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Mining sector facing an uncertain future

THE future of the mining sector – dependent on exploration to maintain current production levels – looks uncertain, with figures re-leased by the Australian Bureau of Statistics indicating a 21 per cent drop in exploration during the March quarter.

The sharp fall can be attributed to an 11 per cent decline in gold exploration, which accounts for about two thirds of mineral exploration.

More than offsetting the decline in mineral exploration was the strong growth in petroleum exploration.

Petroleum exploration has more than doubled over the past year, from a low point of just $97 million spent during the 1999 December quarter to more than $216 million spent in the last quarter.

WA accounts for almost 70 per cent of Australia’s petroleum exports.

However, the gold sector is still languishing, with exploration slumping 11 per cent or $11 million in the March quarter.

If exploration continues at current levels gold export revenue, which totalled $2.72 billion in 2000, looks set to drop by the middle of the decade as depleting mining tenements are not replaced by new finds.

The fall in exploration expenditure has renewed calls by the industry for assistance from the Federal Government to treat exploration expenditure investment along the same lines as tax-effective schemes.

Australian Gold Council chief executive officer Greg Barns said the figures demonstrated the need for exploration companies to have greater access to capital.

“That is why the Australian Gold Council, along with other industry bodies, is asking both the Federal Government and the Federal Opposition to examine ways in which access to capital can be improved in the future,” Mr Barns said.

“Failure to do so will result in a loss of jobs and investment in regional Australia over the next 10 years.”

However, gold miners’ margins have been maintained or improved thanks to production costs declining from an estimated $350 an ounce in 1996 to $318 an ounce in 2000 and a low Australian dollar.

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