Exploration's big problem explained in one chart

The exploration industry is in crisis, according to a study by the Boston Consulting Group released last week.

There is simply few major discoveries anymore, this despite a huge ramp up in spending just a few years ago before metal prices collapsed.

While major discoveries account for a vast majority of the world's metal supply, the number of giant discoveries has tapered off to only one or two per year despite a massive increase in exploration spending from 2010 through 2012. The authors calculate that the weighted average cost of base-metal discoveries nearly tripled, from $23 million from 1980 through 1989 to $64 million from 2000 through 2009, all the while exploration performance deteriorated.

Perscriptions? Boston Consulting Group say better management and leadership are the core issues according to a group of leading mining geologists who were interviewed for the study:

Across the interviews, strong leadership was the unifying theme. Leadership goes beyond personal attributes such as charisma, determination, and drive. It entails bold decision making and judgment that play out in every aspect of planning, execution, and management. Successful exploration leaders not only set the strategy by which the team plays but also strive relentlessly to assemble the team they know they will need to win—the right mix of talent, experience, and youth. They forge a culture of teamwork and, most important, ensure that their team has the confidence and motivation to win. Successful exploration leaders also protect their team members from pressures and other distractions—whether pushback from impatient executives and boards, company developments, or market spasms. They keep their team on track even if wins do not come as quickly as they hope.

Download the report.

Creative commons image by Hitchester