🔻 Exploration spending just hit a four-year low.
And insolvencies in the mining sector aren’t slowing down.
In the March quarter, Australian minerals exploration spend fell to $643.5M, down 19% from the previous quarter and the lowest level since June 2021, according to BDO.
This marks a sharp reversal from a decade-long growth cycle that saw spend rise from $267M in 2016 to $1.07B in 2022, driven largely by the energy transition and demand for critical minerals.
But while capital is pulling back, insolvency activity continues to push higher.
📉 Mining Insolvency Appointments (ASIC data):
• FY22: 157
• FY23: 239
• FY24: 370
• FY25 (est.): ~310
Although FY25 appears to be plateauing, volumes remain well above historical averages, and forward indicators suggest the pressure isn’t easing any time soon.
So what’s the relationship between capex cuts and insolvency risk?
đź“Š When we looked at the data quarter by quarter, the link was weak.
The scatterplot showed a low R² of 0.0865 – meaning that just 8.65% of insolvency variation can be explained by changes in exploration spend within the same quarter.
But when we introduced a 4–5 quarter lag, the picture changed.
⏳ Our cross-correlation model shows a much stronger relationship – suggesting that when exploration budgets are cut sharply and sustained, the impact hits 12+ months later, especially for junior explorers and pre-revenue developers.
đź’Ą In short: the pain doesn’t hit straight away – but when it does, it’s real.
