Miners Chopping $10 Billion Search Bodes Next Price Boom – by Elisabeth Behrmann and Rebecca Keenan (Bloomberg News – January 17, 2014)

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Mining companies are extending massive cuts in exploration budgets for a second year, setting up the next price boom as China continues its relentless pursuit of metals and energy.

Exploration spending plunged by 30 percent or $10 billion last year, squeezing budgets to search for minerals and sustain supplies, according to MinEx Consulting Pty, whose clients include BHP Billiton Ltd. (BHP), the world’s biggest miner. Payments may drop another 10 percent this year for geologists, drilling exploratory holes and analyzing mineral specks to unearth the next copper, iron ore or gold El Dorado, MinEx said.

Investors in mining companies and metals may welcome the cuts because they’ll help propel a rebound in prices. Platinum, aluminum, silver, nickel, zinc, lead and uranium all are forecast to rise by 2017, according to the median of analyst estimates compiled Jan. 16 by Bloomberg. The losers will be buyers of cans, cars and all the goods made from metals.

Mining companies are extending massive cuts in exploration budgets for a second year, setting up the next price boom as China continues its relentless pursuit of metals and energy.

Exploration spending plunged by 30 percent or $10 billion last year, squeezing budgets to search for minerals and sustain supplies, according to MinEx Consulting Pty, whose clients include BHP Billiton Ltd. (BHP), the world’s biggest miner. Payments may drop another 10 percent this year for geologists, drilling exploratory holes and analyzing mineral specks to unearth the next copper, iron ore or gold El Dorado, MinEx said.

Investors in mining companies and metals may welcome the cuts because they’ll help propel a rebound in prices. Platinum, aluminum, silver, nickel, zinc, lead and uranium all are forecast to rise by 2017, according to the median of analyst estimates compiled Jan. 16 by Bloomberg. The losers will be buyers of cans, cars and all the goods made from metals.

The austerity has been triggered after a decade-long mining boom peaked in 2012. That forced producers including BHP, Rio Tinto and Glencore Xstrata Plc to slash spending and sell assets to bolster earnings as more than $60 billion of writedowns mounted and shareholders demanded changes.

Although China, the biggest metals consumer, has slowed its rapid economic expansion, it’s still forecast to grow 7.5 percent this year and 7.2 percent in 2015, the fastest in the world, according to data compiled by Bloomberg. The Asian nation will be the major driver of world economic growth and could increase demand for some commodities as much as a 75 percent over the next 15 years, BHP Chairman Jac Nasser said on Nov. 20 at a shareholder meeting in Perth.

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