MINERAL EXPLORATION

The Hon. I.K. HUNTER (15:30): Will the Minister for Mineral Resources Development provide an update on the latest mineral exploration data for the March quarter?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (15:30): The latest Australian Bureau of Statistics data shows that investment in mineral exploration in the first three months of this year slowed to $36 million from $68 million in the previous quarter. While disappointing, the sharp slowdown in spending on minerals exploration was inevitable, given the global financial crisis and last year's decline in world commodity prices.

Of the $36 million of mineral exploration expenditure in the March quarter, 28.6 per cent was spent on the search for new deposits, and the remaining 72.4 per cent was spent to prove up existing deposits. The latest quarterly results bring overall spending for the 12 months to March 2009 to $274.2 million, down from $317.5 million in the calendar year 2008. While that result is below the most recent peak at $355 million in the 12 months to June 2008, it is still more than double the target of $100 million that the government has set in the South Australian Strategic Plan.

South Australia is not alone in feeling the brunt of the global financial crisis. All other states recorded significant falls in exploration spending throughout the first three months of this financial year. This is hardly surprising when you consider the fall in world commodity prices and the scarcity of sourcing capital, whether through traditional lenders or capital markets. Even taking the slowdown from last year's peak into account, South Australia is still performing exceedingly well, compared with the total exploration expenditure of about $40 million a year achieved nearly 7½ years ago when this government came into office.

Despite this predicted downturn, South Australia's mineral and energy sectors remain strong. We continue to have a very bright outlook in this state and, unlike other states, South Australia has not experienced any mine closures as a result of the global financial crisis. In fact, mining projects are continuing to proceed towards development and full operation. Only last month, Oz Minerals officially opened its $1.1 billion Prominent Hill copper and gold project near Coober Pedy. The government also approved the mining and rehabilitation program for Iluka Resources' exciting heavy mineral sands project at Jacinth and Ambrosia in the Eucla Basin near Ceduna.

Premier Mike Rann and I also recently attended a ceremony to mark the construction of Uranium One's Honeymoon project. We have also offered a mining lease to Centrex Metals to develop its iron ore prospects at Wilgerup near Lock on Eyre Peninsula. This government remains confident in the prospects for BHP Billiton's proposed expansion of the Olympic Dam mine with a comprehensive environmental impact statement currently on public consultation.

During the next 12 months we expect to approve a further four to five mines in South Australia, building on the 11 mines currently operating in this state. This is all at a time when many states have had to face the prospect of mine closures. In South Australia, many companies are prepared to look beyond the global economic slowdown to the next upswing and a worldwide recovery.

Having said that, a slowdown in exploration spending in South Australia was inevitable in the face of a sharp fall in world commodity prices. Junior explorers have been forced to put exploration programs on hold due to the challenging financial environment and the difficulty in sourcing capital for their projects.

The economic fundamentals of the mining industry in this country remain positive. As the demand for resources from Asia (in particular, China) recovers we would expect renewed interest in mineral exploration.

The 2009-10 state budget handed down last week continues to support mineral exploration expenditure in South Australia. The government's plan for accelerating exploration (PACE) will enter its sixth year in 2010. This seven-year program has been extremely successful in attracting mineral exploration expenditure to this state and will take on even more importance as we traverse this challenging financial period. PACE will continue to be a key driver for sustaining economic development throughout the minerals and energy sectors.

The government also continues to support the industry with additional funding for Primary Industries and Resources SA to assist in assessing the pipeline of world-class projects still on the books. South Australia also remains a trusted destination for exploration spending. This state still ranks in the top 10 in terms of mineral potential in the most recent survey produced by the influential Fraser Institute.

I again stress that the outlook for the South Australian resources sector remains positive as the known resources in this state are long life and very competitive. The diversity of our resources base, the multitude of world-class ore bodies and South Australia's global reputation as a safe and sure destination for investment in mining all bode well for the future of this important job creating sector of our economy.