Australian explorers heading overseas

6th August 2012

PERTH (miningweekly.com) - Australian-listed mineral explorers are increasingly moving their exploration spend offshore as uncertainties and difficulties in the local market make foreign destinations more attractive, mining consultant Surbiton Associates said on Monday.

“We’ve tracked the local gold and wider mining industry over a long period and the trend to offshore exploration is very clear,” Surbiton director Dr Sandra Close said.

“It’s now reached the point where over half of all the exploration expenditure by Australian-listed companies is being spent overseas - it’s not just for gold but for all minerals.”

Close expressed concerns that if the trend continued, new discoveries would be developed offshore in direct competition with Australian producers and the local industry would decline.

“Australian companies are exploring all over the world, with the list of countries covering the alphabet from A to Z. It’s rational to apply our exploration expertise both domestically and overseas but you must ask the question, why do countries such as Mali and the Democratic Republic of the Congo, for example, appear more attractive to our explorers than Australia?”

Close noted that the resources industry and its exports were a vital part of the Australian economy, adding that the value of Australian mineral and energy exports was currently some five times that of agricultural exports.

“Also, Australia is still a highly prospective country; just look at recent finds like Sandfire Resources’ Degrussa, Rex Minerals’ Hillside and Regis Resources’ Garden Well.”

Close said there were several factors in Australia working against mineral explorers and developers and added that these had become more pronounced in the last few years, prompting the exodus overseas.

“The minerals resource rent tax (MRRT) debacle unsettled much of the industry, as it highlighted the fact that the goal posts could change at any time,” she said.

“In its present form the MRRT is restricted to the larger iron-ore and coal producers. However, late last year the Australian Greens attempted to have it extended to uranium and, on the basis of incorrect data, tried to include gold as well.”

Other taxation concerns included the introduction of a carbon tax, which the federal government had initially promised not to introduce, as well as recent uncertainty regarding the diesel fuel rebate.

Furthermore, there was also the ongoing question regarding land access, said Close.

“If the government wants the boom to continue and the economy to be underpinned, it needs to act now. A good starting point would be to make exploration in Australia more attractive, especially for the small to medium-sized, locally owned companies.”

She said there were a number of ways in which exploration could be encouraged, to redress the current imbalance and boost local activity.

“It’s time to revisit some of the obvious incentives for exploration in Australia – including the old issue of exploration tax credits,” Close said.