Latest quarterly exploration spending among ASX-listed firms reaches seven-year high

Resources exploration spending by Australian companies at home and abroad hit the highest levels in seven years in the June quarter, as the commodities sector continues to make strong gains in tandem with a broader global economic recovery from the pandemic.

According to a study by business advisory firm BDO, explorers listed on the Australian Stock Exchange (ASX) spent A$666 million in the three months to June 30. This was 34% higher than the two year average and the most quarterly spend since March 2014.

BDO said Australian explorers were raising funds at record-breaking levels, which is likely to support a further acceleration in spending to historic highs by the end of the year.

“Initial concerns around COVID-19 and its impact on the exploration sector have been swiftly mitigated by the prompt sector recovery underpinned by strong commodity prices and favourable financial markets,” said BDO’s head of natural resources Sherif Andrawes.

The 10 biggest spenders in the June quarter included four oil and gas companies, three gold explorers, two nickel miners and one company focused on rare earths.

However, the resources industry continued to face headwinds in the form of limited availability of resources, COVID-related travel restrictions and skilled labour shortages, the report said.

Australia’s biggest city Sydney was placed into lockdown at the end of June to try and contain an outbreak of the delta variant, while the country’s international borders have been closed since the pandemic began last year.