S&P Global Market Intelligence’s Monthly Industry Monitor reviews activity in the mining industry's exploration and development sector. The highlights from the latest edition are below.
Heading into May, mounting concern over China gripped metals prices and stocks alike, as slowing demand, overcapacity and record stockpiles at Chinese ports suggest that China’s appetite for metals may be diminishing.
In a more direct setback to the exploration sector—at least in Australia, the Australian government decided not to extend the Exploration development Incentive (EDI). Created in 2014, the program provided credits for greenfields mineral exploration, paid as a refundable tax offset to junior explorers' Australian resident shareholders.
Perhaps in response to the gloomier news, S&P Global’s aggregate market value of the industry’s listed companies (based on 2,470 firms) slipped 3% to US$1.27 trillion, which was nevertheless a level not seen since June 2015.
Projects Reporting Drill Assays (April)
Market for Mining
S&P Global Market Intelligence’s Indexed Metals Price rose to 114 in April from 112 in March, its highest value since September 2014. The indexed price rose for three of the eight constituents of the index and fell for four.
Pipeline Activity Index
S&P Global’s Pipeline Activity Index (PAI) fell sharply in April, from 80 to 66, due to decreases in significant financings, drill results and initial resources; project milestones remained unchanged.
Exploration
After hitting a four-year high in January, global drilling activity eased off for a third consecutive month in April, with the total number of distinct projects reporting drilling sliding to 190 from 196 in March.
Initial Resources
The number of initial resource announcements dropped from five to four in April; however, their US$5.89 billion total value was almost eight times the US$754 million recorded in March.
Exploration Finance
The number of financings by junior and intermediate companies fell sharply in April, to 158 from 235 in the previous month. However, the US$1.23 billion raised was up 70% from US$726 million in March, representing the second-highest amount raised since July 2014.
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