Australian explorers heed the warnings, step up the pace to make new discoveries
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Australia’s resources sector is now well and truly back in the hunt for the next big thing.
Data released from the ABS yesterday showed mineral exploration capex in the June quarter rose to $629.6m, a quarterly increase of $41.5m.
In trend terms, that marks a quarter-over-quarter gain of 5.2 per cent, and the total outlay was 16.5 per cent higher than the same time last year.
Total exploration investment also increased across each state and territory, after falling in the previous quarter.
The pickup comes off the back of what has been a “challenging environment” for minerals exploration, said Warren Pearce, CEO of the Association of Mining and Exploration Companies (AMEC).
AMEC was particularly encouraged by the level of greenfields expenditure in WA, which came in at $184.3m for the quarter — the second highest level on record.
Greenfields refers to mineral exploration in previously unexplored areas, as opposed to brownfields searches where geologists look for minerals in areas that are adjacent to existing mines or deposits.
“Australia needs greater greenfields mineral exploration, and the significant growth in greenfields mineral exploration expenditure right across the country reflects the returning strength of the exploration sector,” Pearce said.
Brownfields exploration investment came in at $35m in WA for Q2, followed by $19.9m in Queensland and $4.3m in Victoria.
In percentage terms, South Australia recorded the highest level of total exploration investment, with a gain of 55 per cent to $85m.
And this year’s strong rise in the gold price — which has climbed to a record-high in Aussie dollar terms — has spurred a renewed deployment of capital in pursuit of the precious metal.
In fact, investment related to gold exploration in Q2 totalled $964m — also a new record high.
In response to the latest data, the Minerals Council of Australia (MCA) CEO Tania Constable said stable government policy — at both the state and federal level — was now of critical importance.
The MCA applauded a recent inquiry announced by the Productivity Commission into resources sector regulation, which it called “a welcome first step” in ensuring policymakers foster continued support for mining investment.
A key focus of the inquiry will be how to streamline approval processes for job-generating exploration projects.
“This exploration investment is creating and supporting jobs throughout the country, especially in regional Australia,” Constable said.
All up, the ABS data showed that Australian resources and energy companies deployed around $3.5 billion of capital on exploration projects during the 2018/19 financial year.
“With the right policy settings, the development of Australia’s national resources can continue to drive new discoveries, which will contribute towards today’s high standard of living, employment and building regional communities,” said Tom Reid, head of policy at AMMA Australian Resources and Energy Group.