The $100 million Junior Minerals Exploration Incentive (JMEI) proposed last year by the Australian Government has passed through the Senate in welcome news for the country’s explorers.
With greenfields exploration expenditure declining by almost 70 per cent in recent years, the incentive has been designed to make it more financially attractive for explorers to find resources.
The Australian Government will provide the funds over the next four years, allowing greenfields exploration programs to distribute their tax losses as a credit to Australian-based shareholders.
Explorers in Australia were delighted with the passage of the Treasury Laws Amendment (Junior Minerals Exploration Incentive) Bill 2017 through the Senate, with Association of Mining and Exploration Companies (AMEC) chief executive Warren Pearce saying it would increase investment in greenfields mineral exploration projects.
“Greenfields mineral exploration is a long term, high risk activity which needs to attract scarce equity capital in a globally competitive market place,” Pearce said.
“Greenfields exploration is where Australia will make the next big discovery that will power the Australian economy for years to come.”
The Bill must now return to the House of Representatives, which will need to agree to amendments made in the Senate.
Resources Minister Matt Canavan said the government recognised the critical role that junior mineral explorers played in maintaining a healthy and vibrant resources sector with the incentive.
“Greenfields mineral exploration underpins the Australian resource sector by finding new mineral deposits and ensuring a strong investment pipeline,” Canavan said.
“Ongoing exploration and the discovery of new mineral resources are essential to the longer-term future of Australia’s resources sector. They are also the vital components for the tools of our modern economy – from smartphones to solar panels.”
The new incentive entitles Australian resident investors in small minerals exploration companies to a refundable tax offset if the company in which they have invested issued them with an exploration credit.
Finance Minister Mathias Cormann said the tax incentive would encourage junior explorers to take risks and to have a go at discovering the next large-scale mineral deposit.
“We want to back these businesses,” he said. “We are working to get the economic fundamentals right to build a strong prosperous Australia, improve the business climate and unleash our economic potential. We are doing so to create a stable platform for investor confidence and growth.”
The JMEI, first proposed last September, replaces the Exploration Development Incentive (EDI) scheme that was scrapped earlier in 2017.