PERTH (miningweekly.com) – Federal Resource Minister Matt Canavan on Wednesday said that the Australian government would work with the resources industry to develop a new exploration incentive scheme to replace the current Exploration Development Incentive (EDI), which was dumped from the federal budget.

Speaking at the Association of Mining and Exploration Companies (Amec) convention, in Perth, Canavan said that the EDI in its current form had failed to meet its objectives, and had not encouraged sufficient levels of greenfield exploration, or capital spend, to justify its continuation.

“There was relatively low uptake [of the EDI] and a 36% decrease in the number of participants in the first to second year. While we acknowledge that it was a difficult time, and we have seen a 64% drop in exploration expenditure in Australia over the past few years from the heights of the boom, notwithstanding that, even Amec put forward a number of radical proposals to change the scheme, showing that the industry felt the scheme was not designed in a way that was attractive.”

The EDI encouraged shareholder investment in small exploration companies, enabling companies to create exploration credits by giving up a portion of their tax losses from greenfield exploration and distributing these to equity shareholders.

When introduced, the EDI had a trial period of three years, with Canavan noting on Wednesday that the federal government would honour its commitment to the scheme during its final year of operation.

“The EDI still has a year to go, and there is still potential for tax credits to be claimed. And if there is enough uptake next year, I will be the first to argue that it should continue. But that is unlikely, given the concern around the design,” Canavan told delegates.

He said that the government, with the assistance of industry participants, would now look to create a better scheme, providing benefits to both the resources sector and the nation.

“The government is committed to supporting junior explorers and the mining and exploration sector,” Canavan said.