World Exploration Trends 2022

Despite continued challenges posed by the pandemic, 2021 proved to be profitable for the mining industry. Prices for most commodities continued to track upward from the last half of 2020, with some touching new highs. The bullish sentiment made its way into capital markets, boosting financings by junior and intermediate companies to $21.55 billion in 2021 — approaching twice the $12.13 billion raised in 2020. The resulting increase in exploration activity year over year led to reported results from 68,880 drillholes — nearly 70% more than the 41,026 reported in 2020.

These factors culminated in our Pipeline Activity Index, or PAI, reaching a recent high of 149 in March 2021, just below the highest recorded PAI of 152 in March 2012. The PAI averaged 137 in 2021, compared with just 98 in 2020. The increase in financing and site activity was also reflected in corporate exploration budgets for 2021, which S&P Global Market Intelligence’s Corporate Exploration Strategies, or CES, study found to have increased 35% to $11.24 billion from $8.35 billion in 2020.

Looking forward, the increased government spending to support those impacted by the pandemic and to aid in economic recovery has led to high inflation, which, combined with labor shortages and higher energy costs, has increased costs for the mining industry — more severely for mining compared with exploration. With commodity prices forecast to remain elevated in the near term, however, margins should remain well above pre-pandemic levels. The risk of further pandemic-related shutdowns has diminished, allowing most countries to continue moving their economies toward full recovery. Financing conditions for the juniors looks likely to remain strong in 2022, despite a drop month over month in January, and the number of active juniors has increased substantially over the past 12 months. This should result in higher junior budgets in 2022, while cashed-up majors will be able to explore for new deposits and advance their project pipelines. We therefore forecast a global exploration budget increase of 5%-15% year over year for 2022, although Russia’s invasion of Ukraine in late February has created uncertainty over commodity markets and the broader global economy that could persist for some time.

Going into 2021, high expectations for a strong global economic rebound supported metals markets. In major economies, COVID-19 vaccines were rolled out and public health restrictions were relaxed. Manufacturing activity resumed, fueling demand for industrial and battery metals, and boosting already climbing commodity prices. Consumer spending also rebounded, spurred by monetary stimulus
and relief packages. According to S&P Global Economics, global GDP increased 5.7% year over year in 2021, following a 3.3% decrease in 2020. As 2022 dawned, however, concern over the economy shifted from the pandemic to mounting tensions between Russia and Ukraine. Russia invaded Ukraine Feb. 24, sending global metals markets into turmoil.