Australia benefits from investments made to expand mining production
“The upward revision of Australia’s resources and energy export earnings in the Office of the Chief Economist’s March 2017 Resource and Energy Quarterly shows that Australia continues to benefit from the investments made by the mining sector over the last ten years,” said Simon Bennison, Chief Executive Officer, Association of Mining and Exploration Companies (AMEC).
“Australia’s resources and energy export earnings have been revised up by 32 per cent from the previous forecast and are forecast to reach an all-time high of $215 billion in 2016-17 and 2017-18.”
“85 per cent of these exports are from the minerals sector.”
“Higher iron ore and metallurgical coal prices have been a key driver of this revision. Iron ore prices reached an unexpected 30-month high of US$89 a tonne in mid-February 2017. Australian iron ore exports are forecast to have increased by 50 per cent in 2016–17, to reach a three-year high of A$72 billion.”
“Because of the large investment to boost production capacity in the past decade, recent extensive cost-cutting and the high quality of Australia’s resources, export earnings from mining are forecast to remain high.
“The growth in global demand for ‘non-energy resource commodities’ such as iron ore, gold, aluminium, copper, nickel and zinc — is projected to be slower than in the previous five years, with the Office of the Chief Economist predicting that, while remaining significant, the rate of Chinese urbanisation will taper in the next five years.”
“However, India is predicted to expand its steel production and overtake Japan as the world’s second biggest steel producer– so with the correct public policy settings, Australia could position itself to take advantage of these opportunities.”
“The Federal and State Government must ensure that Australia, and Western Australia, remain attractive to investment to overcome any potential slowdown in the growth of demand.”
“The Federal Government’s Exploration Development Incentive (EDI) program has stimulated investment in eligible Australian junior mineral exploration companies, making it more attractive for investors to decide to support the next generation of mines.”
“AMEC has called on the Federal Government to continue its support of the EDI, which is currently under review. The EDI has provided eligible shareholders with a tax offset equivalent to the company tax rate.”
“The Resources and Energy Quarterly does not quantify the number of barriers, including land access, increasing red tape and rising costs, that Australian mining and mineral exploration companies face.
“The proposed introduction of cost recovery for the Australian Securities Investment Commission will undermine Australia’s attractiveness to mining investment.”
“AMEC continues to advocate for ongoing funding for exploration incentive schemes and co-funded drilling programmes to encourage innovative mineral exploration in Australia and generate significant economic returns for the economy.”
“Australia is currently benefiting from the investment that mining companies have made during the construction phase in the last decade.”
“The investment by the mining sector has created jobs, royalties and revenue for Australia. The Government must focus on encouraging investment in the mines of tomorrow so the community can continue to benefit from mining.” said Mr Bennison.