EDITORIAL & OPINION — FACTS ‘N’ FIGURES — Gloomy year for spending

Exploration budgets for 1998 have dropped dramatically following the decade’s peak of US$5.1 billion in 1997, according to a report penned by Halifax, N.S.-based Metals Economics Group (MEG).

Total expenditures for 1998 are estimated at US$3.5 billion, a 31% decline from the previous year. Exploration spending was reduced in every region of the world this year as a result of the Asian financial crisis and subsequent weakening of world economies, low metal prices and difficulty in raising capital, according to MEG, which evaluated 182 nonferrous mining companies with exploration budgets of at least US$2.9 million.

In 1998, Latin America remained the destination of choice for exploration dollars, with companies spending US$814.1 million there, or nearly 29% of worldwide expenditures. Australia placed second with $494.6 million, or 17.5% of the total, followed by Africa with US$494.3 million (17.4% of the total), Canada at US$308 million (10.9%), Southeast Asia at US$265.7 million (9.4%), and the U.S. at US$242.7 million (8.6%). Spending in the rest of the world was a combined US$209 million, including US$96.9 million for Europe, US$53.6 million for the Commonwealth of Independent States, US$42.4 million for Asia, and US$3.1 million for the Middle East.

In dollar terms, the largest spending drop this year occurred in Latin America, which saw a US$356.2-million decline, from US$1.2 billion in 1997. This year marks the end of the region’s 6-year record of increased exploration spending.

Despite a drop in Australia’s exploration expenditures by US$178.8 million, from US$673.4 million last year, the country attracted 17.5% of total worldwide mineral spending in 1998, up from 16.7% in 1997.

Spending in Southeast Asia plummeted nearly 40% between 1997 and 1998, falling US$174.7 million, from US$265.7 million. Overall spending was also down in 1998, to 9.4%, compared with 16.5% in 1997.

Exploration spending in Africa this year was off US$168.3 million, down from US$662.6 million in 1997, though overall spending increased to 17.4% of worldwide expenditures, compared with 16.5% in 1997.

Canada and the U.S. experienced smaller decreases in spending, falling by US$27.9 million, from US$308 million, in the case of Canada, and by US$212.9 million, from US$242.7 million, in the case of the U.S. Overall spending in Canada was up slightly at 10.9% of the worldwide total, whereas overall spending in the U.S. dipped to 8.6%.

As for the rest of the world, surveyed companies spent US$209 million in 1998, down from US$209 million.