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New tax offset for exploration legislation developed

The Government is launching an Exploration Development Incentive to help boost exploration for new mineral deposits.

The legislation, which was brought in to parliament yesterday, looked to support junior miners and explorers in greenfield activities.

“The Exploration Development Incentive is aimed at fostering the discovery of new resource deposits and will encourage investment in eligible junior exploration companies conducting greenfields mineral exploration,” acting assistant treasurer Mathias Cormann said.

He went on to outline the current difficult market for junior explorers, with current conditions creating a number of barriers to new investment and exploration.

Both exploration and investment in the mining sector have fallen heavily this year.

Exploration investment has continued the steady downward trend in the September quarter, with Queensland the worst hit according to the Australian Bureau of Statistics (ABS).

Mineral exploration fell 3.6 per cent on the national trend estimates, down by $16.5 million to $446.9m for the quarter.

Queensland fell by $10.9 per cent, down $10.7m, while on seasonally adjusted figures Western Australia fell by 7.7 per cent, or $21.7m.

However in original terms mineral exploration is down 11.7 per cent to $455m for the quarter, a loss of $60m worth of investment in the industry, with greenfields down $15m and brownfields down by $45m.

Overall investment has plunged to its lowest level in a decade.

In the six months to October, just three projects worth $597 million received a final investment decision and moved to the committed phase.

This is the lowest number and value of projects committed in the sector in ten years, The Bureau of Resources and Energy Economics (BREE) said.

The report stated that as of October there were 44 resource and energy projects with a combined value of $228 billion in the committed stage.

This compares to 48 projects with a combined value of $229 billion six months earlier.

The slower rate of project progression is also evident at earlier stages of development, with eight projects worth $22.2 billion failing to progress from feasibility in the six months to October.

A further 17 projects which had been publicly announced have been taken off the major projects list after being dumped by companies.

Exploration also suffered, decreasing by 12 per cent total spend of $6.9 billion in 2013-14.

According to Cormann, “this new legislation will enable junior explorers to use their tax losses for the benefit of their Australian shareholders”.

“It’s another significant policy the Government has delivered to ensure the resources sector continues to underpin our economy,” he added.

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