WESTERN Australia rocketed up global rankings to secure the world’s top resources investment destination for 2013, nudging out the US state of Nevada for the number one spot.WA burst into the top-ten overall rankings from 15th in 2012, despite the slowdown in mining investment. All ranked jurisdictions in 2013 were top ten in 2012, except for Canada’s Newfoundland and Labrador, and WA.
The Fraser Institute Survey of Mining Companies 2013 assessed how mineral endowments and public policy factors – such as taxation and regulatory uncertainty – affected exploration investment.
About 700 survey responses providing sufficient data to evaluate 112 jurisdictions around the world. WA ranked second in the world in the Best Practices Mineral Potential index and sixth in the Policy Perception index (PPI); the two categories combined created the overall Investment Attractiveness index category.
The PPI measured the overall policy attractiveness of the 112 jurisdictions in the survey. Policy factors examined included administrative uncertainty; environmental regulations; regulatory duplication; legal system and taxation regime; political stability; labour regulations; uncertainty concerning protected areas and disputed land claims; and labour and skills availability.
The Best Practices Mineral Potential Index rated a region’s attractiveness based on geology, independent of policy restrictions. Alaska ranked in first place, with WA and Nevada following closely in terms of pure mineral potential.
Total exploration budgets reported by the companies participating in the mining survey were US$4.6 billion in 2012 and US$3.4 billion in 2013. WA Mines and Petroleum minister Bill Marmion said the survey results were very pleasing.
“These positive results reinforce that WA has what it takes to be globally competitive, but we know our work is far from done and it is important not to be complacent,” Mr Marmion said.
“Increasing competition for global capital means that without the right policies, companies will simply look elsewhere to develop resource projects.
“For this reason I am particularly pleased to see comments by an exploration company president identifying the state’s new Mining Rehabilitation Fund as ‘exemplary policy’. “The state also received encouraging comments in regard to managing native title approvals.
“WA has a dynamic, world class resources industry which underpins the state and national economies and as minister for Mines and Petroleum I intend to ensure it remains that way.”
Queensland and the Northern Territory were ranked 18th and 24th in the world respectively.
In terms of the PPI, South Australia and the Northern Territory ranked 11th and 13th respectively, while in the Investment Attractiveness Index the Northern Territory was ranked 17th followed by South Australia at 20th, and Queensland at 21st.
Yet these results were dampened by Australian Bureau of Statistics (ABS) data, which revealed a significant decline in the nation’s exploration spending during the December 2013 quarter.
WA was the largest contributor to the decline with a 19.3 per cent (or $73.4 million) drop in spending. Overall, Australia’s seasonally adjusted mineral exploration spending estimate fell by 12.5 per cent, or $75.8 million, to $533 million. Metres drilled fell 4.4 per cent, while drilling of new deposits fell 33.2 per cent; drilling of existing deposits rose 9.1 per cent.
The Association of Mining and Exploration Companies (AMEC) chief executive Simon Bennison responded to the ABS statistics with what he termed “extreme concern”, stating the implementation of the government’s Exploration Development Incentive (EDI) could not come soon enough for Australia’s mineral explorers.
Greenfield exploration spending fell 27.5 per cent (or $66.5 million) and metres drilled had dropped by 33 per cent (or nearly 2 million metres) compared to the previous quarter, according to AMEC.
“This decrease in greenfields exploration expenditure and metres drilled is extremely concerning as it takes on average seven years to convert a discovery into an operating mine, according to research undertaken by the University of Western Australia,” Mr Bennison said.
“In order to reverse this downward trend, AMEC has been advocating for policy changes that will make Australia a more desirable place to invest such as the implementation of the EDI, announced by the Federal Coalition in its Resources and Energy Policy paper.”
The EDI, to be introduced on 1 July, will allow investors to deduct a proportion of the eligible exploration expenditure against their personal taxable income and is designed to boost investor confidence in junior and mid-tier companies.
“With only 12 Initial Public Offerings for exploration companies in 2013 and only two since the start of 2014, the EDI will provide a much needed incentive for capital to flow into the sector,” Mr Bennison said.
“Investors are looking for positive signs through Federal Government policy changes such as the repeal of the carbon tax and mining tax; exploration deductibility; employee share schemes; and streamlining approvals processes.
“We must take action now to secure the mines of tomorrow and revenue streams for the benefit of all Australians.”
