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Do commodity prices incentivize exploration permit application? An explorative study of an anecdotal relation

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  • Tobias Olofsson

    (Lund University)

Abstract

Do commodity prices drive exploration permit applications? In a recent qualitative study on mineral exploration and risk management in Sweden, a number of respondents representing mineral exploration organizations and governmental agencies expressed how mineral exploration permit applications increase with rising commodity prices. This paper seeks to investigate this alleged correlation quantitatively. In doing so, the study uses time series analysis and ARIMA models to analyze the covariation of applications for exploration permits filed with the Mining Inspectorate of Sweden and annual average copper, lead, zinc, silver, and gold prices in the period 2000 to 2018. Contrary to the anecdotal evidence given by actors in the exploration and mining industry, the paper cannot show any significant covariation between the majority of mineral prices and applications filed. Contrary to expectations, there appear therefore not to be any correlation between copper, lead, silver, and gold prices and the volume of permit applications filed annually. Moreover, the study also shows that the correlation between annual average zinc prices and permit applications appears to be the reverse of what was first believed as the annual change in application volume occurs before the rise or fall in zinc prices.

Suggested Citation

  • Tobias Olofsson, 2022. "Do commodity prices incentivize exploration permit application? An explorative study of an anecdotal relation," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 35(1), pages 133-141, March.
    • Handle: RePEc:spr:minecn:v:35:y:2022:i:1:d:10.1007_s13563-021-00277-0
    DOI: 10.1007/s13563-021-00277-0
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    More about this item

    Keywords

    Exploration permit applications; Commodity prices; ARIMA; Time series analysis; Mineral exploration;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • C00 - Mathematical and Quantitative Methods - - General - - - General

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