Australian exploration spending reaches seven-year quarterly high, finds BDO report

Spending on exploration in the Australian mining sector surged by close to a third in the September quarter – to US$618 million – driven by surging prices for battery metals such as copper, nickel and lithium.

The latest quarterly spending total was compiled in a report by business advisory firm BDO. Although gold continued to attract the most investment dollars, BDO identified strong growth in the battery metals area, as Australian explorers responded to the call for more metals and minerals required for the global clean energy transition.

“It’s clear there’s demand from investors to put money into those commodities in anticipation of the energy transition,” said BDO’s global head of natural resources Sherif Andrawes. He added that there was also growing evidence of supply shortages in those metals.

Five of the 10 biggest mining capital raisings on the ASX over the September quarter came from companies developing lithium or cobalt resources — metals used in batteries for electric vehicles and in renewable energy storage infrastructure.

BDO also noted a pickup in the M&A arena in the September quarter. Among the major deals announced in recent months, Newcrest Mining agreed to buy Canadian gold producer Pretium Resources for about $2.8 billion, while South32 will pay $1.55 billion for a stake in a Chilean copper project.

“We are starting to hear from some of our clients about strategic transactions being contemplated for the start of next year, indicating that the sector is now considering using their newly-raised cash towards M&A activity,” the report read.