Australian iron ore exploration boom continues

Australian iron ore exploration spending remained close to a six-year high during October-December last year, although coal exploration remained depressed with China's import ban on Australian coal and uncertainty around medium-term demand in the face of climate change.

Australia's total mineral exploration spending increased by 2.5pc from a year earlier to A$754mn ($585mn) during October-December, driven by higher spending on iron ore, base metals and gold, the Australian Bureau of Statistics' quarterly exploration data showed today.

Spending on iron ore exploration in Australia fell slightly to A$110.6mn from A$111mn during July-September but was up from A$84.6mn in October-December last year. The last quarter and the current one often see lower spending because of disruptions caused by the November-April wet season in Western Australia (WA), the Northern Territory (NT) and Queensland.

Iron ore mining firms have increased their spending on exploration over the past two years from a low of A$50.1mn during January-March 2018. Total spending remains below the A$336.2mn high for April-June 2012 when Pilbara iron ore mining firms in WA were investing in new capacity to feed China's growing steel-producing industry. These firms are focused on incremental increases in capacity through productivity improvements and on developing new mines to replace existing ageing production. But smaller iron ore mining firms are exploring opportunities across WA, the NT, South Australia and Tasmania.

Australian iron ore exploration spending rose to A$395.5mn in 2020 from A$349.6mn in 2019 and A$300.9mn in 2018.

Spending on coal exploration fell to A$54mn during October-December from A$73.1mn for July-September and from $77.6mn in October-December 2019. The drop came despite an easing of Covid-19 restrictions but in the face of Chinese bans on imports of Australian coal. Mining firms are focused on cost reduction rather than future opportunities, with many looking to exit thermal coal.

Australian coal exploration spending was A$289.4mn in 2020, up from A$229.3mn in 2019. The increase was heavily loaded towards the first half of 2020 before Beijing imposed its ban on Australian coal exports from around October. Coal exploration hit a quarterly low of A$23.4mn during January-March 2016, which was just over 10pc of the A$227.4mn spent for July-September 2011.

By Jo Clarke