PERTH (miningweekly.com) – Western Australia’s Exploration Incentive Scheme (EIS) could be in the firing line as the state government scrambles to make up the A$100-million a year hole left by the tanking of the proposed gold royalty.

Speaking on the sidelines of the Paydirt nickel conference, Mines and Petroleum Minister Bill Johnston said on Tuesday that while the EIS was a “great programme”, all government incentive programmes were considered in the government’s bid to cut costs.

“I’m not saying that the EIS will be cut, but I’m saying that we clearly have to come to terms with that loss in revenue. Everything is always in the mix, and we will not allow the finances of the state to be ruined,” the Minister said.

The state government’s proposed 50% increase in the gold royalty was blocked by opposition parties in the Upper House of Parliament last week, following severe opposition from the Western Australian gold sector.

Miners had warned that the proposed hike would cost an estimated 3 000 jobs and would result in the closure of a number of gold mines.

In the most recent state Budget, the government committed to A$10-million a year in funding for the EIS for both 2017/18 and 2018/19.

The EIS consists of a number of programmes that promote resource exploration in Western Australia, particularly on greenfield areas and frontier petroleum basins, and provides refunds of up to 50% for innovative exploration drilling projects to a value of more than A$150 000.

It has previously been pointed out that for every A$1-million invested by the government towards major new projects, the scheme generated A$10.3-million in exploration activities and created 48 jobs over 18 years.

A recent report by mining economists MinEx Consulting has stressed the importance of exploration to maintain Australia’s gold production over the long term, as only four of the current 71 operating gold mines will still be producing in 40 years’ time.