Australian Prime Minister Anthony Albanese and Treasurer Jim Chalmers announced $475 million in capital gains tax (CGT) concessions on 18 June, a move the Association of Mining and Exploration Companies (AMEC) describes as an “extremely disappointing result for mineral exploration”.
In offering $475 million in tax concessions to small businesses, start-ups, and testamentary trusts, AMEC says that the concessions will “no doubt reduce funding” for critical minerals exploration.
Exploration expenditure for critical minerals has fallen by more than 30% over the past year, despite strong demand.
AMEC states exploration companies should have been included in the carve-outs, because they share “many parallels with start-ups”.
AMEC Chief Executive Officer Warren Pearce describes the federal government’s announcement as a “kick in the guts for the entire mineral exploration industry and those who invest in it”.
“The International Energy Agency says the world needs around 50 new lithium mines, 60 new nickel mines, and 17 new cobalt mines to meet carbon emissions goals by 2030,” Pearce says.
“Excluding an industry that finds the mines of the future from carve-outs will hurt future discoveries and reduce productivity for Australia’s most important economic driver.
“To include start-ups in the carve-outs but ignore exploration is quite frankly ridiculous, given we are Australia’s original start-up and develop projects in the exact same way.”
The government’s announcement noted an increase to existing small business 50% active asset CGT concessions from $2 million to $10 million.
Investors engaging with junior exploration companies will be subject to the removal of the current 50% CGT discount, replaced by inflation-adjusted indexation and 30% minimum tax rate on capital gains, beginning 1 July 2027.
“It’s hard to understand why the advantage will be given to wealthy venture capitalists and angel investors in tech, but not Mum and Dad retail investors in mineral exploration,” Pearce adds.
“This is an own goal of epic proportions for the Australian Government, given its ambitious critical minerals agenda.
“Clearly, mineral exploration is collateral damage from the proposed changes to the CGT. This will result in fewer discoveries, fewer mines, and will impact Australia’s critical minerals agenda, green energy transition, and sovereign capability.
“AMEC urges the government to consider the unintended consequences the CGT changes will have on mineral exploration.”
As reported by Mining.com.au, AMEC presented to the Senate Economics Legislation Committee earlier this week as part of the inquiry into the tax reform package.
In the 2026–27 Commonwealth Budget, the Australian Government proposed to remove the current 50% CGT discount that was first introduced in 1999. The discount allows taxpayers to reduce their taxable capital gain by half rather than adjusting for inflation.
The proposal also includes the reintroduction of CGT base indexation and a minimum tax rate of 30%, which will apply to real capital gains from 1 July 2027.
Write to Maddison Elliott at Mining.com.au
Images: AMEC
