How Mining Companies Can Beat the Exploration Crisis

Lessons From the Legends

BOSTON, MA--(Marketwired - Jun 30, 2015) - Mineral exploration worldwide is in crisis, according to a new report by The Boston Consulting Group (BCG). The report, Tackling the Crisis in Mineral Exploration, is being released today.

From 2010 through 2013, the annual number of discoveries (excluding bulk commodities) declined by more than half, even after adjusting for discoveries yet to be drilled out. The number of giant discoveries dropped to only one or two per year. The sharp decline in discoveries has occurred despite a period of significant increases in exploration spending. At the height of the recent resources boom, average annual exploration expenditure grew by almost 40 percent to record levels.

Alexander Koch, a BCG partner and coauthor of the report, said that the crisis in mineral exploration had "flown under the radar" for much of the mining industry. "Since the end of the resources boom, most mining companies have now shifted their focus to productivity and cut back sharply on exploration spending, which has exacerbated the depletion of resources and reserves."

Cyclical increases in drilling costs and the depletion of easy pickings only partly explain the discovery drought. To shed light on the more fundamental reasons for the exploration crisis, BCG recently worked with six of the world's most illustrious mineral-exploration legends -- the individuals responsible for such historic finds as Minera Escondida in Chile, Oyu Tolgoi in Mongolia, and Olympic Dam and Cadia in Australia.

The report crystallizes the legends' insights on the causes of the crisis and offers their views on the essential ingredients governing exploration success. 

The Keys to Exploration Success
To a person, the legends insisted that the crisis was not the result of external factors such as geology, industry economics, or other macroeconomic forces. Nor does successful discovery depend on luck or funding. Leadership is paramount. Beyond that, four critical areas make the difference: exploration strategy (the operational approach to finding ore bodies), exploration management (the principles companies follow in running exploration), innovation (in ideas and approaches as well as technology), and talent development and people management.