Page 70 - Introduction to Mineral Exploration

4: RECONNAISSANCE EXPLORATION 53

license blocks we term target selection and that remainder of the chapter will be devoted to
of drilling, target testing (discussed in Chap- private sector organizations although much
ter 5). The deposit is then at the stage of pre- may be applicable to state organizations.
development followed by a feasibility study
(Chapter 11). Before we consider how explora-
tion is planned we should discuss who explores. 4.1 EXPLORATION PLANNING

The exploration players Mineral exploration is a long-term commit-
ment and there must be careful planning of a
Private sector company’s long-term objectives. This should
Most mineral exploration in developed coun- take particular regard of the company’s
tries is conducted by companies with a sub- resources and the changing environment in
stantial capital base generated either from which it operates (Riddler 1989). The key fac-
existing mineral production or from investors tors are:
on stock markets. The size of the company 1 Location of demand for products. This will
can range from major multinational mining depend on the areas of growth in demand. For
companies, such as Rio Tinto plc or Anglo metals the most obvious areas are the industri-
American Corporation with operations on sev- alizing countries of the Pacific Rim, and who
eral continents, to small venture capital com- are resource deficient. China has assumed par-
panies, usually known as a junior company, ticular importance since the late 1990s for a
with one or two geologists. Exploration by wide range of commodities.
individual prospectors has been an important 2 Metal prices. Price cycles should be esti-
factor in countries with large unexplored areas mated as far as possible and supply and demand
and liberal land tenure laws, e.g. Canada, forecast (see section 1.2.3).
Australia and Brazil. Here you can still meet 3 Host country factors. The choice of country
the grizzled prospector or garimpeiro. Although for operation is important in an industry which
they usually lack the sophisticated training of has seen substantial nationalization, such as
the corporate geologist, this can be compen- copper in The Democratic Republic of Congo
sated for by a keen eye and the willingness to and Zambia and coal in the UK. The standing
expend a little boot leather. of foreign investment, the degree of control
permitted, percentage of profits remittable to
State organizations the home country, and most of all government
In more centrally directed economies, most stability and attitude are important. Other
exploration is carried out by state run com- factors are availability of land, security of
panies, geological surveys, and often in the case tenure, and supply of services and skilled labor
of developing countries, international aid (see section 1.4).
organizations. The role of a geological survey 4 The structure of the mining industry.
usually includes some provision of information Barriers to the entry of new producers are com-
on mineral exploration to government and the petition from existing producers and the need
private sector. Usually this takes the form of for capital to achieve economies of scale.
reconnaissance work. By contrast, the Soviet These factors combined to encourage explo-
Ministry of Geology had until 1991 exclusive ration companies in the 1980s to concentrate
prospecting rights in the former USSR, al- on precious metals in Australia, Canada, and
though exploration was carried out by a wide the USA (see section 1.2.3 “Metal and mineral
variety of organizations at the Union (federal) prices”). In the 1990s the net was more widely
and republic levels. In China exploration is spread with access possible to the countries of
undertaken by a number of state and provincial the former USSR and exploration undertaken
groups, including the army. in countries with high political risk. The late
These two groups essentially explore in 1990s saw a concentration of exploration activ-
similar ways although state enterprises are ity in countries with proactive mineral policies
more constrained by political considerations in South America and selected parts of Africa
and need not necessarily make a profit. The and Asia. There was a revival in interest in base