MINERAL EXPLORATION

The Hon. B.V. FINNIGAN (15:15): Will the Leader of the Government, as Minister for Mineral Resources Development, provide an update on mineral exploration data for the December quarter?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (15:15): The latest Australian Bureau of Statistics figures show that $68 million was spent on mineral exploration in South Australia for the December quarter of 2008. Of the $68 million spent in the December quarter, $22 million was invested in the search for new mineral deposits. The remaining $46 million was spent on the expansion and development of South Australia's growing list of known mineral deposits.

The latest quarterly result brings overall spending for the calendar year 2008 to $317.5 million, which is down from both the $331.3 million in the 2007 calendar year and the most recent peak of $355.5 million in the 2007-08 financial year. The latest result for the 12 months ending in December is still more than triple the $100 million target set by South Australia's State Strategic Plan. While South Australia remained in third place (behind resource-rich Western Australia and Queensland), exploration spending slowed in all jurisdictions except New South Wales and the Northern Territory. A cut-back in spending on exploration in South Australia was inevitable in the face of the sharp fall in world commodity prices in the past six months. The global financial crisis that sparked this fall in commodity prices is clearly a major concern for governments, industry, businesses and private individuals.

The Hon. D.W. Ridgway interjecting:

The Hon. P. HOLLOWAY: Yes, and that is why it trebled. If members opposite want it, I am happy to give them the history lesson. Just $40 million was spent for an entire year on exploration when this government came to office. Even going through the world's worst global financial crisis ever, in 2008 we were still able to get exploration of over $300 million a year compared with just $40 million a year when we came to office.

The Hon. D.W. Ridgway interjecting:

The Hon. P. HOLLOWAY: Let me go through the state's share. South Australia had less than 5 per cent of the country's mineral exploration when we came to office; it is now over 12 per cent. That is more in line with our share and, of course, that was achieved through the PACE program, which enabled us to get it up from that. Access to capital, whether through banks or equity markets, remains hard to come by. In that climate, investors are looking for certainty and stability, and that is why this government continues to work hard to create a climate of certainty in this state that provides investors with the confidence they need to plan long-term investments in the resources sector.

We also realise that investment in our resources sector is critical for the continued development and growth of the South Australian economy. The fact that quarterly exploration numbers continue to hold up in the current environment confirm that the global exploration sector continues to have the highest levels of confidence in South Australia's mineral potential. Even taking the December quarter slow-down into account, South Australia is still faring well compared with that total exploration expenditure of about $40 million a year experienced just seven years ago.

Many of the world-class projects that have been identified by prospectors in the past few years are still being developed, and that is because many companies are prepared to look beyond the global economic slow-down to the next up-swing as fiscal and monetary policy responses eventually help lead the way to worldwide recovery. While the current economic climate is casting a shadow on the short-term outlook for the mineral sector, the fundamentals of the mining industry, including the demand for resources from Asia, remains positive. Some doomsayers are already complaining that the ongoing expansion of the mining sector in this state has somehow stalled; and we see those opposite who seem to specialise in knocking this state and its achievements.

Even though we are more than triple our target and eight times the level of exploration we had seven years ago, those opposite still continue to knock. Such unnecessary pessimism denies the increase in operating mines to 11—so, the number of mines now is 11 compared to four when this government came into office—and the expectation that two more mines at least will go into production over the next 12 months. Those new mines are not only generating investment and export dollars for this state but also creating jobs at a time when Australia's employment outlook faces the most challenging period since the early 1990s, or perhaps even the 1930s. This government remains confident in the prospects for BHP Billiton's proposed expansion of the Olympic Dam mine, with a comprehensive environmental impact statement due to be made available from early May.

I am acutely aware of the pressures the current economic situation places on the mineral resources industry. Funds for exploration are essentially unavailable for many small miners at present due to the global credit squeeze and companies need to preserve their cash. To assist companies identify sources of capital during this testing period, the government is ramping up its efforts to promote South Australian projects overseas, particularly in China, Japan and India where companies remain cashed up and are looking for investment targets. This government remains committed to supporting and developing a healthy mineral sector through the good times and the bad.

As we have seen with previous downturns, the business cycle will eventually turn into an upswing. This government aims to be ready for that recovery by taking advantage of the current period to lock in infrastructure projects that support the mining industry, and we are also looking to train the skilled workforce that will be required once many of the world-class projects still in the pipeline come on stream in the next few years. The latest mineral exploration results certainly reflect, to some extent, as they do across Australia, the global financial situation, but the levels of exploration for 2008 will still more than treble the Strategic Plan target set just five years ago.