PERTH (miningweekly.com) – Capital spend on exploration activities fell by some 10.2% during the December quarter, to A$790.2-million, the Australian Bureau of Statistics (ABS) reported this week.
The largest contributor to the fall was Western Australia, which spent some 11.2% or A$55.3-million less on exploration activities.
The ABS said exploration for gold experienced the most significant decline, with exploration for the precious metal down 16.3% or A$31.7-million during the quarter, while coal exploration was also down by some 12.5%, or A$21.4-million.
The Association of Mining and Exploration Companies (Amec) said on Wednesday that the ABS statistics further highlighted what the association had been warning policy makers against.
“Australian exploration activity is in decline. Of most concern, is the decrease in greenfield exploration, which fell by 28% in the December 2012 quarter,” said Amec CEO Simon Bennison.
“For the first time since the financial crisis, the trend for exploration activity in Australia is going down. These statistics further highlight the lack of investor confidence in exploration companies that has made access to equity finance almost impossible.”
Bennison said the decrease in greenfield exploration had serious consequences for future governments, given that greenfield exploration was responsible for finding the mines of tomorrow.
“It is estimated that in the absence of new significant discoveries, based on current reserves and resources, about half of Australia’s nonbulk commodities mines would be exhausted in 7 to 18 years.
“Considering it takes between seven and ten years from applying for an exploration licence to get to a stage of extracting and selling a mineral, it is imperative that we increase greenfield exploration now to ensure the mines of tomorrow.”
Bennison noted that Amec had put together a policy framework that it believed would correct the situation if it could obtain federal government support.
One such strategy is introducing a Mineral Exploration Tax Credit model. A similar approach was adopted by Canada in 2000.
Meanwhile, petroleum exploration expenditure increased by some 20.1% during the quarter under review, to more than A$1.3-billion, with exploration expenditure on production leases increasing by 26.3% and exploration expenditure in all other areas increasing by 14.4%.
Western Australia was the largest contributor to this increased petroleum exploration spend, with expenditure up 22.4% during the three months. Onshore exploration expenditure was up by 12.3% to A$295.3-million, while offshore exploration spend was up 20.8% to just over A$1-billion.