Western Australia dominates minerals exploration despite rising costs, fewer quality discoveries and a lengthy approvals process.
Western Australia dominates minerals exploration despite rising costs, fewer quality discoveries and a lengthy approvals process.
Western Australia continues to provide the bulk of expenditure on mineral exploration in the country, according to a report by federal government entity Geoscience Australia.
The state’s position has strengthened despite an industry body calling for the WA government to reform the approvals process for exploration companies looking to invest into potential projects.
Exploration expenditure in WA jumped 28 per cent to almost $1.6 billion in the 2011 financial year as companies invested heavily in iron ore, gold, nickel and uranium.
This was a 54 per cent contribution towards Australia’s total investment into exploration of $2.95 billion, with each state except Victoria recording an increase on the previous year.
“Western Australia dominated exploration spending with 54 per cent of total spending in Australia, followed by Queensland (22 per cent) and South Australia (9 per cent),” the report said.
Iron ore was the top commodity, just ahead of gold, for exploration expenditure, with $665 million spent in the fiscal year, a rise of 27 per cent per cent over the corresponding period a year earlier.
Of this, $585 million was spent in WA, which was 37 per cent of the state’s total exploration investment.
WA was also the top spender for gold exploration, hitting $452 million of the $652 million invested countrywide. This was a rise of 28 per cent for the state and 13 per cent for the country.
Association of Mining & Exploration Companies (AMEC) chief executive officer Simon Bennison said the increase in expenditure reflected the higher costs involved with exploration.
“It is becoming more and more expensive to undertake drilling programs due to a number of factors, including the type of drilling and location of the drilling program and the increasing operating costs involved for each metre drilled,” Mr Bennison said in a statement.
“It is inappropriate for government agencies to keep using exploration expenditure as the key measurement of performance.
“It does not acknowledge that the rate and quality of discoveries has declined in recent years and that companies are going much deeper to find targets.”
AMEC’s analysis of government data showed that the share of greenfields exploration had fallen from about 45 per cent to just over 30 per cent since 2003, while brownfields exploration had risen from 55 per cent to 70 per cent.
“This shift is a result of companies actively shoring up their reserves and expanding production at brownfields sites due to increasing commodity prices over the last few years,” Mr Bennison said.
An example of this is gold miner Saracen Mineral Holdings, which has increased its exploration spend from $12 million in 2011 to a budgeted $35 million this financial year as it aims to increase annual gold production from 120,000 ounces towards 250,000 ounces.
Announcing its exploration budget for 2012, Saracen said “it made good sense for us to lift our sights to much higher production levels” considering the elevated gold price.
Saracen is aggressively exploring its Red October, Whirling Dervish and Porphyry prospects in the South Laverton district, 120km north-east of Kalgoorlie, to reach this production goal by 2015.
Meanwhile, AMEC has recommended more reform of WA’s exploration approvals process over the next 12 months to ensure efficient project approvals while not compromising environmental, Aboriginal heritage and health and safety standards.
Mr Bennison believes there is an urgent need to “reduce the red tape” in the approvals process, saying that AMEC has encountered companies that have had to obtain hundreds of approvals on one project alone.
“This imposes substantial cost burdens on the industry and consumes valuable resources of approval agencies,” Mr Bennison said.
“Our recommendations include the formation of a strategic advisory committee with representatives from key resource industry bodies to provide high-level policy advice and identify and prioritise initiatives, which would enhance the state’s approval process, legislation and regulation.
“We have also recommended wider adoption of information communication technology and more efficient administrative processes to remove duplications and streamline decision making.”
In the 2011 calendar year, WA’s department of mines and petroleum finalised 4,443 mineral applications, which included for 2,714 exploration licences and 1,462 prospecting licences.
The department said 95 per cent of all mineral applications in the 2011 calendar year were finalised within target timelines.
Minister for Mines and Petroleum Norman Moore said the increase in exploration applications was driven by high levels of interest in uranium and gold.
Uranium was the state’s major improver for exploration expenditure in 2011, rising 82 per cent in WA and 27 per cent around the country to $214 million, the Geosciences report said.
Exploration for uranium in WA has shown strong growth since Colin Barnett’s government lifted a ban on mining of the mineral in late 2008.
WA Chamber of Minerals and Energy chief executive officer Reg Howard-Smith said the increase in uranium exploration was also a sign of the market recovering from the Fukushima nuclear incident in Japan last year.
“News of the federal Labor Party agreement to overturn its ban on uranium exports to India and a slight relaxation by WA Labor to its uranium policy may also continue to see a positive impact on exploration in 2012,” Mr Howard-Smith said.
WA has several major uranium projects under way, including BHP Billiton’s Yeelirrie prospect near Wiluna in the Mid West. The mining giant is hopeful of having the project in production by 2014.
