Mining companies have made 454 capital cost announcements worth a total of US$125.90 billion between Jan. 1, 2017, and Dec. 14, 2018, of which only US$1.11 billion has been spent thus far.
Canceled capital projects and sustaining capital costs were not included in the analysis, while capital expenditure announcements with multiple spending scenarios were only included in the aggregations once to avoid double counting.
Year-to-date announced capital costs totaling US$79.78 billion already far exceed the aggregate US$46.12 billion for all of 2017, though there have been only 212 announced plans this year compared to 242 in 2017.
All regions except for the Middle East had year-to-date announced capital costs that were significantly higher than for 2017. Asia-Pacific and Latin America outstripped U.S. and Canada to distinguish themselves as the top two destinations for capital expenditures this year with announced costs totaling US$21.32 billion and US$20.02 billion, respectively.
The largest announced capital costs in the top two regions this year were the US$8.64 billion for Turquoise Hill Resources Ltd.'s Lookout Hill project, which is associated with the Oyu Tolgoi mine in Mongolia, and the US$5.15 billion for Anglo American PLC's Quellaveco project in Peru. The projects are both planned copper mines. Start-up is expected in 2021 for Lookout Hill and in 2022 for Quellaveco.
Helped by the aforementioned projects, primary copper properties accounted for the bulk of potential capital costs this year as announced spending more than doubled from full year 2017 to US$31.20 billion. Other notable primary copper project capital expenditures this year were the US$5.50 billion for KAZ Minerals PLC's Baimskaya project in Russia that is slated to begin operations in 2027 and the US$2.75 billion for NGEx Resources Inc.'s planned Josemaria open pit mine in Argentina.
Gold followed, albeit distantly, with the second-largest share of year-to-date announced capital spending at US$18.65 billion. The US$2.57 billion planned for República Bolivariana de Venezuela and Gold Reserve Inc.'s Siembra Minera project in Venezuela was the largest announced cost for a primary gold project this year, followed by the US$2.25 billion earmarked for PJSC Polyus' Sukhoi Log mine in Russia, which is expected to start up in 2026.
Doubled year-over-year capital expenditures were also recorded for iron ore, lithium and nickel, among others, at US$4.18 billion, US$6.34 billion and US$2.38 billion, respectively. About US$2.60 billion and US$1.28 billion were announced this year for Australian iron ore projects Hamersley Consolidated, owned by Rio Tinto, and Western Hub, owned by Fortescue Metals Group Ltd., respectively, while US$1.06 billion was earmarked for Lithium Americas Corp.'s Lithium Nevada project in the U.S. Capital spending of US$1.70 billion was earmarked for mine-life extension of Vale SA's Voisey's Bay nickel mine in Canada.
Initial capital spending, or costs earmarked to get a mine up and running, remained the top expenditure type this year, more than doubling to US$57.22 billion, from full year 2017's US$26.27 billion. Announced initial capital spending plans grew from 96 to 119 year over year, with year-to-date plans led by expenditures for Lookout Hill, Baimskaya and Quellaveco.
Announced expansion spending was only slightly changed year over year at US$7.85 billion, ticking down from US$8.07 billion, while planned mine-life extension costs rose by more than half to US$6.49 billion. Potential capital expenditures were led by the US$4.00 billion allocated for a mine-life extension of South32 Ltd.'s Klipspruit coal mine in South Africa and the US$1.87 billion for the output expansion of PolyMet Mining Corp.'s NorthMet primary copper project in the U.S.
Planned initial capital spending in the first quarter reached a high not seen since the end of 2014, helped by plans for Lookout Hill announced in January and for both Siembra Minera and NorthMet announced in March.
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