Copper discovery rates are at decade-long lows, according to a report from S&P Global Market Intelligence, despite increased funding going towards exploration.
More than US$25 billion was allocated to all stages of copper exploration in the past decade, compared to the US$15.4 billion spent in 1990-2008, though this has not translated into major new discoveries.
S&P Global forecasts new copper discoveries will remain historically low, which will not affect the short or medium-term pipeline but may have consequences for long-term supply.
Sector focused on expanding existing assets
One contributing factor of the decline, according to the report, is a key shift in focus within the exploration sector.
Grassroots exploration budgets have halved since the 1990s, with juniors increasingly focused on expanding known deposits and producers concentrating on exploration at existing operations.
The lack of significant discoveries, however, is not expected to have an immediate impact on the near-term pipeline.
S&P notes there are numerous developing copper assets that can feed the short and medium-term supply pipeline, although many of these require additional investment.
However, the report states the longer-term pipeline is at risk from the reduced discovery rates.
Latin America centre of global copper exploration
While the amount of copper discovered annually varies year-to-year, it roughly followed the trend of annual spending on copper exploration to 2009.
In terms of return in copper discovered for exploration dollars spent, the 1990s were a more successful decade than the 2000s, with almost half of the 220 major discoveries of the past 29 years, containing more than half of discovered copper, being made in the 1990s.
Latin America is the primary location for copper exploration, attracting over one-third of copper budgets over the past two decades and accounting for 42% of global production in 2018.
Much of this has focused on Chile and Peru, which together account for 80% of copper discovered in Latin America and 45% of the global total found since 1990.
Potential long-term effects
S&P Global has defined a major deposit as one containing over 500,000 tonnes of copper in reserves, resources and past production.
While it has confirmed a lack of new significant deposits being found, S&P notes that a portion of the shortfall is attributable to recently-found deposits that require additional exploration to expand beyond its major discovery threshold.
The report indicates it takes about 20 years to advance an asset from discovery to production, meaning the reduced discovery rates of the past decade will limit the pool of projects coming online in 15-20 years.
This is when many major copper mines are currently scheduled to be producing much less than now and a host of smaller producers will have ended operations.