A snapshot of mineral exploration drill rig use in major mining regions globally has revealed Australia, the United States and parts of South America are nearing capacity, as the surge in exploration continues unabated.
The survey, by leading global mining-tech company IMDEX, provides a rare global overview of rig utilisation.
In a market update ahead of a presentation to the Macquarie Emerging Leaders Conference, IMDEX said rig utilisation in Australia was “nearing capacity” at 79 per cent, and 72 per cent in North America.
IMDEX Chief Executive Officer Paul House said the company was able to produce the snapshot because of its global presence in major mining regions.
Mr House said global rig utilisation had only just returned to or exceeded pre-COVID 19 levels.
The March snapshot showed rig utilisation was at 37 per cent in Europe, 38 per cent in South America, 30 per cent in Africa, and 55 per cent in Canada.
Activity in Canada would be significantly higher in the northern summer drilling season, Mr House said.
Some regions in South America were stronger than others, but overall there was room for growth.
In regions nearing capacity, delivery times for new rigs had increased and labour shortages were adding to the pressure.
“We believe the industry is willing to invest and spend but may not be able to move as fast as it would like,” Mr House said.
“The industry drivers of depleted reserves, strong commodity pricing and the trend towards decarbonisation, are driving substantially increased industry exploration budgets.
“However, delivery against these targets will require time and investment in labour, drilling rigs, and other supply chain pressures that are a current constraint.
“When S+P says exploration will grow by 15 to 20 per cent in a year and we see that the areas that are most active are running at maximum rig utilisation, and we know the lead time for new rig orders has blown out to nine or 10 months, we believe that increase won’t happen in that timeframe.
“A lack of rigs places even more importance on using the best technology to drill more metres with the rigs that are available.”
Mr House said the long-term outlook for mining-tech was strong.
The snapshot comes as consultants BDO in its latest quarterly report said that ASX-listed exploration companies had raised $2.37 billion in the March 2021 quarter, up 7 per cent from the $2.21 billion in December.
BDO’s Global Head of Natural Resources Sherif Andrawes said 81 per cent of companies had reported sufficient funds to support operations for more than two quarters.
“This may have negated the urgent need for explorers to raise funds in the March quarter, as companies turned their focus instead toward spending in the ground and investment,” he said.
He said the figures showed a flood of funding toward battery minerals and clean energy companies.
“We know that the battery minerals industry has been hot in recent times but the dominance of lithium and other battery minerals companies this quarter has taken us by surprise,” Mr Andrawes said.
Mr House said IMDEX’s integrated product offering was commodity agnostic, ensuring it was in a good position to service the market.
