Global exploration spending on non-ferrous metals by mining companies declined by 42% to $7.7bn in 2009 compared to $13.2bn in 2008.
According to Nova Scotia-based Metals Economics Group, this is the sharpest decline it has seen since its report on spending was first launched by the group in 1989.
Factors contributing to the decline include the economic downturn that triggered low demand and a drop in prices of commodities earlier this year.
Cuts by junior mining companies also played a major part in the reduction in exploration spending, the report said.
To lower costs, major mining companies such as Rio Tinto have postponed or trimmed exploration projects.
Recently, prices of commodities have rebounded including copper, which has doubled since the end of 2008 due to escalating Chinese demand in the first half of the year.
The fall in the value of the dollar also contributed to the rebound in copper as the appeal of commodities improved as hedges against inflation.