The Association of Mining and Exploration Companies is advocating for the Junior Minerals Exploration Incentive to continue beyond 2024, pointing to a report by BDO showing the hundreds of millions of dollars in value it can generate.
The Junior Minerals Exploration Incentive Economic Impact Assessment report commissioned by AMEC shows that between 2017 and 2024, $182.2 million in JMEI tax credits delivered a net-positive impact on the Australian economy of $769 million in GDP value.
Under the JMEI program, junior exploration companies can generate tax credits by choosing to give up a portion of their losses from greenfields exploration expenditure.
These tax credits can then be distributed to investors who purchase newly issued shares in that eligible entity during a certain period.
The JMEI is estimated to have generated an additional $404 million worth of greenfield exploration, which was enabled by an estimated $1.2 billion in capital raising by junior explorers.
This activity comes at a time when the sector needs to reverse its declining exploration trend to help meet future demand.
According to S&P Global, global early stage exploration hit a record low of just 22% of total capital spent in 2024.
BDO’s report says the JMEI tax credits already paid out are expected to lead to production of $5.9 billion in minerals around Australia in present value terms.
This in turn would generate $391 million in additional tax revenue for the Australian Government.
AMEC Chief Executive Officer Warren Pearce says the JMEI program provides significant stimulus for the exploration sector and is a substantial contributor to Australia’s economy and government revenue.
“Every dollar allocated results in more than $2 spent on exploration activity and more than $6 is raised on capital markets by companies,” he says.
“This report identifies that the JMEI is doing exactly what it set out to do.”
AMEC wants to see the JMEI program extended for a further four years through to 2028-29 and at a minimum increase the funding to $200 million.
The peak industry body is also calling for the JMEI to be made a permanent initiative in the Commonwealth budget.
BDO Economics Partner Anders Magnusson says there is a clear opportunity for the JMEI to do more.
“The positive historical effects of the JMEI reported here are indicative of the type of effects that can be expected in the future if the program is extended, and further positive effects can be expected from expanding the program,” he says.
“By increasing the total amount of credits available and allowing them to be sued over a longer period, more businesses could benefit from the program.”
However, many businesses cited a lack of knowledge about the program, according to Magnusson.
“By boosting visibility and understanding of the JMEI, more companies could be encouraged to participate, thereby increasing overall exploration activity and investment in the sector,” he says.
Write to Angela East at Mining.com.au
Images: iStock
