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PERTH (miningweekly.com) – Companies are spending significantly less on mineral exploration, especially in Western Australia, new figures by the Australian Bureau of Statistics (ABS) show.
Exploration expenditure during the three months to March fell by 8.3% quarter-on-quarter and by 34.1% year-on-year to A$487.7-million. Western Australia led the decline, with exploration expenditure in the state dropping 14.9% during the March quarter, or A$44.8-million, compared with the previous quarter.
In seasonally adjusted terms, mineral exploration expenditure fell by 9.2% to A$480.2-million during the March quarter, while in original terms, mineral exploration expenditure declined by 25.5%, to A$408-million.
Greenfield exploration declined by 31% and brownfield exploration expenditure declined by 22.8% during the quarter under review. In terms of commodities, iron-ore showed the biggest decline in exploration expenditure, dropping 37.5% during the quarter, followed by gold, which was down 29.9%.
However, the ABS reported that total petroleum exploration expenditure increased by 0.5% during the three months to more than A$1-billion.
In seasonally adjusted terms, total petroleum exploration expenditure rose by 10.8%, to A$1.13-billion. The ABS reported that the largest contributor to the rise in the trend estimate was South Australia, which increased by 8% on the previous quarter, while the largest contributor to the seasonally adjusted estimate was Western Australia, up 16.8%.
In seasonally adjusted terms, onshore petroleum exploration expenditure increased by 24.3%, to A$334.2-million, while offshore petroleum exploration expenditure increased by 6%, to A$805.3-million.
The Association of Mining and Exploration Companies (Amec) said on Tuesday that the steady decrease in exploration expenditure was a cause for extreme concern.
“This decrease in greenfield exploration expenditure and metres drilled is extremely concerning as it takes on average seven years to convert a discovery into an operating mine, according to research undertaken by the University of Western Australia.
“These figures should be a wake-up call for all levels of government, highlighting the need for the Coalition’s proposed Exploration Development Incentive (EDI), and repeal of the carbon and mining taxes,” said Amec CEO Simon Bennison.
“The EDI will allow investors to deduct a proportion of the eligible exploration expenditure against their personal taxable income, increasing the attractiveness of investing in exploration companies.”
Bennison noted that with only 12 initial public offerings for exploration companies in 2013, and only four since the start of 2014, the EDI would provide a much needed incentive for capital to flow into the sector.
“It is essential to increase Australia’s attractiveness as an investment destination to secure the mines of tomorrow and revenue streams for the benefit of all Australians.
“All sides of government must take action now, providing smooth passage of the repeal of the carbon and mining tax, and the introduction of the EDI though the senate,” said Bennison.