Mineral exploration occupies the upstream position in the mineral resource industry chain and supply chain. Economic development, the mining market, and mineral resource exploitation—all these forces drive the evolution and changes in mineral exploration. The cyclical nature of economic growth, in turn, fuels the cyclical fluctuations in mineral exploration activities. By analyzing the shifts in driving forces behind China’s mineral exploration over the past two decades, identifying the underlying patterns and influencing factors that shape the development of mineral exploration, and assessing the trends and trajectories of investment in mineral exploration, we can gain valuable insights that will help us better implement the new round of strategic initiatives aimed at achieving breakthroughs in mineral exploration.

Since 2000, China’s economy has undergone a transformation from high-speed growth to high-quality development. In 2010, China’s economic aggregate jumped to second place in the world, marking its transition from a phase of rapid industrialization to the mid-to-late stage of industrialization. Along with changes in economic growth rate, growth patterns, and economic structural adjustments, the driving forces behind mineral exploration have undergone a pivotal shift.

— Overall economic growth has gradually slowed down, and the economic structure has shifted from being dominated by the secondary sector to being dominated by the tertiary sector. From 2000 to 2007, China’s economy experienced sustained rapid growth, with an average annual GDP growth rate of 10.5%. From 2008 to 2012, affected by the global financial crisis, China’s average annual GDP growth rate dropped to 9.2%. Since 2013, the GDP growth rate has been steadily declining, falling to 6.0% by 2019. Affected by the COVID-19 pandemic, the GDP growth rate experienced significant fluctuations from 2020 to 2022, averaging 4.4% annually. Since 2000, the share of the secondary sector has first risen and then fallen; sectors such as industry, construction, and transportation—industries with high demand for mineral resources—have seen a marked slowdown in their growth rates.

— The supply-and-demand dynamics of mineral resources have shifted from rapid growth in the past to high-level fluctuations and a trend toward stabilization at elevated levels. From 2000 to 2011, China’s total mineral extraction volume grew at an average annual rate of 9.3%. After 2012, the growth rate slowed significantly, peaking in 2014 and then declining gradually year by year; from 2019 to 2021, there was a gradual rebound. Meanwhile, China’s total mineral consumption, after 2014, transitioned from rapid growth to slow growth, exhibiting a pattern of stabilization at high levels. Consumption trends diverged across different mineral types: for bulk minerals such as coal, iron ore, and cement—whose consumption volumes are in the billions of tons—consumption reached a peak and has since fluctuated at high levels; for most non-ferrous metals and precious metals, the growth rate has slowed down and consumption has stabilized at high levels; and for strategic minerals with consumption volumes at the tens of thousands of tons or below, consumption has continued to grow steadily.

— The prices of mineral products have shifted from a sustained upward trend to a downward adjustment. Changes in the supply-demand relationship for mineral products determine the overall macroeconomic trend of their price movements. From 2000 to 2011, China’s demand for mineral products continued to expand, driving mineral prices steadily higher. From 2012 to 2019, the growth rate of mineral demand slowed significantly, easing the tight supply-demand situation and causing mineral prices to generally decline. From 2020 to 2022, the COVID-19 pandemic disrupted global mineral supply chains, distorting supply-demand relationships in certain regions and transmitting these distortions throughout the supply chain, thereby creating widespread global tensions in the supply and demand of mineral products. Coupled with factors such as an oversupply of U.S. dollars and speculative activities by financial capital, these conditions triggered a sharp rise in mineral prices.

— The contribution of the mining industry to economic development has been weakening. The share of value added from the mining industry in both industrial output and GDP has gradually declined, falling from 5.3% and 13.4% in 2011 to 2.4% and 7.6% in 2020, respectively. In 2021–2022, the growth rate of value added in the mining industry picked up somewhat, increasing by 5.3% and 7.3% year-on-year, respectively.

As China’s economy shifts from a phase of high-speed growth to one of medium-to-high-speed growth, the extraction and consumption of mineral resources have transitioned from rapid expansion to high-level fluctuations and eventual stabilization at elevated levels. Profits in the mining industry have shifted from sustained rapid growth to a downward trend—followed by a rebound and stabilization. Mineral exploration activities have also moved from continuous rapid expansion to a period of downward adjustment and are now in a stage of bottoming out and recovery, poised to usher in a new round of growth cycle.

First, mineral exploration investment has shifted from growth to a downward trend—approaching stabilization—and the market’s recovery momentum is gradually strengthening. From 2003 to 2012, China’s mineral exploration entered a decade-long boom period, with exploration investment rapidly increasing from 1.018 billion yuan to 40.539 billion yuan. From 2013 to 2019, exploration investment continued to decline. From 2020 to 2022, exploration investment showed a slow rebound, growing by 0.7%, 6.4%, and 16.4% year-on-year, respectively. Looking at the sources of investment, since 2013, the share of investment contributed by mining enterprises has been steadily declining. Although mining industry profits surged in 2021–2022, reaching record highs, the growth rate of exploration investment by mining enterprises still lagged behind the growth rate of fiscal investment. This indicates that although the mineral exploration market has already emerged from its bottom range, mining enterprises remain cautiously optimistic, and the market environment facing mineral exploration urgently needs further transformation.

Second, the structure of investment in mineral exploration continues to adjust, with diverging trends emerging among different types of minerals. Since 2017, the share of investment in coal exploration has been slowly recovering, while the share of investment in metallic mineral exploration has shown fluctuating downward trends, and the share of investment in non-metallic minerals has been steadily increasing. Investment in exploration for different mineral types exhibits three distinct patterns: investment in rare and precious metals as well as non-metallic minerals has remained stable and is on the rise; investment in base and precious metals has declined but is now stabilizing; and investment in coal and ferrous metal exploration has shifted from declining to rising.

Second, the volume of drilling activities has shifted from growth to year-on-year decline, and overall primary exploration has weakened. From 2001 to 2012, China’s mineral exploration saw an average annual increase of 40.6% in drilling volume. From 2013 to 2020, however, drilling volume declined year by year. In 2021 and 2022, drilling volume bottomed out and then began to rebound, increasing by 21.3% and 4.9%, respectively, compared with the previous year. Looking at the exploration stages, from 2006 to 2008, the proportion of projects that completed detailed exploration and prospecting accounted for an average of 36% of the total number of mineral deposits explored in that stage; whereas from 2018 to 2022, this proportion averaged 68%. This indicates that mineral rights holders are increasingly inclined to carry out further exploration on target areas with high levels of work and promising resource prospects, while adopting a more cautious approach toward regions with low levels of exploration and unclear resource potential.

Finally, the number of newly discovered mineral deposits and the total amount of newly identified reserves have both generally declined. Looking at interannual changes, the number of newly discovered mineral deposits in China has been on the decline since 2009, dropping from an average of 567 per year during the period 2006–2010 to an average of 106 per year during 2018–2022. In terms of exploration efficiency per unit of funding invested, the number of newly discovered mineral deposits has generally shown a downward trend when the same amount of funds is allocated. From 2006 to 2010, for every 100 million yuan spent on exploration, an average of 6.6 new mineral deposits were discovered annually; however, from 2018 to 2022, this figure fell to an average of just 1.3 new deposits per 100 million yuan spent—less than one-fifth of the previous period. Correspondingly, the amount of newly identified reserves has also been on the decline. Taking copper deposits as an example, the average annual increase in identified copper reserves during the period 2006–2010 was 4.232 million tons, but this figure dropped to 3.425 million tons from 2016 to 2019.

Promoting Chinese-style modernization and building a modern economic system have placed new demands on ensuring the supply of mineral resources.

First, it is about ensuring the domestic mineral resource security by smoothing the industrial and supply chains. Over the past two decades, China’s demand for mineral resources has risen rapidly. The growth rate of domestic mineral production has failed to keep pace with the growth rate of consumption, leading to a steadily increasing dependence on foreign sources for certain minerals. Since the outbreak of the COVID-19 pandemic, a trend toward deglobalization has gained momentum, severely impacting the security of global mineral resource supply chains and industrial chains. Faced with this situation, the central government has attached great importance to ensuring the supply of mineral resources. In the 10th issue of the magazine “Seeking Truth” in 2022, General Secretary Xi Jinping published an article clearly stating: “We must enhance our capacity to ensure domestic resource production. We need to intensify exploration efforts, launch a new round of strategic actions to achieve breakthroughs in mineral exploration, and raise the level of development and protection of marine and mineral resources.”

Second, there is a need to support the development of low-carbon energy industries by achieving the goals of peaking carbon emissions and achieving carbon neutrality. The next 10 years represent a critical turning point for China as it scales up decarbonization efforts and successfully achieves carbon neutrality. Low-carbon and zero-carbon new energy sources will accelerate their development. The growth of low-carbon energy industries—including wind power, solar power, new-energy vehicles, and energy-storage batteries—will drive a rapid increase in demand for critical minerals. Ensuring the supply of these critical minerals needed for the development of low-carbon energy industries will become a key focus of mineral exploration efforts.

Third, the demand for high-tech industrial development supported by a new round of scientific and technological revolution. Since the 21st century, a new round of scientific and technological revolution and industrial transformation has been deepening. The development of emerging industries—including next-generation information technology, high-end equipment manufacturing, energy-saving and environmental protection, new materials, and new energy—each relies on various types of critical minerals for support. Driven by the intense competition among major industrial nations in emerging sectors, countries are increasingly focusing on critical minerals. At the same time, this new round of scientific and technological revolution is promoting the deep integration of advanced technologies, thereby transforming the content, efficiency, and methods of mineral exploration. Big data is triggering a profound revolution in the field of Earth sciences, which will profoundly influence the development of mineral exploration theories and technologies. Quantum sensing and measurement technologies represent a key development direction for international geophysical exploration equipment today, offering new technological approaches for exploring deep-seated mineral resources. Aerial geophysical surveys have achieved rapid progress in areas such as multi-parameter aeromagnetic surveys, vector measurements, airborne gravity surveys, and time-domain airborne electromagnetic surveys, laying a solid foundation for enhancing the efficiency and detection capabilities of mineral exploration.

The new round of strategic initiatives aimed at breakthroughs in mineral exploration is not merely about discovering more large-scale mines; more importantly, it seeks to establish a long-term mechanism for mineral exploration, enabling the market to truly play a decisive role in the allocation of resources—including human capital, financial investment, and physical assets—related to mineral exploration.

On the one hand, Remove non-market barriers that hinder investment in mineral exploration. Improve mineral exploration management policies from aspects such as mining rights administration and ecological environmental protection, and promote the establishment of a mineral exploration policy environment that is stable, market-transparent, predictable, and more business-friendly. For example, fully promoting the competitive allocation of mining rights has played a significant role in standardizing the mining rights market; however, objectively speaking, the economic costs for enterprises to acquire and maintain exploration rights have increased somewhat, leading to a decline in the willingness of social capital to invest.

On the other hand, Unblock investment and financing channels for mineral exploration. Currently, China’s mineral exploration has established an investment structure in which funding comes from three sources: central government finance, local government finance, and social capital—each contributing jointly. During periods of robust mineral exploration activity, social capital dominates the investment landscape, while central and local government funding accounts for a relatively small share. In contrast, during downturns in mineral exploration, social capital investment steadily declines, highlighting the increasingly important role played by both central and local government funding in stabilizing exploration investments. Compared with developed economies, China’s mineral exploration market infrastructure started later, and the development of market-based financing for mineral exploration has been relatively slow. China should fully draw on the investment and financing practices and experiences of developed economies’ capital markets, vigorously develop a risk-oriented mineral exploration capital market, and ensure smooth access to diversified financing channels for mineral exploration. It is advisable to explore establishing a risk exploration guidance fund led by the government, with joint participation from fiscal funds and social investments. By leveraging social investment to set up commercial risk exploration venture funds, and through coordinated collaboration and division of labor between the guidance fund and commercial risk exploration venture funds, we can play a guiding and promoting role in fostering and perfecting China’s mineral exploration investment and financing mechanisms. Additionally, exploring financing methods tailored to China’s national conditions—including public stock market financing, corporate partnership financing, and foreign-invested financing—is also crucial.