The sustainability of Australia’s mining industry could be at risk because of mining companies’ shift away from greenfields exploration.
A report from the University of Western Australia has highlighted an increasing preference for exploratory drilling around existing resources, which typically has higher, short-term profitability.
The report says the shift is understandable given the economic difficulties companies are facing but it is concerning because the discovery of new large mines only came about through greenfields exploration.
Association of Mining and Exploration Companies chief executive Simon Bennison said the trend was worrying because it would ultimately affect the country’s resources inventory.
“It’s estimated that in the absence of significant new discoveries, based on current reserves and resources, about half of Australia’s non-bulk commodities mines would be exhausted between seven and 18 years,” he told the opening of the association’s convention this week.
Australian Bureau of Statistics data has also shown seasonally adjusted expenditure on exploration fell 4.9 per cent across the country in the June quarter – with Western Australia’s expenditure dipping 1.9 per cent.
Mr Bennison said the decline in minerals exploration had been masked by higher than average commodity prices and Australia had failed to recognise the depressed activity.
“Action needs to be taken now to ensure the continued sustainability of the industry, recognising that Australia is in competition with a growing number of jurisdictions globally that encourage mineral exploration,” Mr Bennison said.
Addressing the AMEC convention, Prime Minister Julia Gillard pointed to national capital expenditure figures that were expected to reach $119 billion by the end of this financial year as an indication of the industry’s strength.
Ms Gillard also drew on the ABS trend estimate data, which she said showed a “promising” 3.1 per cent increase in exploration expenditure.
But the main thrust of her presentation was to convince mining executives her government’s national education policy would help the industry by providing a larger pool of skilled workers.
State mines and petroleum minister Norman Moore said the WA government’s Exploration Incentive Scheme had now been allocated $138 million to 2016 following an additional $5 million worth of new grants announced this week.
Mr Moore said similar grants had enabled discoveries such as Sirius Resources’ Nova nickel resource and were fundamental in identifying future resources.
