Exploration brings unexpected lift in December quarter

Australia's level of exploration has rallied in the last quarter, improving on the lowest rates seen since the GFC and attracting praise from industry groups.

According to the latest Australian Bureau of Statistic figures, the trend estimate for total mineral exploration expenditure rose 2.7 per cent, representing an additional $9.7 million in spending and bringing the December quarter to $364.1 million.

Most of the increase was spent in Western Australia, with the mining state up 3.1 per cent or $6.5 million.

However, the seasonally adjusted estimate for mineral exploration expenditure fell 1.4 per cent or $5 million, down to $365.3 million, with the majority of the decline due to Western Australian expenditure falling 2.1 per cent.

The current quarter estimate is still 12.3 per cent lower year on year.

Regarding original terms, mineral exploration expenditure fell 3 per cent to $382 million in the December quarter 2015, while exploration on areas of new deposits fell 7.8 per cent ($9 million) and expenditure on areas of existing deposits fell 1.1 per cent ($3 million).

Iron ore accounted for the largest decrease in original terms, falling 9.4 per cent ($7.7 million), while uranium fell 30.5 per cent ($4.7 million).

Greenfields exploration showed new promise, with estimates for metres drilled up 3.7 per cent in the December quarter, 1.1 per cent higher than the previous December quarter 2014 estimate.

The seasonally adjusted estimate for metres drilled rose 9 per cent in the quarter. In original terms, metres drilled rose 6.9 per cent, while drilling in areas of new deposits rose 29.6 per cent.

Association of Mining and Exploration Companies chief executive officer Simon Bennison said the latest figures showed signs of promise, with an increase in metres drilled in new deposits during a traditionally negative quarter.

“Compared with the September 2015 quarter, greenfields metres drilled is up 30 per cent in the December 2015 quarter whilst expenditure is down 8 per cent. The cost of exploration is coming down as would be expected in the current market conditions,” he said.

“The increase in greenfields mineral exploration highlights the Federal Government’s Exploration Development Incentive (EDI), which was effective from 1 July 2015, is having a positive impact on greenfields mineral exploration as intended.

“AMEC has been working with the Australian Taxation Office, Treasury and the Department of Industry and Science to review the operation of the EDI to make it more effective for explorers and investors.

Chamber of Minerals and Energy chairman Reg Howard-Smith said the figures showed that opportunities still existed for mineral exploration in WA, despite tough market conditions a difficulties with capital raising, in part thanks to the WA Government’s co-funded Exploration Incentive Scheme for greenfield projects.

“In order to secure the long-term future of the resources sector in Western Australia it is vital the next pipeline of resource projects are discovered through active exploration of the state,” he said.

“Critical to achieving this aim is ensuring policies which advance exploration through incentives or credits.”