Mining Exploration Services

Mining Exploration Services Global Market Outlook:

MARKET OVERVIEW

Global Exploration Budget: $11.23 Billion (2021E)

Global Exploration Spend: $4.47 Billion (2021E)

Global Drill Rigs and Breakers: $11.39 Billion (2021E)

Market Driver:

• Mineral Production Output

• Commodity Demand and Prices

• Declining Ore Grades

• Global Economic and Infrastructure Development

Key Exploration Services:

• Prospecting

• Geochemistry & Geometallurgy

• Drilling

• Assaying

• 3D & Orebody Modeling

• Resource Audits

• EIA

Mining Exploration Services : Regional Landscape

• Mining exploration budget by main exploration firms increased by around 18 percent and stood at around $11.23 billion in 2021. In addition, the global exploration budget for non-ferrous metals significantly surged by about 30 percent in 2021

• Rise in commodity price, along with declining ore head, is the key market driver

• Key mining exploration players increased exploration spend in 2021 by about 7 percent, due to positive outlook of commodity prices and improving demand from end users

• LATAM accounts for the largest share of mining exploration expenditure, predominantly for precious and base metals

Mining Exploration Services Market Overview and Trend

• Global mining market stood at about USD 92.99 billion in FY-2021, and is anticipated to reach USD 118.12 billion by FY-2024, witnessing a CAGR of 6.50-7.00%. 

• Rising demand for metals, due to advancements in automobile, mechanical equipment, and infrastructure sectors since last few years, has resulted in increase in mining industries and thus is anticipated to drive the mining services market.

• For instance, the global construction industry is predictable to reach approximately USD 8 trillion by end of 2030, supported by countries such as China, USA, and India. Therefore, the building industry is likely to account for larger part of global economy by FY-2030. This increasing trend is foreseen to activate the demand for metals, and thereby would uplift the metal mining exploration market.

• Increasing demands for metals such as steel, copper, titanium, silver, and platinum drives number of metal mining/exploration activities, globally. In addition, other metals such as iron, copper, lead, and zinc serve as important raw materials for various applications such as batteries, weights for lifting, electrical equipment, and pharmaceutical equipment. All above-mentioned are estimated to drive growth of the market in long term.

Porter's Analysis on Mining Exploration Services

Supplier Power

• Mining exploration services includes drilling services, geoscientific services and feasibility and environmental impact assessment services.

• There are a few large global drilling service providers but the services industry is largely fragmented into smaller regional players although a high level of technical expertise is required

• Additionally due to the cutbacks in exploration spend due to Covid-19, the supplier power is medium.

Barriers to New Entrants

Barriers to new entrants to the mining exploration services industry are:

• Reduced exploration spend by majors

• Unavailability of capital for juniors

• Industry increasingly relying on revenues for spend

• Declining commodity prices

• Declining commodity demand

Intensity of Rivalry

• There were about 1708 active explorers for non-ferrous minerals in FY-2021 and the associated service providers for mineral exploration is fragmented

• Additionally, the decline in mineral exploration budgets due to the pandemic crisis has further increased the competition among service providers

Threat of Substitutes

• Advent of drone and AI technology is a threat to traditional aero surveying and orebody modelling with AI fitted drones and AI software improving on traditional techniques and reducing labor costs

• There are no known substitutes for drilling services that account for the major portion of the exploration expenditure.

Buyer Power

• Junior and intermediate miners account for a significant portion of exploration activity reducing their negotiating power

• However with the reduction of exploration budget by major miners and junior miners finding it challenging to raise capital for financing, buyers have an additional leverage to negotiate

• While major miners have higher negotiating power, the buyer power for the overall industry would be medium to medium-high.

Cost Structure: Mining Exploration Services

Mining Exploration services expenditure could be split into two categories – Exploration expenditure which accounts for about 70% of the total expenditure and Deposit Appraisal Expenditure which accounts for about 30% of total expenditure

The various stages of mineral exploration lifecycle include;

• Identifying available land resource for prospecting,

• Prospecting & Early exploration - Aeromagnetic and drone survey, physical surveys, sampling of bed rocks, water, vegetation, geological survey

• Intermediate Exploration stage - Trenching, Preliminary Drilling and Sampling, Geochemical and Geophysical analysis

• Advanced Exploration stage - definition drilling, bulk sampling, assaying followed by project development plan and environmental assessment

• Finally Economic Assessment and Feasibility Study is done before moving to mine development stage along with establishing joint ventures

Drilling is the primary cost component of mineral exploration which includes test drilling, delimitation drilling, infill drilling etc. followed by geoscientific surveys & engineering, economic, and pre- or production feasibility studies