TIMELY SUPPORT FOR EXPLORATION

New legislation to implement the Australian Government’s Exploration Development Incentive (EDI) deserves bipartisan and crossbench support to help ensure a future pipeline of resource projects in Australia.

The Excess Exploration Credit Tax Bill 2014 recognises the need to reinvigorate Australia’s exploration effort. The Australian Bureau of Statistics reported this week that quarterly exploration expenditure has halved in the two years to September 2014, with metres drilled down by more than a third over the same period.

The EDI is a timely and practical commitment to the future of the Australian minerals industry with small Australian exploration companies facing real challenges securing capital. Available to junior companies with no taxable income and to their investors, the EDI addresses the situation whereby junior explorers are unable to access the immediate deduction for exploration expenditure.  Importantly, it will allow explorers to leverage additional investment in their companies and to retain existing shareholdings.

In its recent major projects report, the Bureau of Resources and Energy Economics noted that: ‘The appetite for risk among project developers and financiers appears to be low in the current operating environment; nevertheless, Australia still has many world class resource deposits that can be developed when market conditions improve.’

The EDI will make exploration investment in Australia more attractive and it deserves universal parliamentary support.

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