Each mine is the fruit of past risks taken, holes drilled, investments made and deals done.

Each mine creates revenue, royalties and jobs for the local community and Australia. Not to mention the other taxes paid and more difficult to measure economic multiplier effects created.

In the last decade, Australian greenfields mineral exploration has declined. Until the end of last year, meters drilled had fallen consistently to reach 14-year lows. Thankfully, at last, that decline has begun to turn.

More broadly, Australia continues to suffer through an unprecedented lack of discovery. The last major discovery, “a Tier 1”, was Olympic Dam in the 1970s. In the 50 years since there have been lesser discoveries, but nothing akin to the sheer size and impact of Olympic Dam. A trillion-dollar deposit was a game changer, that overturned South Australia’s uranium ban, and has provided a sustained uplift to the South Australian economy.

One of the obvious reasons for this lack of discovery is that all of the easy deposits have been found. Gone are the days when then grazier Lang Hancock could fly his plane below bad weather in Australia’s north and identify iron ore in the escarpment. The next Tier 1 discovery is currently hiding out there under dense “cover”, the thick overburden that blankets a lot of the continent.

The impediment of cover is why the fall in meters drilled over the last decade is critical. To discover the mines of tomorrow, Australia needs mineral greenfields explorers to drill deeper and further.

Important work done by Dr Richard Schodde of Minex Consulting on currently operating gold mines shows that Australia faces a period in the next ten years where the vast majority will reach the end of their mine life. It can take between 10 to 15 years of lead time to develop a mineral deposit into a mine site, so this is a very concerning state of affairs.

The statistics around the opportunities still available are staggering: over 70% of Australia remains unexplored or is under explored.

The rocks in the ground are only half the equation. What makes a geological formation economically recoverable (and a mine) is determined by a range of factors such as the commodity price, the royalty regime and the cost factors to process and extract. Overarching these considerations is the question of the certainty and transparency of the regulatory environment in which that deposit is found will make it attractive to investment or not. Termed ‘sovereign risk’, this refers to the predictability of decision making and the long-term stability of the policy settings. Compared to other international jurisdictions, Australia has historically excelled at providing this certainty and transparency. When developing a mine a company will know what will happen, roughly when, roughly how much it will cost and what is expected. Certain States within Australia have fostered investment far better than others, but overall, Australia remains an attractive jurisdiction.
Image courtesy of DDH1 Drilling

It is hard to understate, the benefits of a stable and progressive regulatory environment. For example, the majority of the world’s cobalt is supplied by the Democratic Republic of Congo. The Congo has been wracked by geopolitical instability for decades. A large percentage of the cobalt mined in the Congo is done by ‘artisanal’ miners, which include under-age workers and children. The security of an ethically mined supply of cobalt is a key concern for a number of major phone producers, who are rightly concerned with artisanal mining. There are a number of Australian potential producers who are well placed to meet the growing demand for cobalt, who will be required to meet Australia’s regulatory requirements.

It is because of this legacy of long term, stable regulation that when investor confidence began to return, the mining and critical mineral exploration industry began to grow in Australia.

Anecdotal evidence first began in the middle of 2016 of that returning confidence. It was evident in the busy hotels in the Western Australian Goldfields and the Pilbara, in the hustle and bustle of increased Initial Public Offerings listing, and in the growing numbers of high vis Fly In Fly Out workers returning to our airports and towns. There changes are being mirrored in Queensland, South Australia and the Northern Territory.

These unofficial barometers were reinforced by a raft of positive figures that show growing mineral exploration, increased approvals to mine and explore being sought and more companies listing. An example of this momentum was seen in the December quarter of 2017, which recorded the highest gold mineral exploration expenditure in two decades.

The Association of Mining and Exploration Companies works with all levels of Government to build on this momentum, and to ensure a progressive regulatory environment.

The vast majority of Australian greenfields mineral exploration is done by small, ASX listed mineral exploration companies reliant on retail investors. These companies have tight budgets and tighter time frames. The focus of AMEC advocacy is to facilitate the smooth development of mines and increase Australian greenfields mineral exploration.

As every new drill hole could discover a deposit that could be a future mine, every new mine that is opened creates jobs, revenue for local communities and royalties too. The flow on benefits of mining are felt not just in the mining towns, but by every family in Australia, and every single shareholder.