Exploration industry observers are feeling the chill of a cooling economic climate, after the release of a new report from the Australian Bureau of Statistics.
According the Mineral and Petroleum Exploration, Australia, Dec 2013 report shows the alarming downturn in operating expenditure and metres drilled in mineral exploration.
Although the downward trend has continued steadily since 2011, the estimate for the December quarter saw total mineral exploration expenditure down 9.8 per cent, or down $58 million to $536.3 million, with the largest contributor being Western Australia down 12 per cent.
Seasonally adjusted this equated to expenditure down 12.5 per cent, down 19.3 per cent in WA.
Exploration on areas of new deposits fell 27.5 per cent or $66.5 million, and on existing deposits the expenditure fell 6.2 per cent or $24.5 million.
The largest monetary decrease for any mineral was for iron ore, down 17.1 per cent or $38 million, while nickel fell 49.2 per cent or $18.6 million.
In terms of metres drilled the trend estimate fell 2.7 per cent for the December quarter, with the current estimate 22.6 per cent lower than the same time in 2012.
Greenfields drilling fell 33.2 per cent while brownfields drilling rose by 9.1 per cent.
The Association of Mining and Exploration Companies (AMEC) CEO Simon Bennison expressed industry concerns over the report.
"The latest figures from the Australian Bureau of Statistics for Mineral and Petroleum Exploration Australia - December quarter 2013 are of extreme concern to the exploration and mining sector.”
“The figures show a significant decrease in total mineral exploration expenditure.”
Mr Bennison expressed his support for the July 2014 introduction of government incentives for exploration.
“The implementation of the Government’s Exploration Development Incentive (EDI) can’t come soon enough for Australia’s mineral explorers,” he said.
“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.
“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 will allow investors to deduct a proportion of the eligible exploration expenditure against their personal taxable income.
“With only 12 Initial Public Offerings (IPOs) for exploration companies in 2013 and only 2 since the start of 2014, the EDI will provide a much needed incentive for capital to flow into the sector.”