PERTH (miningweekly.com) – The Australian resources sector has welcomed the federal government’s commitment to invest about A$125-million into the resources and energy sector in an effort to attract explorers and more private investment.

Industry Minister Ian Macfarlane said that the federal budget, announced on Tuesday, honoured government’s commitment to provide A$100-million for the Exploration Development Incentive, which would fund exploration for new mineral deposits.

The incentive would provide small exploration companies with better access to capital from private sector investors through a refundable tax offset for greenfield exploration costs.

“The resources sector has underpinned growth in the Australian economy for more than a decade and new discoveries are vital to the sector, which generated around A$171-billion in export revenues in 2012/13,” Macfarlane said.

The incentive would target junior exploration companies, start on July 1 and be capped at A$100-million.

The federal government would also deliver A$2.7-million to establish the Tasmanian Major Projects Approval Agency that would speed up regulatory approvals and encourage private investment in the Tasmanian economy.

The Association of Mining and Exploration Companies (Amec) said on Wednesday that the Exploration Development Incentive would go a long way towards addressing low new discovery rates, an ongoing reduction in Australian greenfield exploration activities and a low number of initial public offerings for mineral projects in Australia.

“It will help Australia to regain international competitiveness and increase its share of global exploration expenditure. This is on the back of the worst periods in many years for base and precious metal companies,” said Amec CEO Simon Bennison.

“The incentive tax credit will be provided to Australian resident shareholders for greenfield exploration in Australia. It is proposed that there will be a ‘no taxable income’ test to ensure that the programme is directed to junior minerals explorers to discover the ‘mines of tomorrow’ and provide future taxation streams for governments.”

He noted that the government’s commitment to continue with the proposed reduction in the company tax rate to 28.5% on July 1, 2015, was also a positive message to industry and would provide much needed business and investment confidence. It would also assist in creating new jobs and allow businesses to grow.

“We need to be encouraging additional long-term investment in the mining sector to promote growth and productivity, and let the industry get on with business to ‘grow the pie’.

“This will provide considerable social and economic dividends, thousands of jobs and regional infrastructure throughout the Australian economy, including remote communities, and significant revenue streams for all levels of government,” Bennison said.

The Western Australian Chamber of Minerals and Energy (CME) has also welcomed the investment, with CEO Reg Howard-Smith saying the industry relied upon increasing the current level of exploration activity to establish a future pipeline of projects.

The Queensland Resources Council welcomed the news of government’s A$50-billion-over-five-years infrastructure plan.

Amec’s Bennison pointed out, however, that the government’s economic strategy for the resources sector would be dependent on the abolishment of the carbon and minerals resource rent tax by the Senate, which he said would send the message that Australia was a safe investment destination.

“Stable public policy settings are essential for long-term strategic investment and business decisions in the Australian mining sector.

“The industry is, therefore, extremely pleased that the government has not heeded the uninformed and unhelpful calls by the Greens to scrap the much needed diesel fuel tax credit arrangements that have applied for ‘off road use’ in the agriculture, forestry, fishing and mining sectors for decades,” Bennison said.