Mining companies are urging the state government not to squander the current resources boom, as mineral exploration expenditure in WA hits a 20-year high.
Mining companies have expressed concern at perceived state government complacency over the long-term sustainability of the local mining industry.
They claim stringent regulations and growing approvals costs and delays could deter further mineral exploration in Western Australia.
While rising commodity prices have fuelled a recovery in exploration expenditure in WA following years of decline, reaching a 20-year high of $839 million in the 2006-07 financial year, miners have appealed to the government not to take the current resources boom for granted.
Unresolved native title claims, the flow-through shares issue, and the government’s acquisition of pastoral leases for possible conservation status, are seen by some as deterrents to exploration activity.
The Association of Mining and Exploration Companies has called on the government to clarify the details of its plans for the pastoral leases and whether it will set aside the land as conservation estates to A-class standard.
The government has indicated that conservation parks do allow for minerals exploration and production, and that advanced resource development projects on several of the former pastoral leases will be reserved.
Concerns also continue over the backlog of mining tenement applications, which peaked at 18,700 in February.
The government recently committed $3.5 million to accelerate the approvals process.
While WA leads the nation in exploration expenditure, making up almost 49 per cent of the national exploration expenditure total, the state has been eclipsed by South Australia in year-on-year growth, with SA recording a 77 per cent growth in expenditure.
AMEC policy and public affairs manager Ian Loftus said that, while WA’s exploration expenditure in dollar terms was increasing, the state’s proportion of total Australian expenditure was well below traditional levels.
In the 2004-05 financial year, WA’s proportion of the national total reached almost 59 per cent, but dropped to below 50 per cent during the past financial year.
Mr Loftus said South Australia, on the other hand, was rapidly advancing, increasing its national expenditure from 10 per cent to 18 per cent of the national total in just two years.
He said incentive programs by the SA government for the mining industry, led by its dedicated exploration initiatives, including the Plan for Accelerating Exploration (PACE) program to encourage greenfields exploration, were starting to bear fruit.
“The SA government has a proactive, open door policy. They’re keen to keep economic growth happening,” Mr Loftus said.
“The [WA] government doesn’t see the need to provide other incentives…it’s quite happy with the way things are going.”
Heron Resources Ltd managing director Mathew Longworth told WA Business News the hurdles mining companies had to jump through were being lifted, making it difficult for programs to be completed on time and within budget.
The nickel explorer spent $6 million on exploration during the past financial year, and will almost double its exploration expenditure this financial year to almost $15 million.
“The impact on Heron is in additional time and money, rather than a no-go for projects,” Mr Longworth said.
He said that, while the hurdles for mining companies undertaking exploration programs in WA had grown, other states were reaping the benefits of their governments’ incentive programs through increased investment in mining.
“WA government policy has a lot of catching up to do. Other states are attracting investment by putting considerable amounts of money into programs, cutting red tape and added facilitation,” Mr Longworth said.
“Because we’ve had a strong mining industry…there hasn’t been the need. Now we’re particularly lagging behind,”
Specifically, Mr Longworth said he would like to see the approvals process streamlined, removing the overlap of different government departments.
He repeated the calls for a state minister devoted entirely to mining, removing the responsibility for mining industry issues from current resources minister, Fran Logan, who currently tends to the portfolios of energy, resources, industry and enterprise.
“A minister for mines is very important, considering the level of wealth generated [for the government] from the mining industry,” Mr Longworth said.
Subiaco-based Golden State Resources Ltd exploration director, John Hasleby, believes WA has gone backwards in the past 10 years because of tighter regulation and costly approval delays.
Most of Golden State’s $17 million exploration expenditure for 2006-07 was spent on programs in the US, the home of its natural gas and uranium projects.
Only $500,000 was spent on exploration in WA, targeted at its eastern goldfields gold tenements.
Mr Hasleby said the company would spend more in the US and roughly about the same in WA this year.
He said much of the time it was the lack of skilled government workers, often because staff were poached by the private sector, rather than the regulation itself that posed the problem.
Mr Hasleby said that, despite the environmental regulation in the US being similar to that of WA, the turnaround time in the US was a lot quicker, making it less likely to lead to cost and time blow-outs.
“If they fix the process to the point where tenements are processed quickly then ground will be turned over more quickly and there’ll be more opportunities for more companies to operate in the goldfields,” he told WA Business News.
Mr Hasleby said policy issues such as native title and anthropological clearances were less of a problem in the US, a fact that has influenced where Golden State’s exploration dollars have landed.
“Utah, like WA, gets most income from [mining] royalties,” he said.
“They admit that and encourage the industry; WA doesn’t admit that, they seem to think the money comes from nowhere and it will come to them no matter what.”
“The [WA] government forgets that it’s all very well to have mines producing royalties, but those mines had to be discovered.”
Announcing the $3.5 million in approvals process funding in late August, Mr Logan said reducing the backlog would encourage more exploration activity in the WA.
The funding would allow the Department of Industry and Resources to employ people on a contract basis to process applications.
Other government initiatives designed to streamline the approvals process have included amendments to the Mining Act, including mechanisms to revert from unwanted mining lease applications to new exploration titles, and the use of Regional Standard Heritage Agreements.
The latter was developed between industry and native title groups to address Aboriginal heritage activities, and was designed to reduce objections by native title parties and speed up the processing of exploratory applications.
Mr Logan said the backlog had now started to decline.
A record number of tenement applications were granted last financial year, with a total of 2,780 approvals granted, according to Mr Logan, compared with the previous five-yearly average of 1,570 grants.
According to the latest Australian Bureau of Statistics figures, gold exploration received the highest level of expenditure in WA in 2006-07 at $276 million, up 15 per cent on the previous year.
Iron ore exploration is rapidly gaining pace, experiencing the highest growth of all minerals, up 74 per cent to $272.1 million.
Petroleum exploration in WA increased 150 per cent to $1,481 million, the biggest in the country.
WA makes up almost 67 per cent of the nation’s petroleum expenditure, up 47 per cent the previous year.
