental management were passed during 2000 (E&MJ, September 2000, p. ww 33). Presidential decree No. 13/2000 also increased royalties on certain minerals applicable to the 8th generation of Contracts of Work (Mining Journal, June 2, 2000, p. 429). Trade publications report that as a result of current low gold prices, the governments of Indonesia and Thailand have or plan to temporarily stop issuing exploration licenses in those countries.

In the United States, changes in Alaska mining claim location procedures took effect on August 21, 2000. The legislation improved mineral claim processing by allowing claimants to use global positioning system (GPS) equipment that can enter claim locations into State Land Status Plats electronically. The regulation also provides for taxation income from exploration site rentals to be split between a permanent fund and the Alaska Department of Natural Resources (Mining Journal, June 2, 2000, p. 434).



The USGS collects and analyzes data on more than 100 mineral commodities, both in the United States and worldwide. This article draws from both public and private sector sources and the knowledge and expertise of USGS mineral commodity, country, and mineral-resource specialists. More detailed information on the material covered in this article may be obtained from the author, David Wilburn, U.S. Geological Survey, P. O. Box 25046, MS 750, Denver Federal Center, Denver, CO 80225-0046; telephone 303-236-8747, extension 337, fax 303-236-4208 or wilburn@usgs.gov. For additional USGS information on mineral commodities and international minerals activities, inquiries may be directed to Kathy Keys, U.S. Geological Survey, 988 National Center, Reston, VA 20192; telephone 703-648-4961 or kkeys@usgs.gov.

1Information from Metals Economics Group’s Strategic Report 2000 study. Metals Economics Group, P.O. Box 2206, Halifax, Nova Scotia, Canada B3J 3C4; Phone 902-429-2880 or Fax 902-429-6593.





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