File picture: Itumeleng English/Independent Media
New York - A rebound in exploration by global miners could see spending hit $18 billion (R223.8 billion) by 2025, with China the front-runner in the search for a new generation of giant discoveries.

Exploration budgets are rising after they plunged to an 11-year low of about $10 billion last year as mining companies slashed costs in the wake of a collapse in prices, said Richard Schodde, managing director of Melbourne-based MinEx Consulting, an industry adviser.

“We are coming out of the bottom of the cycle. I actually see the opportunity for the exploration sector to regain its mojo and quickly deliver a pipeline of good discoveries,” Schodde said in an e-mailed response to questions. “It’s catch-up time for the industry.”

China, the top spender on exploration, is likely to continue to dominate in the hunt for new deposits, while Canada and Ecuador are currently among hot targets for more investment by miners, according to Schodde. The US could be poised for a rise in exploration with President Donald Trump regarded as likely to be more favourable towards resource development, S&P Global Market Intelligence said in a report published in January.

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Discoveries of so-called tier one projects, deposits with a net present value of more than $1 billion, have stalled. Only 12 were uncovered in the past decade compared to an average of two to three a year since 1950, according to MinEx. The average cost of finding a significant mineral deposit has tripled in the past 10 years to about $238 million, the consultancy said in a March 6 presentation.

China, the target of more than a quarter of global exploration spending in 2016, is yet to reap major rewards. An estimated $42 billion spent on the nation’s hunt for new mines since 2007 has seen only two large discoveries announced and found a total slate of projects worth about $13 billion, according to MinEx. Global exploration budgets peaked in 2012 at $33 billion, the data shows.

Rio Tinto Group, the world’s second-largest miner, terminated a joint project to hunt for copper in China, its partner and largest shareholder, Aluminium Corporation of China, said in January. Rio increased spending on drilling in 2016 even as its overall exploration and evaluation budget declined, and as it cut the number of countries on its target list, Steve McIntosh, the executive in charge of exploration, told investors at a December 6 seminar in London.

Spending on exploration in the mineral and energy sectors in Australia, the biggest exporter of iron ore and coking coal, slumped 40percent to A$3.2 billion (R31 billion) in the year to June 30, the largest ever decline, according to the nation’s government.

Volatility in commodities' prices has led companies globally to focus on adding value to existing operations and to undertake greenfield programmes in less risky locations, S&P said in January. Budgets among the largest miners will rise slightly this year, the ratings’ company said in a separate report this month.