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Schodde RC, "Recent trends in Copper Exploration are we finding enough?", Presentation to the 34th International Geological Congress, Brisbane 5th - 10th August 2012.


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The presentation talks about trends in expenditures and discoveries for copper in the world since 1950. It attempts to answer the question - is the industry finding enough copper to meet the future needs for new mines?

Key observations are:

  • Exploration expenditures are cyclical. The Western World industry is currently spending ~$4 billion up from $1b pa over the last decade
  • The current hot spots for exploration success are Latin America, PNG, Central Africa, South Australia and China
  • Over half of all copper found in the last decade was in "High Risk" countries
  • Unit Discovery Costs have risen from 1-1.15 c/lb to ~2.5 c/Cu-equivalent (in constant June 2011 US Dollars). Excluding the value of by-product credits increases this figure to ~3.0 c/lb Cu
  • Average discovery costs vary by Region ranging from 1.4 c/lb in the FSU+China to 6.2 c/lb in Western Europe
  • At current high levels of exploration spending, the industry is expected to find (on average) around 65 Mtpa of copper. While these rates are higher than current mine production of 16.1 mpta it should be noted that not all discoveries turn into mines. Historically, only 60% of all copper discoveries are ultimately developed as mines.
  • Only part of the Resources are converted into Mineable Reserves. Analysis of 32 mines operating in the 1970-90s showed a conversion factors varying from 25-400% !!
  • Not all of the contained metal is recovered. Mining and processing losses typically run at 5-10%
  • Even if the project is successfully developed as a mine, there is a lag of 16 years between discovery and development. Brownfield projects are quicker
  • This last factor means that by the time the discovery is ready to be developed as a mine, total demand will be bigger than today
  • Consequently, to provide an adequate supply of good quality (economic) projects 15 years out, the industry needs to be finding 2x as much metal as will be mined at the time. Using the average level of spending in the last decade, the likely discovery/mining ratios for copper is respectively estimated to be only 1.1x. Even if exploration spending remains at the (high) levels achieved in 2011 the discovery/mining ratios increase to only 2.6x. This suggests that copper explorers are struggling to supply an adequate pipeline of new discoveries. The implications for long term commodity prices are profound.

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