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South Australia budget lacks adequate support for mining - Amec

7th June 2024

By: Creamer Media Reporter

     

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The South Australian government has unveiled a surplus budget, buoyed by stronger-than-expected goods and services (GST) and state tax revenues, as well as A$420-million in royalties from the minerals and petroleum industry. Despite this surplus, state debt is set to exceed A$38-billion as the government borrows to fund ongoing initiatives, highlighting the critical role of the resources industry and its yearly royalty contributions.

The budget includes a A$3.6-million commitment over two years for a Green Iron and Steel initiative and an additional A$1.7-million investment in the Whyalla steelworks. Further, A$4.1-million has been allocated to support the new hydrogen and renewable energy legislative programme.

While these initiatives received praise, the Association of Mining and Exploration Companies (Amec) expressed disappointment over the budget's overall provisions for the mining sector.

“South Australia has big plans for green iron and steel, and a recent supply chain analysis demonstrates a 21% advantage to produce green iron in South Australia. This is underpinned by the state's significant magnetite resources, and we welcome the commitment to support industry to grow value-adding opportunities,” said Amec CEO Warren Pearce.

However, he highlighted that major industry requests remain unaddressed. Amec has called for additional funding to better resource the Department for Energy and Mining, but little progress has been made. Notably absent from the budget are allocations for the Accelerated Discovery Initiative and the Critical Minerals Strategy, along with its development fund.

“This lack of government investment will have a knock-on effect for the junior explorers who are already doing more with less, as capital raising and inflationary pressures are also biting their businesses,” Pearce stated.

He further emphasised concerns over South Australia's global investment attractiveness, which has declined, with the state dropping to nineteenth position in the latest Fraser Institute survey after maintaining a top 10 ranking for over a decade.

The Australian Bureau of Statistics' recent figures showed South Australia reaching its highest greenfield exploration expenditure of A$47.2-million, largely driven by copper resource definition efforts at Oak Dam. Without this investment, the sector's outlook appears weaker.

The budget does include a A$15.4-million allocation for an acid drainage treatment plant at the former Brukunga mine, a necessary investment for addressing environmental responsibilities. However, Amec has called for more substantial funding to foster downstream critical minerals processing and to promote South Australia’s investment opportunities globally.

Particularly disappointing for the organisation was the state government’s decision not to fund initiatives to complement the federal government’s Production Tax Incentive.

“Minerals are critical for building the renewable-energy infrastructure for decarbonisation goals and the materials for our growing housing needs along with the state’s strong defence, space and high-tech industries,” Pearce noted.

“To grow the state’s ambitions for green minerals will require a serious financial commitment from government in the future if the state is to compete with other national and global jurisdictions for precious investment.”

The budget's mixed reception reflects a broader tension between immediate fiscal responsibilities and long-term strategic investments necessary for sustaining and growing South Australia's resource sector.

Edited by Creamer Media Reporter

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