Visionary announcement by the Prime Minister
2 September 2017
“The announcement today by the Prime Minister, Malcolm Turnbull to replace the Exploration Development Incentive (EDI) with the Junior Mineral Exploration Tax Credit (JMETC) for 4 years, from the 2017/18 year, is visionary and great news for Australians,” said Simon Bennison, Chief Executive Officer, Association of Mining and Exploration Companies (AMEC).
“The JMETC is a tax credit arrangement which allows mineral exploration companies (with no mining income) to renounce and pass future tax deductions (losses) to their Australian resident investors.
“The JMETC is a critical investment in Australia`s future, particularly as contemporary research in relation to existing mines indicates that there will be significant reductions in production and Government revenue streams as those mines reach the end of their current lives. They need to be replenished by new discoveries as soon as possible.
“Mineral exploration is a long term, high risk activity which needs scarce equity capital in a globally competitive market place.
“Tax credits under the JMETC will be available to new raisings of capital, more akin to the Canadian model.
“The credit to investors will represent 30% of the eligible greenfield mineral exploration expenditure incurred, and renounced by the company. This is an extremely attractive arrangement which should result in more investors entering the equity market.
“The rewards are even greater for those investors in successful exploration companies which subsequently develop a new mine.
“The announcement comes at a time where IPOs and mineral related greenfield drilling have been at an all-time low over the past few years.
“Successful mineral exploration is needed to drive the development of the mines of tomorrow, create revenue streams and jobs, and be in the national interest. Analysts have projected that employment will decrease in the base and precious metals by up to 75% over the next 15 years if action is not taken now.
“We thank Prime Minister Turnbull, his Cabinet and numerous backbenchers who recognised that action needs to be taken now to discover the mines of tomorrow, noting also that each new mine can take 10 years before the full benefits in jobs, revenues and royalties streams are realised.
“Special acknowledgement and recognition should be given to Senator Mathias Cormann, Minister for Finance for his understanding of the issues and trends, considerable foresight and support.
“AMEC looks forward to working with the Government to ensure a successful implementation.
“In the meantime, applications are still open until 30 September 2017 to access $40 million of tax credits under the existing EDI scheme. All eligible companies are encouraged to apply,” said Mr Bennison.