Mining sector advocates are labelling Treasurer Jim Chalmers’ Federal Budget as a missed opportunity for the sector, with key recommendations and certain issues raised overlooked by the Australian Government.
A major issue for the sector is the government’s decision in the Budget to not extend the Junior Mineral Exploration Incentive (JMEI) scheme.
The Association of Mining and Exploration Companies (AMEC) has been calling on the federal government to extend the incentive program — which encourages investment in greenfields mineral explorers — after it reached its conclusion.
For the program to continue, a new funding commitment will need to be made during the imminent election campaign, industry advocates say. For every dollar allocated to the JMEI, more than $2 was spent on exploration, and more than $6 was raised in capital markets.
AMEC Chief Executive Warren Pearce says after eight years of the program, AMEC has been working with the government to evolve the incentive to be more impactful. Yet this and other support for exploration companies appears to have been overlooked in the Budget.
“We are expecting that both major parties will address measures in the upcoming election to support the exploration sector in Australia, because without exploration you can’t find the mines of the future,” Pearce says.
“The JMEI is a proven program that supports junior exploration companies and is a substantial contributor to Australia’s economy and government revenue.
“Exploration needs support, and we need to see strong commitments from the major parties during this election campaign. You can’t have a mining boom or downstream processing, if you don’t make the discoveries in the first place.”
BDO’s Global Head of Natural Resources and Energy Sherif Andrawes agrees, saying the decision to not extend the JMEI “is a missed opportunity for an industry that plays a critical role in Australia’s economic future”.
“Despite a compelling economic impact report from BDO and the Association of Mining and Exploration Companies, the government has opted against extending the initiative, marking a missed opportunity for an industry vital to Australia’s economic future,” Andrawes adds.
“The omission of the JMEI from the Federal Budget is a setback for the mining and exploration sector. The program has proven to be highly effective in encouraging investment in junior exploration companies, which are the backbone of our mining sector.”
According to BDO’s Economic Impact Assessment Report released last year, in association with AMEC, the JMEI facilitated over $400 million in exploration activities, generated $1.2 billion in capital raising, and contributed $769 million to Australia’s GDP.
RSM Australia’s National Resources, Mining & Energy Leader, Craig Amos, concurs, adding that while the JMEI decision is a missed opportunity the Budget provided no surprises for the resources, mining, and energy sector.
The broader industry is largely expected to wait until federal election campaigns kick-off to understand policy direction on a range of issues including critical minerals, transmission infrastructure, uranium, green hydrogen and domestic gas, Amos says.
According to Amos, the Budget reinforces the current Australian Government’s long position on green hydrogen and renewable energy with a range of production incentives affirmed.
“However, given the gravity of looming domestic gas shortages, there was not a great deal of new funding for domestic gas security and infrastructure,” he adds.
“The recently announced ‘Rewiring the Nation’ program to modernise the electricity grid and further funding for regional transmission upgrades is welcomed, but the challenge ahead remains with AEMO’s latest integrated system plan indicating at least 10,000km of new transmission is needed by 2050 to support wind and solar capacity.
“The ability for transmission infrastructure to keep pace with remote renewable energy generation will continue to be a challenge.”
Meanwhile, the Chamber of Minerals and Energy of Western Australia (CMEWA) laments there are key recommendations from its own Pre-Budget Submission that were not addressed.
These include cutting Australia’s corporate tax rate to a more globally competitive 25%, increasing the fringe benefit tax concession for employer-sourced housing in remote areas, and committing to the repeal of recent IR reforms that have reduced the competitiveness and productivity of the Western Australian resources sector.
The chamber’s CEO Rebecca Tomkinson says there is still substantial work to be done to improve Australia’s investment attractiveness and ensure the resources sector remains well-positioned to continue supporting national prosperity into the future.
Tomkinson notes that easing the immediate cost of the living burden on struggling families is essential, but the best way to deliver long-term, sustainable cost of living relief that doesn’t push the Federal Budget into further deficit is by supporting industry growth.
“Successful businesses can pay their workers higher salaries. The Western Australian resources sector is a shining example, supporting 6% of all jobs in Australia and offering average earnings 57% higher than the national average,” Tomkinson says.
“The missing piece is fundamentals that give businesses the confidence to deploy their capital in Australia – including affordable and low-emission energy, efficient project assessments and stable and predictable workplace laws and environmental reforms.”
As part of the BDO report and AMEC’s continued advocacy, the association made five recommendations for ongoing funding, including increasing support to $200 million over a four-year period and making the JMEI a permanent initiative in the Commonwealth Budget.
Other recommendations include development of a merit-based allocation process, requirement for funding recipients to report impacts annually to the government, and increased awareness of the JMEI and encourage more companies to apply.
AMEC is a national association representing over 500 member companies from around Australia. Its members include explorers, emerging miners, producers, and a wide range of businesses and service providers within the industry. Mining.com.au is an associate member of AMEC.
CMEWA is an advocate agency for the resources sector in Western Australia. It is a member-funded, not-for-profit organisation that represents the views of its members and advocates on their behalf.
Write to Aaliyah Rogan at Mining.com.au
Images: CMEWA
