Australia’s junior mining companies could be on the brink of extinction unless the federal government changes tack according to an international report on mining released at the beginning of March.
Grant Thornton’s International Mining Report 2013 surveyed mining executives in Australia, Canada, South Africa and the UK and found that 53% of small mining companies reported cash balances of less than US$2 million.
Simon Gray, National Head of Energy and Resources at Grant Thornton Australia, said over-regulation of the industry was strangling junior miners.
“Forty-two percent of executives responding to the survey cited increased government involvement and/or regulation as a constraint on growth, and another 36% rated permitting/licensing procedures as a constraint. A majority of miners in Australia (58%) rated increased government involvement and/or regulation as a constraint on growth, the highest percentage among countries surveyed.”
“It is such a key issue here in Australia. The government is doing little to support exploration companies, and it doesn’t really have the interest of junior miners on its agenda,” says Gray.
The report claims increased regulation has driven project approval times from months to years.
The report also found that increased regulation and the impost of new taxes have placed more demands on executives to prove the viability of projects, and have dampened the enthusiasm of international investors in the Australian mining sector.
“From an industry perspective, the only key changes government has made in recent times have been to unexpectedly add new taxes.”
Gray urged the government to increase incentives that would encourage big and small mining companies to invest more in exploration.
“Governments should consider increasing incentives to encourage exploration to ensure that the industry continues to progress, and that the mines of the future are identified,” argues Gray. “A prolonged period of reduced exploration could set back future discoveries significantly. This impacts employment and the viability of the industry.”
Gray urged the government to increase incentives that would encourage big and small mining companies to invest more in exploration.
“If you’re looking to the future, you can’t find the next mine unless you do exploration. So governments looking to increase revenues from mining companies need to make sure that those mines are going to continue to be found and developed.”
“A prolonged period of reduced exploration could set back future discoveries significantly. This impacts employment and the viability of the industry.”
84% of Australian mining executives surveyed agreed with Gray calling for the government to do more to support the exploration sector. Increasing exploration grants and providing incentives to encourage investment in juniors were two of the highlighted recommendations.
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