Exploration Spending Expected to Stay Flat in 2025, Despite Strong Gold Prices and Trump’s Promises, S&P Global Reports
Despite record-breaking gold prices and President-elect Donald Trump’s plans to reduce red tape, exploration spending on new mineral sources is expected to see little growth next year, according to S&P Global mining analysts.
The ongoing tight financing conditions will likely limit any significant increase in exploration budgets, even if interest rates continue to ease. This could raise concerns for major mining companies, which increasingly rely on smaller explorers for new discoveries. Analysts highlighted these challenges during a webcast on Wednesday.
“The reality is that junior miners often lead the way in finding new deposits,” said Mark Ferguson, S&P Global’s director of metals and mining research. “When these juniors are underfunded, the entire exploration pipeline suffers.”
Tight Budgets and Struggling Juniors
Global exploration budgets for nonferrous metals are set to decrease by 3% in 2024, dropping from $12.9 billion to $12.5 billion, with junior miners taking the biggest hit. Even high commodity prices haven’t been enough to boost capital for junior exploration projects. Gold exploration, in particular, is feeling the squeeze.
S&P Global’s exploration activity index (PAI), which tracks drilling, financing, and project milestones, fell to 63 in the third quarter of 2024, the lowest level since 2016. Meanwhile, the exploration price index (EPI) reached a record high of 203, reflecting rising metals prices, particularly for gold, copper, and nickel.
The growing disparity between the PAI and EPI suggests that, despite favorable metal prices, investment in new exploration is low. Companies are increasingly prioritizing existing assets over high-risk exploration, S&P noted.
“The trend of lower exploration spending reflects a cautious investment climate and conservative investor sentiment,” said associate research analyst Jasper Madlangbayan. “Juniors, in particular, have been hit hard by the drying up of financing.”
Critical Minerals: A Bright Spot
Despite the overall decline, critical minerals tied to the transition to renewable energy remain a potential bright spot, the analysts pointed out.
“Critical minerals continue to attract investor interest, especially as economies shift toward electrification and renewable energy,” said Francesca Price, S&P Global’s senior analyst for critical minerals. “Investors are keen on securing access to these resources outside of geopolitically sensitive regions.”
Drilling Activity Declines
So far this year, drilling rates have fallen across nearly all metals. Nickel projects, for example, saw a 53% decrease in drill holes from the previous quarter.
“Although drilling and new projects have decreased, there’s still hope for recovery if metal prices remain stable,” said Madlangbayan.
Looking ahead, analysts expect copper prices to average $9,825 per tonne in 2025, up from $9,331 per tonne as of Wednesday. Nickel prices are predicted to rise to $16,995 per tonne, compared to $15,897 per tonne today. A surplus in nickel is expected due to high output from Indonesia and China, which will account for 78.2% of global production by 2028.
Regional Differences in Exploration Spending
In terms of regional trends, Australia saw the largest drop in exploration budgets, with juniors in the country struggling to finance projects. Western Australia, a hub for gold and base metals, was particularly hard hit.
“Australia’s large junior sector is no longer able to support the level of exploration activity seen in past years,” Madlangbayan noted.
On the other hand, U.S. exploration spending rose, particularly in copper and lithium projects. Policies like the Inflation Reduction Act, which funds domestic exploration for critical minerals, have helped boost budgets.
“The U.S. has shown resilience in exploration budgets, especially in states like Nevada and Arizona, where policy incentives and infrastructure access are attracting renewed interest,” said Price. “Ongoing demand for critical minerals should help buffer the sector from further exploration budget declines.”
A Divided Mining Sector
The mining industry is split, with major companies expanding through acquisitions while junior miners struggle to secure funds, raising concerns about the long-term sustainability of new project development.
“The resilience of the sector is being tested,” Ferguson said. “But with strong demand for critical minerals, there’s hope for a recovery. Exploration budgets may stabilize in 2025 for key commodities needed for the energy transition.”
