Speech to the Association of Mining and Exploration Companies Convention
13 June 2018
Next year will mark the 160th anniversary of one of the first major Australian mineral finds. Back then, on 17 December 1859, a stockman noticed a wombat kicking up some strange, green-looking pebbles. He reported the sighting to his boss Walter Watson Hughes, a sea captain turned pastoralist.1
His find eventually became the Wallaroo copper mine and this mine, along with other discoveries of copper, helped save the then fledgling colony of South Australia.
Since then, pretty much every major mineral find in Australia has been found in the same way, although sans the wombats. In basic terms, most major mineral finds have come through the inspection of surface material or outcropping.
This outcropping only exists, however, over about 30% of Australia's landmass, and that means about 70% of Australia remains unexplored from a mineral perspective.
This is an exciting prospect for Australia and means that we remain in the era of Christopher Columbus from a discovery viewpoint. That is why the Australian Government is investing in more science for the resources sector.
The last 160 years of the Australian mining industry has been immensely successful. The mining sector is likely to become more important to the future of the world, not less. Mobile phones, solar panels and batteries all rely on an increasingly complex array of mineral inputs. All of this spells opportunity for the Australian mining sector.
We will not be able to attract more investment, especially for more uncertain prospects, without offering an attractive return commensurate with risk. The Australian Government understands that the successful mineral exploration initiatives must be able to make a profit from their investments.
These are the three themes I would like to focus on today: science, opportunity and profit. All three were on demonstration to me directly last week when I travelled to Ararat to inspect a new gold prospect being explored by Chris Cairns and Stavely Minerals.
Stavely is using the latest science (and infrared testing) to pinpoint an area of gold potential. Stavely has taken advantage of the former Exploration Development Incentive, and the new Junior Mineral Exploration Incentive.
And, their exploration for copper and gold is occurring in an environment where there is increased demand for both of these minerals. Indeed, Dr Ian MacFayden from the UNCOVER initiative predicts that the world will have to use as much copper in the next two decades as it ever has in history.2
Science - Exploring for the future
The sobering reality, however, is that we have not made a world-class mineral discovery in Australia for nearly two decades. Further, even when a discovery is made, it would most likely take seven to 15 years from discovering an economic resource to developing it into production.3
That means we could be three decades between major discoveries in Australia - a longer drought than the Fremantle Dockers - although Dockers did have the handicap of being coached by a current Nationals party parliamentarian for some years!
Australia needs to increase exploration now to secure a pipeline of projects for the future and remain competitive with other prospective nations. It is crucial that new greenfield Tier 1 deposits are the focus of our exploration efforts.
The government is looking at the potential for longer-term and game-changing policy actions to promote exploration activities and reforms that can enhance geological expertise to find new supplies.
We continue to invest heavily in Geoscience Australia, which pays dividends in the resources sector. This means explorers can continue to count on world-class geoscience information that provides understanding of available resources and lowers the risks of exploration.
We’ve seen Geoscience Australia recently release terrific data and subsurface geological maps from the seismic reflection survey across the South Nicholson Basin in the Barkly Tableland region.
This was made possible by the government’s $100 million Exploring for the Future program.
The survey is opening up new ground to the exploration industry and enhancing Australia’s reputation as an attractive destination for exploration investment.
Global major Anglo American has returned to the Australian exploration scene with a significant investment in an extensive block of exploration licences in a greenfield area south west of Mt Isa.
This decision was based on the mineral potential of the region, the world-class datasets being delivered through programs such as Exploring for the Future and a desire to be close to Australia’s innovation ecosystem for under-cover mineral exploration.
This is exactly the kind of activity we need to see more of: harnessing the power of world-class datasets to deliver on real mineral potential.
This morning, I released the first tranche of data from the world’s largest airborne electromagnetic survey, AusAEM.
Geoscience Australia is conducting this survey to help map potential resources buried under cover in the highly-prospective area between Tennant Creek and Mt Isa.
The initial AusAEM data shows preliminary results from the first year of the program, which covers an area of over one million square kilometres—an area larger than France.
The data will provide explorers with insights into the thickness of cover and areas with potential targets for further investigation.
If you haven’t done so already, you have an opportunity to view the AusAEM data at booth 35.
Knowing the immense value of their work, we’re building on our investment in Geoscience Australia.
In this year’s Budget, we’ve earmarked over $260 million for Geoscience Australia to develop better GPS technology and satellite imagery.
This will ensure accurate positioning and environmental monitoring. And it comes with many practical benefits for your industry, including:
- better geophysical surveys;
- increased productivity and profitability through more efficient transportation of ore;
- improved mining safety through vehicle and personnel tracking;
- better understanding of the impact of mine dewatering; and
- progress monitoring of mine rehabilitation.
Australia can be proud that we lead the world in geological science. It is an area that the Australian Government is passionate about, reflected in our continuing investment in our skills in this area, despite what have been challenging budget conditions.
Opportunity - critical minerals
That opportunity has been demonstrated recently with the development of a Memorandum of Understanding between Geoscience Australia and the United States Geological Survey.
During Prime Minister Turnbull’s visit to America, he and President Trump agreed to a critical minerals alliance to cooperate on ways to increase the production and availability of these minerals that are so important to modern technologies.
On my recent trip to the United States, I agreed with my counterpart, Secretary Zinke, the Secretary of the Interior, to develop a Memorandum of Understanding between Geoscience Australia and the United States Geological Survey to cooperate on the increased exploration and production of critical minerals.
Geoscience Australia's expertise in this area is widely respected and my understanding is that work on this MoU is progressing well.
Last month, the United States finalised a list of 35 critical minerals which it sees as strategically and economically important. Australia is in the top five of reserves for 13 of these, and is in the top five producers for 12 of them.
These resources include rare earths like neodymium, which is the component that helps your speakers sound clear in headphones or mobile phones.
A mobile phone is made up of 25 different minerals and metals.4 Australia produces 18 of these.5 A solar panel is made up of 16 minerals and metals; Australia produces 10 of them. And, of course, the burgeoning demand for batteries is creating opportunities to expand lithium production. Australia has already tripled lithium production in the past eight years and is the world's largest producer of lithium.
I commend the work that AMEC is doing to identify what we can do to attract investment in lithium, not just in the mining and early processing but also through the value chain as well.
I intend to catch up with AMEC today about what we can do to work together to meet this shared objective. It is an opportunity I am keen to promote and I also have spoken to the Western Australian government about their keen interest too.
One potential strategic approach that the Federal and State governments could take is to align infrastructure opportunities to take advantage of this potential. To that end, the Australian Government recently announced $3.5 billion towards roads of strategic importance. This program will build on the successful Northern Australia Roads Program.
I know the Western Australian Government is keen to work on road investments that can support the development of tech metals, including the Karratha to Tom Price, Tanami Road along with others. I would also invite AMEC to be involved in these discussions and support such strategic investments.
Profit - Junior Minerals Exploration Incentive
Such opportunities are on the table but no-one will come to the table unless they can make a profit. I am not shy of making the point that a world class resources industry must be a profitable one.
It is a risky business and a constant problem for risky ventures is that our tax system typically applies to risk asymmetrically.
If you win and make a find the taxman is there to take his share. If you lose your shirt, the taxman is an upside investment partner and is nowhere to be seen.
That is the rationale for programs like the Exploration Development Incentive and the new Junior Mineral Exploration Incentive. However, a theoretical rationale does not equate to practical success. We must have programs that demonstrably provide benefits.
The EDI program did not do that. As I said at last year's conference, I was happy to consider a redesigned scheme to replace the EDI.
I want to thank AMEC for their constructive input towards the development of the new Junior Minerals Exploration Incentive. This has made some key changes to the EDI which give it a greater chance of success.
First, the scheme no longer has a modulation factor that created a year or more delay between an application and confirmation of the actual benefit. The new scheme operates on a first-in, best-dressed basis.
Second, the tax benefits of the JMEI can be provided to new investors only providing a greater benefit to the marginal investor that may keep an exploration project going.
The first round of the JMEI has attracted $8 million of incentives to 25 mining companies, including nine from Western Australia. The residual benefits that were not taken up this year (admittedly in a shortened period due to legislative delays) will roll over to next year, so I encourage you to apply.
Woomera Prohibited Area
Before I conclude, I did want to highlight one specific issue in regard to the Woomera Prohibited Area.
The WPA is both an important strategic asset for Australia and a prospective area for the resources sector.
Last month, Defence Minister Marise Payne and I announced a review of the coexistence framework for the area.
The aim is to deliver a contemporary framework that balances the interests of all groups who use this valuable asset, be it national security, economic or native title interests.
At over 122,000 square kilometres, the Woomera Prohibited Area is about the size of England.
Geoscience Australia estimates the area and its surroundings contain around 62 per cent of Australia’s known copper resources and 78 per cent of our known uranium resources.
The review will help ensure certainty for domestic and foreign investors interested in the area.
Submissions to the review close on 25 June.
Success = benefits to Australia
If we can combine the science, opportunity and profit, there will be enormous benefits to Australia in terms of wealth, jobs and taxes.
We have had a stark reminder of the importance of the resources sector in the past couple of months.
The Australian economy grew 1 per cent in the March quarter, contributing to through-the-year growth of 3.1 per cent.
GDP growth was largely the result of strong exports, which rose by 2.4 per cent in March. This was driven primarily by the mining commodities — LNG, coal, iron ore and gold.
Improved mining profitability is expected to increase revenue forecasts from company taxes by $3.7 billion over the next four years.
Our analysis shows an increase of US$10 per tonne freight-on-board in the iron ore price results in an increase in nominal GDP of about $5.5 billion in 2018-19 and just over $12 billion in 2019-20.6
The Australian Government believes that we must have a consistent plan for stronger resources economy. That is why I have established the Resources 2030 taskforce to map out a long term plan for the resources sector.
I established the taskforce in March to look at ways in which we can ensure our resources sector remains strong, competitive and sustainable in the face of global challenges.
Former Queensland Resources Minister Andrew Cripps chairs the taskforce. Andrew and his team will provide their report to me by the end of August.
We will then draw on it to develop a new national resources policy statement, which I plan to release by the end of the year.
This will be the first statement of its kind since the 1990s – a long-term and, hopefully, bipartisan vision to strengthen the sector so Australia remains a world- leading resources nation.
I am very proud to be the Resources Minister of what I think is the greatest resources country in the world. Thanks for all that you do to have generated that success. I think the future is even brighter and I look forward to working with you on these opportunities.
1. Knox, M. 2013, Boom: the underground history of Australia, from Gold Rush to GFC, Penguin.↩
3. Schodde RC, "Time delay between discovery and development – is it getting more difficult?", Presentation to China Mining 2017 Conference
5. Society for Mining, Metallurgy and Exploration 2010, Fact Sheet Solar Panels: Metals & Mineral Products used to make a Solar Panel
6. Budget 18–19, p 8-16