Explorers angle for Albanese Government to make tax sweeteners for new investors a permanent budget fixture

Explorers are campaigning for the Albanese Government to save and double the size of a tax scheme designed to keep investor dollars flowing into high-risk mineral pursuits. With the Junior Minerals Exploration Incentive Scheme set to end on June 30, the Association of Mining and Exploration Companies is pushing for the investor lure to become a permanent fixture of the Federal Budget. Treasury has doled out more than $182 million under the program since it was launched by the former Coalition government in 2017 in the hope of boosting investment in junior explorers. AMEC will on Monday begin a campaign for $200m to be pumped into the scheme over the next four financial years. It has also called for the scheme allocations to be merit-based, rather than the existing first come, first served system. AMEC’s campaign is to be spearheaded by a report from accounting firm BDO estimating the scheme has spurred more than $400m of exploration spending and an additional $1.2 billion in capital raising. “We need to replenish end of life mines with new greenfield exploration discoveries,” AMEC chief executive Warren Pearce said. “This is a critical investment in Australia’s future and supports mineral exploration — a long-term, high-risk activity.” The former Coalition government started the scheme in 2017 with an allocation of $105m over four financial years, and extended it in 2021 with a further $100m budgeted to the end of 2024-25. There are fears the Albanese Government will not extend the scheme, which supporters argue recognises the extremely risky nature of exploration in unproven areas. This greenfields exploration requires high-risk spending on surveying and drilling programs. The majority of explorers lose millions of dollars and then need to raise more money to keep going. The Junior Minerals Exploration Incentive Scheme allows participating companies to convert a portion of their tax losses into an exploration credit. This exploration credit can then be passed on to investors who have recently bought shares in the company, via an equity raising, to be used as a tax offset. AMEC says 131 companies have successfully applied and received $182.2 m of credits since 2017. AMEC argues exploration is the “lifeblood” of Australia’s mining industry and that it is vital to keep the next lot of gold, iron ore and base metal mines in the pipeline. According to BDO’s report, 54 per cent of juniors said the credits had boosted their equity raisings. The BDO report, to be released on Monday, claims the exploration work has identified $5.9b worth of minerals. AMEC’s push comes less than six months out from a Federal election, and as WA’s mining sector continues to be vocal critic of what it deems onerous bureaucratic approvals systems holding back new projects. The mining group successfully drove a huge Canberra lobbying effort to have production tax credits included as part of the 2024-25 Federal Budget tabled in May. Opposition resources minister Susan McDonald said Liberals and Nationals had “created, funded and championed” the program. “We are the guardians of Australia’s resources sector in the face of Labor-Greens-Teal attacks,” she said. “It concerns us that Labor continues to be silent on the future of this program, which is due to expire within six months.”