Recently #commodities are reflecting a knee-jerk reaction to the conflict b/w Russia and Ukraine, but it's the longer-term neglect that's created the foundation for profoundly higher prices for longer.
Let's look at exploration and capex for industrial metals.
Short thread.
1/4
Let's look at exploration and capex for industrial metals.
Short thread.
1/4
Global exploration budgets for #copper, #nickel and #zinc peaked in 2012 at $6.4B after a run in commodity prices, surpassing 2008 high of $5.2B. As prices fell from the high in 2011, exploration spending cooled to an avg. of $2.7B/yr since 2015.
2006-2015: $40B
2016-2020: $13B
2006-2015: $40B
2016-2020: $13B
Capex spend is similar. Aggregating capex for select major to mid-cap producers shows a clear lack of investment vs. prev. yrs, despite increasing sales in recent yrs. Notable is cons. estimates this trend to continue through 2023.
Capex/Sales
2006-2015: 13.4%
2016-2023E: 8.6%
Capex/Sales
2006-2015: 13.4%
2016-2023E: 8.6%
Despite the run-up in copper prices since 2020 we have not seen a material increase in pdn as old existing mega mines deal w/ grade declines, water issues, geopolitical challenges, etc. New projects (KK, QB2, Quellaveco) help, but supply likely to remain challenged for longer.
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