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Wednesday, 2 June 2010
Page: 5051

Dr JENSEN (9:36 AM) —Much of the attention surrounding the government resource super profits tax has been on the impacts of the big new tax on our large mining companies and also on the immediate future of the resource industry. The discussion about the tax has been very Rio, BHP and FMC centric and, as far as the tax is concerned, this is rightly so, as they will stand the most to lose from their investments.

There is also a wider issue, though, that the government and the mining industry have yet to identify or address. The issue is the lack of world-class mining discoveries in Australia over the past two decades caused by the soaring costs of exploration. According to those who were involved in initially opening up these great mining assets, long gone are the days when a geologist could simply throw a swag into the back of his four-wheel-drive and trek into the great unknown looking for their next big project. This rising cost of exploration is directly attributed to the level of government regulation implemented at both state and federal levels over the last two decades. While Australian companies can for the moment use existing tier 1 projects to gain a windfall from existing international economic momentum, the question still needs to be asked: why is government regulation impeding exploration and the discovery of new tier 1 projects?

A 2009 Geoscience report said the lack of new discoveries is more than compensated for by the discovery of additional resources. But the same report also notes the lack of world-class discoveries in Australia over the last two decades. The report notes that our inventory has been sustained largely through additional resources in known mineral fields, as I mentioned previously. It does not say, however, how long we can maintain the mining industry with relatively high levels of production from existing projects and no new major tenement discoveries. Australian minerals projects are being increasingly ranked by multinational companies against investment returns from other projects worldwide. This has resulted in a number of recent mine closures in Australia.

The new mining tax will hurt all Australians. While Australia’s resources stocks are healthy overall, the country’s position as a premier mineral producer is dependent on continuing investment in exploration to locate high-quality resources and to upgrade known deposits to make them competitive on the world market. We need to investigate all of the possible causes in the rise of exploration and discovery costs. If exploration is the backbone of the mining industry, we need to ensure that it is still a relatively easy and cheap process to discover new mineral deposits and ensure Australia remains a competitive mining nation.