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South Australia stands at crossroads

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For a number of decades, other than Olympic Dam, the only serious mining projects in South Australia were the Beverley uranium mine and the Challenger Gold mine.

However, the Prominent Hill copper and gold discovery by Minotaur Resources in 2001 had a dramatic effect on the resources industry in South Australia: it gave the industry new hope.

The registration of an unprecedented number of exploration tenements has followed.

There are 44 companies exploring in South Australia with 26 looking for minerals, five geothermal and the balance oil and gas.

Exploration is presently dominated by uranium [see page 38 for more detail].

The state is enjoying record levels of investment in exploration, too. Since Prominent Hill there have been further discoveries the most noteworthy of which are Carrapateena by RMG Services (copper) and Jacinth and Ambrosia by Iluka Resources (heavy mineral sands).

A number of other projects are either progressing or likely to come to fruition during the next five years. These include BHP Billiton’s Olympic Dam expansion, Australian Zircon’s Mindarie (heavy mineral sands), Southern Cross Resources Honeymoon (uranium), Terramin’s Angas (zinc) and Hillgrove’s Kanmantoo (copper).

The state government has injected funds into the exploration effort via a drilling subsidy and by making a financial contribution to a number of associated initiatives designed to promote exploration.

Total government investment over five years is $22.5m.

We have also seen the state Labor government publicly support uranium mining and call on the federal Labor Party to abandon its “no new uranium mines” policy.

The South Australian Chamber of Mines and Energy (SACOME) has supported the exploration effort through its participation in the groundbreaking Indigenous Land Use Agreement initiative that produced statewide template minerals exploration land access agreements, which are effectively an off-the-shelf product that saves explorers time and money.

These agreements cover the whole of the native title claim area, not just the tenements.

Although the developments in South Australian can fairly be described as a “boom time”, SACOME believes there are a number of issues that need resolution for the state to fully capitalise on the potential of the industry.

The Labor Party policy on uranium mining remains an issue and until resolved will generate a degree of uncertainty. Having said this, we think it likely that common sense will prevail and the policy will change to allow further uranium mines.

We also believe in the event the policy remains unchanged the state government will ignore it because the economic benefit to the state is so significant.

Industry access to Commonwealth land for exploration and mining is also an area of concern. There are two large areas of South Australia largely reserved for defence purposes.

These are the Woomera Prohibited Area (WPA) and Cultana Training Area (CTA) via Whyalla. The WPA comprises 13% of South Australia. The Commonwealth is considering expanding CTA, which is not a small area at present.

Access to the WPA and CTA is problematic for explorers and miners and subject to terms and conditions dictated by the Commonwealth. Both Woomera and Cultana are geologically highly prospective and contain Olympic Dam-style mineralisation.

With a declining national mineral inventory SACOME has called on the state and Commonwealth governments to do all in their power to facilitate exploration and mining on Commonwealth land.

SACOME has mounted a robust campaign urging the Commonwealth government to introduce flow through shares in the 2006-07 budget to further stimulate exploration in South Australia.

Australia now reports its lowest recorded share of global mineral exploration expenditure. While some growth in mineral exploration has occurred, Australia’s rate of exploration growth contrasts markedly with that of other regions.

Strong global competition for capital has seen Canada introduce and benefit from flow through shares to attract investment and significantly boost mineral exploration. Australia should emulate this scheme.

On another front, SACOME has worked collaboratively with the state government and other agencies to identify the skills needed to sustain the industry into the future.

The state government has committed more than $8m over the next four years to upgrade skills training in preparation for the resources boom. Strategies are being put in place that will assist 300 additional apprentices each year into the resources industry.

In addition, job readiness and pre-vocational programs for semi-skilled occupations will create at least a further 300 jobs. The government has agreed to establish an Upper Spencer Gulf Heavy Engineering and Mining Skills Centre. SACOME will become involved in the management of the centre.

SACOME is also working to ensure there are job opportunities and career pathways for Aboriginal people.

SACOME has expressed concern to government at the scant attention given to the forward planning necessary to support the resources industry. Most promising mining and oil and gas operations are in remote parts of South Australia with no access to power, water, roads, rail or ports. SACOME observes that not every miner is a global mining house with the capacity to pay for required infrastructure.

We are in danger of not taking advantage of commercially economic resource discoveries because of the often very significant costs involved in establishing and operating a mine and getting the product to market. These issues are not beyond resolution.

* Phillip Sutherland is chief executive of the South Australian Chamber of Mines and Energy.

This article appears in the May 2006 issue of .

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