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A lack of Federal Government support is inhibiting growth among junior miners and threatening the future viability of the resources industry in Australia, according to a new report released by Grant Thornton today.
The Grant Thornton International Mining Report 2013 surveyed mining executives in Australia, Canada, South Africa and the UK, revealing a range of factors currently influencing the sector internationally. One key finding was the impact of Federal Government intervention on junior miners and explorers in Australia.
Grant Thornton Australia’s National Head of Energy and Resources, Simon Gray said the Australian Government needed to be more mindful of its influence on the junior mining sector.
“Federal Government intervention is such a key issue here in Australia. The current Government is doing little to support exploration companies, and it doesn’t really have the interests of junior miners on its agenda.
“This is a concern, as a prolonged period of reduced exploration has the potential to set back future discoveries, impacting the viability of the industry.
“The Australian Government must consider increasing incentives to encourage exploration, ensuring the industry continues to progress and the mines of the future are identified,” Simon Gray said.
The report found that 58% of Australian mining executives rate increased government involvement and/or regulation as a major constraint to growth, the highest of all countries surveyed. In addition, only 47% of Australian respondents believe public policy in Australia supports exploration, compared to 73% overall, revealing a distinct disadvantage for explorers in Australia.
“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,” Simon Gray said.
Not surprisingly, 84% of Australian mining executives believe the government should be doing more to support the exploration sector and junior miners, such as increasing grants for exploration and providing incentives to encourage investment in juniors. Complex and lengthy licensing procedures continue to be a major constraint on growth in the sector, as confirmed by a Grant Thornton Australia survey of junior miners undertaken in mid-2012.
Conditions are not entirely negative, with Australian mining executives remaining optimistic about prices. Approximately half of those surveyed expect the price of their key commodity (of their flagship asset) to increase in the coming year and two thirds are planning to increase exploration expenditure.
“I don’t think the industry has reached its peak potential… there are still vast areas of the world that are virtually unexplored. There is a lot of opportunity out there,” Mr Gray said.
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Helina Lilley
National Public Relations Manager
T +61 2 8297 2421
M 0437 725 520
E helina.lilley@au.gt.com
About the Grant Thornton International Mining Report
The Grant Thornton International Mining Report was released in March 2013. It is based on a survey of 389 mining executives in Australia, Canada, South Africa and the United Kingdom. The survey was conducted by Experian on behalf of Grant Thornton International in late 2012 and early 2013. Issues investigated include:
Grant Thornton Australia conducted its first survey of junior mining and exploration (JUMEX) companies in 2009, and again in 2011 and 2012. The JUMEX Industry Survey provides a comprehensive industry snapshot, direct from the industry’s leaders, based on experience, business knowledge and current market conditions. Grant Thornton recently released the JUMEX Survey for 2012. The issues examined in this report included commodity price and employment forecasts, funding requirements and sources, key business constraints and the impact of government policy and regulatory issues.
About Grant Thornton Australia Limited
Grant Thornton’s team of Energy & Resources specialists deliver business advice and accounting solutions to clients worldwide. Clients include a full range of business types and sizes - from newly incorporated exploration entities, to major producers and suppliers.
Grant Thornton offers a combination of global Energy & Resources knowledge and local expertise. With affiliated member firms in over 100 countries, more than 500 offices worldwide and 30,000 employees, Grant Thornton has the global footprint to deliver services wherever our clients need us and an ongoing commitment to independent industry insight.