The Association of Mining and Exploration Companies has applauded the launch of the new Exploration Development Incentive (EDI) by Federal minister for Industry Ian Macfarlane at the AMEC Convention in Perth yesterday.
AMEC chief executive Simon Bennison said the new incentive will be a much needed boost to greenfield mineral exploration in Australia, by improving investor confidence in exploration companies.
“The Coalition Government should be applauded for recognising the need to develop long term investment strategies to discover the mines of tomorrow, generate future revenue streams and create jobs throughout Australia,” Bennison said.
“The EDI was announced at the 2013 AMEC Convention as part of the Coalition’s Policy for Resources and Energy, so the first birthday of the EDI was celebrated at the 2014 AMEC Convention.
“Previous research by the University of Western Australia has indicated that the rate of depletion for existing base and precious metal mines is not being matched by new discoveries.
Bennison said the EDI should help to reverse the ongoing reduction in the global share of Australian greenfield exploration activities and the low number of Initial Public Offerings for mineral projects in Australia.
“AMEC looks forward to continuing in a leadership role and working closely with Government to see early implementation of the EDI in order that significant economic, social and financial dividends can be achieved in the medium term.”
Industry observers have remarked, however, that the EDI will not be as good as what the industry really wants: A flow through-share scheme, which would take the form of exploration tax credits enabling exploration expenses to be treated as deductibles.
The EDI applies only to junior explorers with greenfields projects.
The fund has been capped at $100 million over three years: $25 million for exploration expenditure in 2014-15; $35 million for 2015-16; and $40 million for 2016-17.
In years when funding does not reach the cap, remaining funds will not roll over to the next year.
The scheme will be confined to junior minerals explorers, and only companies with no taxable income within the same year will be eligible to apply for funding.
The funding will not apply to exploration for quarry materials, shale oil, petroleum, unconventional gas or geothermal energy resources.