Question Time

MINERAL EXPLORATION

The Hon. I.K. HUNTER (14:59): My question is to the Minister for Mineral Resources Development. Will the minister provide the chamber with an update on the latest quarterly mineral exploration figures from the ABS, and is he aware of any other views on the performance of the resources sector; if so, will he share that information with members?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Industrial Relations, Minister Assisting the Premier in Public Sector Management) (14:59): I thank the honourable member for his timely question. The Australian Bureau of Statistics issued the June quarter mineral resources exploration figures only last week. These figures unquestionably show that mineral exploration in this state is beginning to recover from the hit taken in the aftermath of the global financial crisis. While the chances were slim that South Australia would be sheltered from the economic tsunami that swept the world in 2008, it has been encouraging to note the speed at which our resources sector has rebounded. Financial markets remain tight and opportunities for raising capital remain constrained, but global commodity prices have improved due largely to demand from countries such as China.

So while annual expenditure is off the levels experienced before the global financial crisis, the latest quarterly figures show that the exploration sector, at least, has begun to strengthen. In the June quarter total expenditure on mineral exploration in South Australia rebounded to the highest level in nine months, rising 41.5 per cent compared with the previous quarter to $47.7 million. South Australia's quarterly growth rate was behind Queensland, but neck and neck with Western Australia and above the national average rise for that quarter on quarter growth.

In the 12 months to June exploration expenditure was $166.5 million, well above the $100 million a year target set in South Australia's Strategic Plan and four times the paltry $40 million we had some eight years ago. These results provide further confirmation that even in difficult times the exploration industry remains confident in South Australia as an investment destination due to our state's world-class mineral potential. That is unambiguously good news for South Australia.

One of the more pleasing aspects of the latest quarter figures was the increase in exploration for new deposits. This element of exploration comprised $32.4 million, or 67.9 per cent of total June quarter spending, the highest quarterly spending on frontier and greenfields regions in more than two years. It should also be remembered that the June quarter was characterised by the national debate on a commonwealth resources rent tax during the quarter. Some of that uncertainty might possibly be reflected in the September quarter figures, but I am confident that there will be no lasting effect on exploration in our state now that the key issues in the implementation of a mineral resources rent tax appear to have been resolved.

A key forward indicator for mineral exploration activity and investment is the total drilling work approvals for South Australia. Again, these provide scope for confidence in the future outlook for the sector, with PIRSA approving mineral drilling projects in 2009-10 totalling 968,049 metres, an increase of 32 per cent compared with the 2008-09 drilling approvals.

The Rann Labor government is determined to support the industry in transforming exploration into viable mining projects. We now have 12 mines in operation in South Australia, treble the number of projects in existence when this government took office. We have already officially opened three new mines in South Australia this year, and there are more in the pipeline. Only this week Rex Minerals announced a further early-stage discovery at its Parara copper prospect on Yorke Peninsula. The company announced yesterday that it would follow up this early find with further explorative drilling. This discovery by Rex follows a defined copper resource at its nearby Hillside prospect near Ardrossan.

So exploration is continuing throughout the state, including in traditional mining areas such as the Copper Coast, and this is because this government has worked hard in the past 8½ years to create a climate of certainty in this state that provides investors with the confidence they need to plan long-term investments in the mining sector. Our Plan for Accelerating Exploration, or PACE, has been an incredibly successful program delivering extraordinary growth in the minerals and energy sectors for South Australia.

The honourable member asked whether I was aware of any other views about the performance of the minerals sector, and indeed I am. Here we were last week with an undeniably good result for South Australia, and what happened? The opposition put out a statement to try to hoodwink the South Australian public into thinking all was doom and gloom. We had the opposition spokesman on mineral resources development stretching back into the pre-global financial crisis days of 2007-08 to claim that somehow mining operation expenditure had collapsed. The shadow minister conveniently ignored the quarter on quarter growth—that 41.5 per cent growth I talked about—the best quarterly spending result in nine months and the best result in greenfields exploration in more than two years.

So, yes, South Australia's total spending is below the peak achieved before the global financial crisis, but to ignore the obvious signs of recovery is simply an attempt to mislead the South Australian public. By any metric, expenditure on mineral exploration in South Australia is now vastly superior to the $40 million in a whole year that we had a decade ago. Let us not stop there. Mineral production last year exceeded the $3 billion a year benchmark this government set in South Australia's Strategic Plan. In terms of exports, mineral resources are now the most important traded commodity, outperforming agricultural production and wine.

Traded commodities recording growth in the year to July 2010 compared with the previous 12 month period included a 113 per cent rise in exports of metal ores and metal scrap. In the same period, South Australia recorded a 202 per cent rise in exports of other metals, more than trebling the previous 12-month figure. We also reported a 20 per cent rise in gold, silver and platinum exports.

South Australian export markets that experienced growth in the year to July 2010, compared with the year to July 2009, included a 26 per cent rise in goods destined for China, one of our key markets for mineral resources.

This government is not resting on its laurels; it is continuing to support exploration through PACE. During the recent recess I visited China to promote investment in our resources sector at the world expo in Shanghai at a special two-day seminar held in the magnificent Australia Pavilion, where we showcased the mineral and energy potential. So, when the opposition claims that South Australia's mining boom, which is already delivering jobs, investment and exports to the benefit of our economy, is just hot air, we know the identity of the real windbag.