A STUDY IN THE ECONOMICS OF METALS EXPLORATION BY MAJOR CORPORATIONS (MINING, MINERALS).

摘要

The central hypothesis of the study is that metals exploration by major corporations is an investment, varying with expected returns, rather than an activity whose level and distribution are determined largely by habit and simple rules of thumb. For testing with data from North America, Australia, and western Europe, the hypothesis is broken into three corollaries.;The second corollary contends that recent trends in relative mineral prices are largely responsible for shifts over time in the mix of minerals sought by firms. The findings support this proposition and suggest that the allocation of exploration funds among minerals is influenced more by long-run than short-run relative prices.;The third corollary hypothesizes that changes in government policies and perceptions of political risk are largely responsible for shifts over time in the geographic location of exploration. The analysis suggests that adverse government policies and associated uncertainties over the potential for future changes have discouraged exploration in Australia, Canada, and some developing countries over certain time periods.;Despite this support, the findings also reveal that a number of other factors, including geologic potential, exploration success, and corporate philosophies, significantly influence the level and distribution of exploration and expenditures. Although the results require some modification in each of the three corollaries, the necessary changes are not inconsistent with the central hypothesis. Instead they identify, and take explicitly into account, important factors affecting expected returns from exploration that the corollaries overlooked.;The first corollary postulates that recent trends in real mineral prices are largely responsible for shifts over time in levels of exploration expenditure. The analysis indicates that changes in long-run secular prices are important for some firms, apparently because they are an important determinant of expected returns. For other firms, short-run price trends are important, presumably because of the need to finance exploration out of internal funds.