Copper exploration budgets closely follow copper prices and are, in fact, a good predictor. Higher prices lead to higher spending, usually with about a one-year lag. I wrote about this a couple of weeks ago.
The implication seemed straightforward: if copper prices remain elevated, exploration budgets should continue rising.
But it raises a more important question.
A question that must be keeping the top dogs at BHP, Rio and other majors up at night.
Why isn’t more spending translating into more discoveries?
The answer may lie in a simple but underappreciated metric: discovery cost.
In this note, I look at the relationship between copper discoveries and implied costs since 1990, plus key implications for investors. This is part 3 of my “Supply stress” series on copper.
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