Base and Precious Metals Exploration by Major Corporations

Eggert, R.G. (1984). Base and Precious Metals Exploration by Major Corporations. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-84-020

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Abstract

Major private corporations are among the principal actors in the world of mineral exploration. This study analyzes changes in the level and distribution of base and precious metals exploration by a number of large North American and European firms over the last twenty years.

It finds that corporate exploration, like other forms of investment, responds to an interplay of economic, political, and technical factors influencing the expected revenues, costs, and risks associated with this activity. The level of exploration expenditure varies to a large degree with changes in overall expected returns, which are strongly influenced by changing mineral prices, discovery rates, and corporate goals such as diversification. The distribution of funds with respect to both commodities and countries tends to vary with changes in relative potential returns. In the first case, relative mineral prices, discovery rates, advances in exploration and production technologies, new exploration models, and corporate goals such as diversification are important determinants of change. In the second case, geologic criteria, particularly recent discoveries in an area, are the most important determinants of change; the importance of government policies and political risks, although not trivial, has been exaggerated.

Accordingly, corporate exploration works together with material substitution and other forms of technologic change to offset the cost-increasing effects of mineral resource depletion.

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