Peer Reviewed Article
The Retreat from Greenfields Mineral
Exploration Was Ultimately Caused by the Growth in
the Economic Importance of Open Pit Gold Mining
Larry Turner, CPG-11408
Introduction A 2009 presentation by McCuaig, Guj, Hronsky, and
Schodde1 pointed out that, starting in the late 1970s and early 1980s, the mining industry began retreating from greenfields mineral exploration work, and that by a few years after the last turn of the century, spending on brownfields exploration work strongly exceeded that used to conduct greenfields exploration. See Figure 1 on page 57
Perhaps tellingly, this abandonment of greenfields explo-
ration work occurred over the same time period that shallow bulk mineable gold deposits became the dominant exploration target in the western world. See Figure 2 on page 57.
The McCuaig et al. observations of 2009 were coupled with
the warning that brownfields mineral exploration programs eventually and necessarily become much more expensive within any given mining district. See Figure 3 on page 58. McCuaig et al. further cautioned that brownfields exploration does not lead to the discovery of additional large, highest value ore deposits. Given these facts, the authors predicted that the mining industry would be forced by declining ore deposit dis- covery rates and declining ore quality to return to its original greenfields exploration paradigm over the following ten years.
Although the mining industry did not actually return to an emphasis on greenfields mineral exploration over the following ten years, the 2009 prediction of eventual ore deposit discovery scarcity turned out to be accurate. Since the early 2000s, in fact, Schodde2 had been already consistently reporting that world-wide mineral exploration expenditures were increas-
1.
ingly outpacing the number of deposits found. See Figure 4 on page 58 as a recent example of such a Schodde report. Schodde’s interpretation of the causes of the continuing and growing discovery failure later departed somewhat from that analysis of the primary cause by McCuaig, Guj, and Hronsky, his 2009 co-authors. As early as 20133, Schodde introduced several new (but derivative/secondary) factors as alternative explanations for the breakdown of the relationship between exploration expenditure and ore deposit discovery:
Over the last 40 years the absolute number varied directly with the overall level of exploration spend. However, this relationship appears to have broken down in recent years. Even after adjusting for the inherent delay in reporting recent discoveries, the industry has become very ineffi- cient in the last 5-10 years. MinEx believes that one key driver is a major increase in input costs (for labour, drilling and admin costs) – which means that less work gets done in the field. If you don’t drill you won’t discover. Other key factors would be the increased challenges in exploring in remote areas and under deeper cover.
Is the Discovery Problem Caused by the Retreat from Greenfields Exploration or Not?
A closer analysis of the worldwide greenfields versus brownfields gold discovery data provided by Schodde in 2010 conclusively confirms the original 2009 analysis carried out by McCuaig, Guj, Hronsky, and Schodde. See Figure 5 on page 59.
http://minexconsulting.com/exploration-targeting-in-a-business-context/
2. For example,
http://minexconsulting.com/recent-trends-and-outlook-for-global-exploration/ 3.
http://minexconsulting.com/the-long-term-outlook-for-the-global-exploration-industry-gloom-or-boom/
56 TPG •
Oct.Nov.Dec 2020
www.aipg.org
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