DESPITE a downturn in iron ore prices towards the end of last year, the WA Government saw a 21 per cent increase in mining applications for the December quarter.
However, the WA Department of Mines and Petroleum also reported a drop in mineral prospecting and exploration applications; which, at 472, was nearly 200 less than the September quarter figure of 653.
The DMP quarterly report stated this was the lowest figure the department had seen since late 2009.
“This decreasing trend in mineral prospecting and exploration activity from record levels of exploration activity during the two years reflects uncertain global market conditions and the high costs of operating in WA,” the report stated.
According to Mines and Petroleum minister Norman Moore, it takes an average of 28 months to approve a mine in WA.
The department has less than 6000 applications left to process from the last quarter, which is less than one third of the 18,700 applications in February 2007; the department’s peak.
The Association of Mining and Exploration Companies chief executive Simon Bennison said that the decline in applications was impacted by junior explorers not having access to equity finance.
“It’s certainly impacted on the number of applications those companies would otherwise be making to the department,” he said.
Mr Bennison also believed the fall in exploration applications was reflected in mass production.
“There were only about 38 IPOs [initial public offerings] which is a very small number when looked at in comparison with previous years. I think that’s compounding the problem enormously as far as…people hanging on to cash and a lack of confidence in the junior resource sector.”
However, despite the downturn in applications, the market was staying strong, he said.
“I think it’s very clear at the moment that the Australian equities market is getting a fairly strong injection from those that are feeling that there’s more upside in the resources sector than previously projected by some of the commentators,” he said.
“As confidence grows and comes back into the marketplace we’ll see an increase in the IPOs. We’ll see an increase in applications to the department.”
He said AMEC was confident the market would pick up. “I think it’s going to slowly but surely turn the corner this year. Everyone recognises that it’s a pretty tight market out there at the moment and we are looking forward to seeing some of the base metal prices improve.”