Brownfield drilling service price

IBISWorld expects brownfield drilling service prices to grow by 0.5% in 2025-26, to $373.70 per metre. Elevated commodity prices and a tight labour market are projected to continue to encourage mineral exploration activities this year, driving increased demand for drilling services. However, continued labour market tightness is anticipated to keep labour prices rising. Brownfield drilling activity was roughly 7.57 million metres in 2024-25. High commodity prices are projected to continue to boost exploratory activities and increase demand for drilling services this year, however prolonged labour market scarcity is expected to keep labour costs high.

Brownfield exploration expenditure in Australia has increased over the last five years as mining corporations engage in prolonging the life of current mines and acquiring new reserves. Brownfield exploration expenditure in 2024-25 totalled $2.82 billion, accounting for nearly 74% of Australia's total mineral exploration expenditures that year. Gold remains the major commodity, accounting for 34.1% of total exploration expenditure in Australia, boosted by strong gold prices and miners' continuous efforts to increase output at mature locations. Although investment in gold exploration is rising, gold's share of total exploration spend has declined since 2020-21, due to stronger growth in other minerals like iron ore, copper and uranium. This is because copper and uranium have emerged as crucial minerals in the worldwide decarbonisation drive. Copper is required for electric cars and power grids, while uranium is in high demand as nuclear energy gains popularity as a low-carbon baseload power source.

While brownfield expenditure has increased overall over the four years through 2024-25, individual states and territories have experienced different trends. Tasmania and South Australia have experienced the strongest growth. Expenditure in Western Australia and Queensland has also grown. On the other hand, expenditure in New South Wales, Victoria and the Northern Territory has dropped off over the two years through 2024-25 and is now lower than 2020-21. Western Australia continues to dominate the country in brownfield drilling investment, with spending exceeding $2.0 billion in 2024-25, accounting for more than 72% of total national brownfield exploration expenditure.

Operating expenses for drilling businesses in Australia have risen dramatically over the past five years, resulting in significant price hikes for drilling services. The COVID-19 pandemic temporarily reduced brownfield drilling costs in 2020-21, but this was swiftly reversed as commodity prices recovered, the labour market tightened, and global supply chain disruptions created equipment shortages and higher purchase and hiring costs. The commencement of the Russia-Ukraine war exacerbated the issue, raising energy costs and adding to supply chain strains. Drillers' operational and capital expenses have remained high because to these compounding effects. Overall, IBISWorld forecasts brownfield drilling service prices to rise at a compound annual rate of 8.2% over the five years through 2025-26.