The lack of equity finance continues to be the most significant business constraint for mineral exploration and mining companies, and this is having a significant impact on exploration expenditure and capital works, according to Association of Mining and Exploration Companies (AMEC) CEO Simon Bennison.
“However there are some green shoots in what has been an extremely tough time for the sector.”
He said that the Grant Thornton 2015 JUMEX survey launched this week showed some positive sentiment returning to the market. “Respondents were cautiously optimistic of improvements in commodity prices with 69% expecting an increase in the next 12 months – with the exception of a few commodities.
“The survey also reveals a positive trend in recent years for companies to refocus on Australia for future project acquisitions.
“Australia is also proving to be relatively attractive for investment with 74% of respondents having received an approach or conducted a transaction with overseas investors.
“This needs to translate into increased investment in mineral exploration which is at its lowest levels in the past 10 years. The rate of discovery is not keeping pace with the rate of depletion of existing mines which is extremely worrying for the future of the industry and Government revenue streams,” Simon Bennison said.
“Lower exploration rates have reduced the cost per metre drilled which is good news for companies that are actively exploring.
“Reflecting just how hard 2015 has been is the lack of Initial Public Offerings on the ASX for mineral exploration and mining companies. There has been just one this year but there are a few upcoming ASX floats.”
He said AMEC continued to work with industry and all levels of Government to reduce the cost of doing business and encourage investment in Australian mineral exploration.
“Companies have been reducing their costs and Government needs to focus on doing the same. Cost recovery and unjustified increases cannot be simply passed on when there are more efficient and smarter ways of operating.
“Whilst there have been some positive outcomes, much more is needed to improve business conditions and encourage investment in the sector.
“The Exploration Development Incentive (EDI) is a significant achievement for the industry on the back of more than a decade of advocacy by AMEC. AMEC continues to drive change in the EDI legislation to deliver an even more effective outcome for industry.
“Shire rates have been a major issue in Western Australia where there have been increases of up to 800% in rates for one year. AMEC has now received a commitment from the Government that they will be undertaking a review of shire rates as well as looking to increase efficiency and transparency of Local Government.
“Duplications in approvals processes have also been a focus for AMEC. The Federal Government’s One-Stop Shop for Environmental Approvals must be implemented swiftly in order to realize the significant benefits for Government and industry.
“AMEC is also working with the State and Territory Government on their deregulation agenda to improve business conditions and encourage investment,” Simon Bennison added.
AMEC is the peak national industry representative body for mineral exploration and mining companies within Australia.