JOHANNESBURG (miningweekly.com) – The South Australian government plans to ramp-up efforts to promote the state’s mining projects overseas, as the current economic situation placed strain on Australia’s mining sector, a top government official said on Monday.

The South Australian Minister for Mineral Resources Development, Paul Holloway, said that the state would target particularly China, Japan and India to promote its projects, as longer-term demands for commodities in those countries remained “fundamentally” sound.

“As countries such as China become more urbanised, the long-term outlook for the South Australian resources sector continues to be positive,” Holloway said in a copy of a speech delivered at the Paydirt 2009 Uranium Conference, held in Adelaide.

He added that the South Australian government had worked hard in the past six and a half years to create a climate of certainty, which would provide investors with the confidence they needed to plan long-term investments in the resources sector. “We realise that investment in our resources sector is critical for the continued development and growth of the South Australian economy.”

While the confidence-building policy initially led to a record surge in investment and exploration in South Australia, with mineral exploration expenditure reaching $355,2-million in the 2007/08 financial year, the latest quarterly results show overall spending for calendar year 2008 of $317,5-million, down from $331,3-million in the 2007 calendar year.

Spending on mineral exploration in the December quarter of 2008 fell to $68-million, down from the $75-million spent over the previous three-month period. The main mineral sought during the last quarter of 2008 was copper, with $20,7-million being spen.

Spending on uranium exploration, which ranked second overall with $17,8-million on expenditure during the quarter, fell from $22,4-million recorded in the previous three-month period.

“South Australia remains in third place behind resources-rich Western Australia and Queensland,, states that also experienced a significant slowdown in exploration spending during the December quarter,” Holloway said.

“As I have been warning for some time, even before the global financial crisis began to take its toll on commodity prices, a slowdown in exploration spending in South Australia was inevitable as many projects moved from the exploration to the construction and development phase.”

However, he added that even taking the recent slowdown into account, South Australia was still recording historically high levels of spending, compared with total exploration expenditure of about $40-million a year, experienced just seven years ago.

“The fact that these numbers continue to hold up in the current environment confirms that the global exploration sector continues to have the highest levels of confidence in South Australia’s mineral potential.”

Holloway noted that the confidence in the state was evident in the recent Resource Stocks magazine world-risk survey, which rated South Australia as the least risky jurisdiction in Australia in which to invest, and the second internationally. Also, in the recent Fraser Institute Annual Survey of Mining Companies, South Australia was voted the fifth-best jurisdiction having the most favourable policies towards mining.

“With the global financial crisis generating so much uncertainty in the world markets, it is quite timely that South Australia has firmly established itself as a low-risk destination for investment.”

He added that while the current economic climate was casting a shadow over the short-term outlook for the minerals sector, the fundamentals of the mining industry, including demand for resources from Asia, remained positive.

“As before, this downturn will eventually turn into an upswing and this government aims to be ready to take advantage of this period to lock in the projects and the supporting infrastructure and skilled work force required to make the most of our state’s mineral wealth.”