Australia’s exploration: Are we drilling ourselves into a corner?

Australia’s reputation as a world-class exploration destination is facing a harsh reality check. The latest data from Geoscience Australia’s 2024 Mineral Exploration Review paints a worrying picture of declining investment, particularly in the high-risk, high-reward greenfield projects that are the lifeblood of future discoveries. 

While the big miners are busy optimising their existing operations, a creeping conservatism is threatening to slowly erode the very foundation of Australia’s resource wealth.

Total exploration spending in Australia fell to $3.95 billion in 2024, a 7.3% drop from the previous year. But the real story lies in the details. Greenfield exploration plummeted by a staggering 16% to just $1.13 billion. In contrast, brownfield exploration saw a much smaller dip of 3%. 

The drills are also falling silent, with total metres down 11.3% and greenfield drilling activity down about 18%. When you cut greenfield exploration by 16% in a single year, you’re essentially betting that all the world-class deposits have already been found. That’s a dangerous gamble in a country where much of the continent remains underexplored.

Gold still commands the largest share of the budget at $1.2 billion, or 30% of the total spend. But even with record-high prices, the drills are not following the money. Gold exploration spending is down 4.5% from 2023 and a massive 25.8% from its 2021 peak of $1.6 billion. This disconnect between price and activity speaks volumes about the current risk-averse climate. The irony… 

Gold is trading at historic highs, yet companies are pulling back from the very activity that could unlock the next Boddington or Super Pit. Instead, they’re content to squeeze every last ounce from existing operations. It’s a classic case of short-term thinking trumping long-term strategy.

Critical minerals losing investor support

Critical minerals are also feeling it. Copper exploration is down 13% to $575 million, despite growing demand from renewable energy infrastructure. The nickel and cobalt sector has been hit even harder, with a 35.6% plunge to $209 million. This collapse reflects the brutal reality of competing with Indonesian laterite operations that have flooded the market with low-cost supply.

The “other minerals” category – which includes the much-hyped lithium, rare earth elements, and vanadium – also saw a 15% decline to $668 million. Remember when lithium was the darling of the investment world? Those days feel like ancient history now. The sector’s retreat from $782 million in 2023 shows how quickly sentiment can shift when reality bites.

The only bright spots in this gloomy picture are uranium, which saw a 29.6% jump to $71 million, and the bulk commodities of iron ore and coal, which were up 10.6% and 2.1% respectively. Uranium’s surge reflects growing global acceptance of nuclear energy as a clean baseload power source. Iron ore’s resilience stems from ongoing demand for high-grade material, while coal’s modest increase shows the world isn’t quite ready to abandon fossil fuels entirely. 

But these gains pale in comparison to the broader retreat. When you’re celebrating a $16 million increase in uranium exploration while watching greenfield activity collapse by hundreds of millions, you know the industry has lost its appetite for risk. 

The inevitable consequence of this pullback in exploration is a drop in new discoveries. Maiden resource announcements, the first official declaration of a new find, fell to 45 in 2024 from 77 in the previous year. That’s a 41% decline in a single year. While some of these new discoveries were significant – including 494 tonnes of gold, 8.9 million tonnes of copper, and 7.8 million tonnes of rare earths – the trend is clear, fewer swings of the bat mean fewer sixes.

The link between greenfield exploration and lack of willingness to embrace bold, risk-aware exploration, means our discovery rates will continue to fall. Australia’s famed resource pipeline is in danger of becoming a mere “optimisation pipeline” great for sustaining existing mines, but terrible for finding the next Oak Dam or Sybella-scale rare earth deposit that will secure our future for decades to come.

Behind these numbers lies a perfect storm of challenges. Rising exploration costs are squeezing budgets tighter. Labour shortages mean higher wages, equipment costs have skyrocketed, and regulatory approvals take longer than ever. Add in global economic uncertainty and geopolitical tensions, and you have a recipe for risk aversion.

Funding well runs dry

Funding has also become scarce. Investors who once threw money at anything with “lithium” or “rare earths” in the name are now demanding proven resources and clear paths to production. The days of funding blue-sky exploration on a PowerPoint presentation and some guy at Diggers telling you to sell your mother’s house to buy his company are over. Companies are hoarding cash, waiting for better times that may never come.

This conservative approach might make sense from a quarterly earnings perspective, but it’s disastrous for long-term resource security. The mining industry has always been cyclical, but this feels different. There’s a fundamental shift in risk appetite that could have lasting consequences.

Explorationhas always been a probability game. The more you drill, the more you find. It’s a simple numbers game, and right now, we’re not playing it to win. By reducing the number of real tests in unproven ground, we are systematically collapsing the odds of a major discovery.