Your SlideShare is downloading. ×
0
THE INCONVENIENT TRUTHS OF
MINING AND EXPLORATION IN
AUSTRALIA
Bernie Hogan
Regional Manager
Association of Mining & Explo...
About AMEC
• Established 32 years ago
• Over 360 company members and growing
• Members include explorers, producers, and s...
Australia is not globally
competitive
• Australia is losing exploration market share
• Costs spiralling - Government sees ...
Background:Federal Policies –
increasing costs of production
• Taxation – Royalties/MRRT/Carbon Tax
• Cost Recovery – envi...
Soaring Costs of Production
Xstrata recently stated that in 2007 it cost $61 to produce a
tonne of thermal coal in Austral...
Where do the ASX
raised funds go?
6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2008 2009 2010 2011 2012
Source
ASX raised fund...
Australia Must Become More
Competitive
• Fraser Institute Policy Potential Index
• A measure of a jurisdictions attractive...
8
Australia’s Share of Worldwide
Exploration Expenditure
(non-ferrous)
8
Australia
12%
Canada
18%
USA
8%
Latin America
25%...
Australia must be globally
competitive.
• Capital is mobile and now going offshore – over 50% -
Africa, Mongolia, South Am...
Permit Approvals in Australia
• Qld 26 Months (all permits and approvals) Is setting targets
• WA – Mining Tenure 65 Days ...
• State/Territory Permit Approval Initiatives
- Streamline the approval process:
- Online applications, improve quality of...
So what?
Effect on Greenfields Exploration
• Provides the pipeline of mines of the future
• Is in serious decline in Austr...
Estimated Remaining life for Major Australian Mines
(based on all operations mining >1 Mt ore in 2010. Excludes Bulk Miner...
14
Greenfield spend is now
half that of Brownfield
0%
20%
40%
60%
80%
100%
1996 1998 2000 2002 2004 2006 2008 2010 2012
Mi...
Boost Exploration with new Capital
• AMEC Federal Policy Paper – distributed
• By Department, outlines Policy Priorities
–...
16
THANK YOU
Visit www.amec.org.au for more information
Bernie Hogan
Bernie.hogan@amec.org.au
Upcoming SlideShare
Loading in...5
×

Bernie Hogan, The Association of Mining and Exploration Companies - Benefits of Mining across the Australian Economy and increased cost pressures for juniors and explorers

491

Published on

Bernie Hogan, Regional Manager, The Association of Mining and Exploration Companies delivered the presentation at the 2013 Mining NSW Conference.

The 2013 Mining NSW Conference looked at mine exploration and development opportunities in Central NSW and the Northern Tablelands with a spotlight on capital raising outlook and overseas investment.

For more information about the event, please visit: http://www.informa.com.au/miningnsw13

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
491
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
1
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Bernie Hogan, The Association of Mining and Exploration Companies - Benefits of Mining across the Australian Economy and increased cost pressures for juniors and explorers"

  1. 1. THE INCONVENIENT TRUTHS OF MINING AND EXPLORATION IN AUSTRALIA Bernie Hogan Regional Manager Association of Mining & Exploration Companies
  2. 2. About AMEC • Established 32 years ago • Over 360 company members and growing • Members include explorers, producers, and service industries • National coverage – offices in Brisbane, Perth and Sydney • Policy development and advocacy AMEC is totally committed to obtaining the best business environment for the mining and exploration industry across Australia 2
  3. 3. Australia is not globally competitive • Australia is losing exploration market share • Costs spiralling - Government sees resource sector as a source of additional revenue. 3
  4. 4. Background:Federal Policies – increasing costs of production • Taxation – Royalties/MRRT/Carbon Tax • Cost Recovery – environmental approvals/safety levies • Diesel Fuel Tax Credits – 6.2 cents Clean Energy/ heavy haulage - 2.5c for carry back of losses • Native Title Payments (1bn pa) and Heritage surveys and related costs. 450 Claims to be resolved. Amendments unworkable for some States. • Infrastructure – strategic support and leadership • Financial Uncertainty – BTWG/ Budget implications • Improve bilateral functionality - environment 4
  5. 5. Soaring Costs of Production Xstrata recently stated that in 2007 it cost $61 to produce a tonne of thermal coal in Australia, and today it is $176 with a global average of $106. (WEEKEND Oz 23rd Feb) Average C1 Gold Production Costs $1208/ oz (Deutsche Bank March 16th 2013 West). Includes Exploration. Using Goldman Sach formula Costs can be even higher Hard Coking Coal – 2008 - us$60/t; 2012 – us$120/t (UBS GAM) TRANSPARENCY IN THE COSTS OF PRODUCTION ACROSS COMMODITIES – ROYALTIES, FUEL CREDIT, TAXES, LABOUR 5
  6. 6. Where do the ASX raised funds go? 6 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 2008 2009 2010 2011 2012 Source ASX raised funds for Australian projects ASX raised funds for overseas projects YTD 56% YTD 44% More ASX raised funds are heading overseas!!
  7. 7. Australia Must Become More Competitive • Fraser Institute Policy Potential Index • A measure of a jurisdictions attractiveness as a place to invest in exploration 7 2002 2012 Australia 8/45 (18/100) 30/96 (31/100) Canada 20/45 (44/100) 17/96 (18/100)
  8. 8. 8 Australia’s Share of Worldwide Exploration Expenditure (non-ferrous) 8 Australia 12% Canada 18% USA 8% Latin America 25% Pacific/SE Asia 6% Rest of World 16% Africa 15% 2012 Australia 20% Canada 14% USA 11% Latin America 27% Pacific/SE Asia 11% Rest of World 6% Africa 11% 1996 Source: Metals Economics Group
  9. 9. Australia must be globally competitive. • Capital is mobile and now going offshore – over 50% - Africa, Mongolia, South America • So how can Governments help? – reduce tax/royalties (amnesty) – reduce cost recovery, – provide access to infrastructure, – reduce duplication in approvals, – co-funded drilling…and Improve the REGULATORY SYSTEM in Australia 9
  10. 10. Permit Approvals in Australia • Qld 26 Months (all permits and approvals) Is setting targets • WA – Mining Tenure 65 Days DMP (96% meet the target). 30 Days Environmental Approval. All within DMP, but has stop the clock. • NSW – Target 90 days Mining Tenure. Then 20 days for Surface Disturbance Notice. Review of Environmental Factors • NT – Exploration License 20 Days, However with notifications min 7- 8 months (non Aboriginal Land) or 28 months (28 months Aboriginal Land). ALRA land average 43 months 10
  11. 11. • State/Territory Permit Approval Initiatives - Streamline the approval process: - Online applications, improve quality of assessment - Attempt to simplify land access including overlapping tenures - Statutory timelines – remove/reduce “stop the clock” - One-stop-shop / Lead Agency to reduce time in transition between Dept – WHOLE OF GOVERNMENT PERMIT - Review Financial Assurance/Security Bonding and Offset policy. (MRF example) - More consistent strategies in land use planning; wild rivers, strategic cropping, CIC/BSAL Improving International Competitiveness
  12. 12. So what? Effect on Greenfields Exploration • Provides the pipeline of mines of the future • Is in serious decline in Australia – Centre for Exploration Targeting - paper Sept 2012. • “The progressive shift of funding from greenfield to brownfield exploration….is worrying as in the long run it will affect the metal contribution to the national resource inventory and with it the sustainability of the mining industry.” • “It is estimated that in the absence of new significant discoveries, based on current reserve and resources, about half of Australia`s non-bulk commodities mines would be exhausted between 7 and 18 years.” 12
  13. 13. Estimated Remaining life for Major Australian Mines (based on all operations mining >1 Mt ore in 2010. Excludes Bulk Minerals) 13 2011 2015 2020 2025 2030 2035 2040 Closure Date based on current Reserves Estimated Mine Lives are approximate only and are based on dividing the current P&P Reserves and MI&I Resources by the production rate reported for 2011 Half of Australia’s existing mines could close down within 7 to 18 years Half of Australia’s existing mines could close down within 7 to 18 years Closure Date based on current Resources Source: MinEx Consulting © August 2012
  14. 14. 14 Greenfield spend is now half that of Brownfield 0% 20% 40% 60% 80% 100% 1996 1998 2000 2002 2004 2006 2008 2010 2012 MinEx estimates Percentage of Total Spend Greenfield Exploration Late Stage & Feasibility Mine Site (ie Brownfield) Brownfield Exploration 35% Source: © Metals Economics Group, Corporate Exploration Strategies 2011 Note: Base metal + gold + diamond exploration expenditures by All Companies Excludes exploration on Bulk Minerals and Uranium Detailed breakdown for 1996 & 2012 are MinEx estimates Assumes that all of the Grassroots spend by Majors and half of the Grassroots spend by Juniors is on Greenfield targets 21% 39% 47%
  15. 15. Boost Exploration with new Capital • AMEC Federal Policy Paper – distributed • By Department, outlines Policy Priorities – Bi-lateral environmental agreements • Difficult with EPBC Act amendments (Water trigger) – Minerals Exploration Tax Credit • Grows the Capital base • Australian investor/Australian project • Scalable for budget constraint • Incentive for retail investor • Greenfield exploration 15
  16. 16. 16 THANK YOU Visit www.amec.org.au for more information Bernie Hogan Bernie.hogan@amec.org.au
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×