Iron-ore exploration boost masks drift from WA

Minerals exploration growth in Western Australia is lagging other states due to a lack of incentives and big obstacles such as native title infrastructure and environmental protection, according to the Association of Mining & Exploration Companies.

Responding to state government claims of rising exploration in iron ore, AMEC spokesman Ian Loftus said that the figures masked more disturbing trends in the sector with junior players prepared to cross the border to states such as South Australia where the environment was more positive.

While the state government cited Australian Bureau of Statistics showing that exploration in WA had risen 24 per cent in the September quarter and iron ore exploration was up 40 per cent for the quarter, the state's share of the national exploration pie had dropped below half to around 48 per cent.

WA represented around 60 per cent of national exploration expenditure just two years earlier.

Mr Loftus said the drift was more obvious in commodities where WA had to compete with other states. In iron ore, WA has a virtual monopoly with more than 95 per cent of national exploration dollars spent in the state.

Furthermore, Mr Loftus said it was unclear from the ABS how much of the iron ore exploration was greenfields and how much was brownfields, the latter generally represented by the big miners studying existing fields.

He also noted that even with iron ore, rising exploration did not necessarily mean increased production.

"It is good that a lot of activity is happening but explortation is just step number one in the whole process, " Mr Loftus said.

Ironically, uranium exploration in WA continues despite the state government's ban on mining the energy source.

Below is the statement from the government and AMEC's response:

For the first time in Western Australian exploration history, more money is being spent on iron ore exploration than any other mineral.

Resources Minister Francis Logan said the latest figures from the Australian Bureau of Statistics showed mineral exploration expenditure in WA rose by 24 per cent in the three months to September 2006.

The national increase was 18 per cent.

Mr Logan said the statistics showed iron ore exploration now exceeded all commodities, including gold, for the first time.

"Iron ore exploration expenditure in WA rose by a remarkable 40 per cent, from $47.4million in the June quarter to $66.4million in the September quarter," he said.

The Minister said the State Government's decision to amend the Mining Act and create the Office of Development Approvals Coordination had started to pay dividends.

The Carpenter Government had also provided additional funding for Geological Survey of WA, resulting in the release of new airborne geophysical information which allowed explorers to look through thick sand cover in remote parts of the State.

"The particularly impressive upturn in petroleum exploration expenditure, up 72 per cent, shows the domestic gas reservation policy has not jeopardised investment in WA as predicted by Federal Resources Minister Ian Macfarlane," Mr Logan said.

He said he hoped the small increase in gold exploration expenditure, from $63.5million to $64.7million, would mark the start of a rally in interest in gold.

Nickel exploration expenditure increased by 25 per cent, from $25million to $31.3million.

Below is the reponse from AMEC:

"It's pleasing that Western Australia is seeing an increase in iron ore exploration," said Mr Ian Loftus, Policy and Public Affairs Manager with the Association of Mining and Exploration Companies (AMEC).

"These figures, however, still need to be considered in the broader context of an overall decline in WA's share of Australia's exploration expenditure from 59.21% in 2003-04 to 47.57% in 2005-06", added Mr Loftus.

Mr Loftus said, "exploration is only one step in the process of mining and exporting iron ore. Explorers still face significant hurdles when they seek to mine what they find during exploration. Factors such as access to infrastructure like railways and ports, unresolved native title issues, and unreasonable environmental hurdles all pose challenges, and the industry looks forward to seeing state government leadership in doing all it can to convert this increased exploration expenditure into actual mining and exporting."

"In particular", said Mr Loftus, "we see the government's response to the appeals lodged against the EPA's Mt Gibson Iron Ore Mine and Infrastructure project - Bulletin 1242 - as a litmus test of its resolve to see the iron ore industry grow."