COMMODITY CAPERS: As the country rapidly edges towards the next Federal election, the Association of Mining and Exploration Companies (AMEC) AMEC has compiled a wish list for whichever side of politics holds the reigns.

AMEC has basically provided a manifesto of what the next government should think about doing for the mining industry, so it can address the challenges it meets through increased mineral exploration activity (both greenfield and brownfield) and the cost of doing business in Australia.

“We are calling on the current Government and the Labor Party to commit to the several proactive and achievable recommendations contained in the Platform which are aimed at increasing exploration activity and reducing the cost of doing business,” AMEC chief executive officer Warren Pearce said.

The long-term health of the Australian mining industry has long been overlooked by successive governments who have failed to realise the difficulties faced by those companies operating on the smaller end of the spectrum.

The big end of mining town is acknowledged for its survival as it increases its overall mineral production, however, this is primarily based on greater exploitation of known reserves not new discoveries.

Although lobby groups such as AMEC continue to rattle the exploration chain, the truth is that Australia’s rate of mineral discovery is falling despite the fact there remains incredible prospects for further mineral discovery across the continent.

The equation is simple enough, without new discovery, Australia’s current production levels will begin to decrease, as existing mines exhaust their reserves and close.

New mines are needed to sustain current production levels just as new mine developments are needed to deliver increased employment and an economic dividend for the country.

“We need to be taking action now to increase greenfield minerals exploration for the benefit of future generations of Australians, and critical Government revenue streams,” Pearce continued.

“Research has shown that it takes on average around 13 years to go from discovery to production.

The big miners mine, but they don’t explore, basically exploration is outsourced to the juniors who punch way above their respective weight divisions.

Instead exploration investment by larger companies is usually spent on identifying developments within an existing reserve, leaving small companies to undertake the exploration and then swop in to purchase such an asset that suits its infrastructure needs when a resource is discovered or proven.

In this way, the existing market serves up new opportunities to large established companies, who consequently do not need to take the risk of greenfields exploration to reap the reward.

However, even this is now being challenged, with very few promising acquisitions available.

The high-risks involved in greenfields exploration makes it unattractive for private investment, which is understandable given roughly only 1 in 100 greenfields exploration projects ends up being a discovery that results in a working mine.

Larger Australian mining companies tend to operate established long-life projects making investment in ‘greenfields’ exploration extremely rare.

Australia’s level of discovery is dropping, and consequently its ability to develop new mines has significantly reduced.

AMEC hopes to see this trend dramatically changed.

“We will continue to work closely with the Government and the Opposition to discuss what needs be done for Australia to grow its mining and mineral exploration industry,” Pearce said.

“This recognises that a successful, sustainable and robust mining and mineral exploration sector creates jobs and economic and social dividends for the community and should be a priority for our political leaders.”

To read AMEC’s Federal Policy Platform FOLLOW THIS LINK