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Chinese business leaders have threatened to stop investing in Australia following Treasurer Wayne Swan’s decision to impose a two-stage approval process for mining and exploration.
The decision requires investors to gain approval from the Foreign Investment Review Board to acquire an exploration business, and obtain a second approval to develop resources if a viable discovery is found.
Swan told BusinessDay it “doesn’t make any sense logically” to allow an exploration licence holder to develop resources without obtaining a second approval.
“How do you apply the [FIRB] criteria to an unknown mineral of an unknown size in an unknown location in an unknown market,” he said.
Swan said Chinese investments might also have to apply for a third FIRB approval if they involved finance from a Chinese state-owned bank.
But Sino Gold co-founder Xu Hanjing warned that Swan’s move was an added administrative burden and would hurt the mining industry.
He said the two-stage process would hinder the development of entrepreneurial talent in small miners and explorers.
He said Canada was already pulling ahead of Australia as a breeding ground for future mining executives, with as many as 10 times the number of junior explorers.
Swan said the controversy over foreign investment had settled down considerably, and most applications experienced no problems in gaining approval.
“Ninety-nine per cent of stuff sails through pretty well,” he said.