The head of the world’s largest and oldest drilling services company says spending on mineral exploration will hit a record pace in 2011 and grow even more in 2012. The Financial Post reports from PDAC:
And as CEO Craig Kipp is quick to point out in an interview, that is a great space to be in these days. According to a published forecast he uses, global exploration spending will reach a record US$14-billion this year. And if that sounds like a lot, a whopping US$19-billion is expected in 2012.
“The outlook’s pretty good,” Mr. Kipp said in a rather big understatement. He thinks we are starting a three-year run of extremely elevated drilling activity. Mining companies have plenty of cash to burn and are having trouble finding good acquisitions, so it makes sense to spend it on drilling, he said.
But that doesn’t mean the business is a cakewalk these days. Mr. Kipp said that finding skilled workers is tougher than ever, making it very difficult for the contract drillers to meet demand. The labour shortage creates wage inflation, which in turn is pushing the drillers to raise prices.