AUSTRALIA continues to benefit from investments made by the mining sector over the last ten years,” according to Association of Mining and Exploration Companies (AMEC) CEO Simon Bennison. This was supported by recent government statistics that have revised up Australia’s resources and energy export earnings by 32% from the previous forecast.
The Office of the Chief Economist’s March 2017 Resource and Energy Quarterly indicates that the nation’s resources and energy export earnings are forecast to reach an all-time high of $215 billion in 2016-17 and 2017-18, with 85% of these earnings from the minerals sector.
Simon Bennison said, “Higher iron ore and metallurgical coal prices have been a key driver of this revision. Iron ore prices reached an unexpected 30-month high of US$89 a tonne in mid-February 2017. Australian iron ore exports are forecast to have increased by 50% in 2016-17, to reach a three-year high of A$72 billion.
“Because of the large investment to boost production capacity in the past decade, recent extensive cost-cutting and the high quality of Australia’s resources, export earnings from mining are forecast to remain high.
“The growth in global demand for ‘non-energy resource commodities’ such as iron ore, gold, aluminium, copper, nickel and zinc is projected to be slower than in the previous five years, with the Office of the Chief Economist predicting that, while remaining significant, the rate of Chinese urbanisation will taper in the next five years.”
“However, India is predicted to expand its steel production and overtake Japan as the world’s second biggest steel producer– so with the correct public policy settings, Australia could position itself to take advantage of these opportunities,” he said.
AMEC’s CEO said the organisation maintained its view that the Federal Government and state governments must ensure that Australia, and all states, remained attractive to investment to overcome any potential slowdown in the growth of demand.
“The Federal Government’s Exploration Development Incentive (EDI) program has stimulated investment in eligible Australian junior mineral exploration companies, making it more attractive for investors to decide to support the next generation of mines.
“AMEC calls on the national government to continue its support of the EDI, which is currently under review, Simon Bennison said. “The EDI has provided eligible shareholders with a tax offset equivalent to the company tax rate.
“The Resources and Energy Quarterly does not quantify the number of barriers, including land access, increasing red tape and rising costs, that Australian mining and mineral exploration companies face.”
He said the proposed introduction of cost recovery for the Australian Securities Investment Commission would undermine Australia’s attractiveness to mining investment.
“AMEC continues to advocate for ongoing funding for exploration incentive schemes and co-funded drilling programs to encourage innovative mineral exploration in Australia and generate significant economic returns for the economy.
“Australia is currently benefiting from the investment that mining companies have made during the construction phase in the last decade. This investment by the mining sector has created jobs, royalties and revenue for Australia. Governments must focus on encouraging investment in the mines of tomorrow so the community can continue to benefit from mining,” Simon Bennison added.