PERTH (miningweekly.com) – The Association of Mining and Exploration Companies (Amec) has blasted the federal government’s decision to dump the Exploration Development Incentive (EDI) from its latest Budget, labelling it a “betrayal” of the mineral exploration industry in Australia.

“It is turning its back on future mineral discoveries and mining development in Australia,” said Amec CEO Simon Bennison on Thursday.

“Industry is seriously disappointed at the level of ignorance in government relating to the benefits of this initiative.”

Bennison noted that the “uninformed and breathtaking policy reversal” by government and the Department of Industry is both “short-sighted and extremely disappointing for the Australian mineral exploration sector, and the nation as a whole”.

“It will cost jobs and growth, particularly in regional Queensland and Western Australia.

“It appears that the decision is an outcome of a non-transparent and unpublished internal review of the EDI, and based on limited measurable data over a short timeline, and conducted during a severe exploration downturn. There was also inadequate public consultation,” Bennison said.

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.

While the EDI was originally set up as a long-term initiative, it has now been cut short after less than three years despite it having minimal impact on the Budget.

“The impact of the backflip is that it will effectively increase the after tax cost of exploration by 30% for many Australian junior greenfield explorers, and undermine the nation’s exploration effort required to replace Australia’s ageing mines,” Bennison said on Thursday.

“The repetitive comments from senior government Ministers that the mining investment boom has come to an end are tiresome, false and completely misleading.

“There are vast areas of Australia that have never been explored, or are underexplored and still highly prospective. The economic opportunities from discovering new mines to replace those that are coming to an end, are enormous.”

The Minerals Council of Australia earlier also expressed disappointment with the government abandoning the EDI, with CEO Brendan Pearson saying that with Australian minerals exploration expenditure declining by A$2.15-billion, or 60%, over the last five years, the government should consider new policy measures to overcome the tax asymmetry whereby junior explorers with no taxable income are unable to access the immediate deduction for exploration.