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Legislative Council - Fifty-First Parliament, Second Session (51-2)
2008-05-08 Daily Xml
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MINERAL RESOURCES

The Hon. B.V. FINNIGAN (14:54): I seek leave to make a brief explanation before asking the Minister for Mineral Resources Development a question about the outlook for the mineral resources industry.

Members interjecting:

The PRESIDENT: Order! The Hon. Mr Finnigan obviously has some dramatic effect on the opposition.

Leave granted.

The Hon. B.V. FINNIGAN: The state is currently undergoing an exploration boom with several mine projects in the pipeline. Spending on mineral exploration in South Australia in 2007 surpassed $330 million, putting the state in second place behind Western Australia and ahead of Queensland.

Members interjecting:

The Hon. B.V. FINNIGAN: Members opposite cannot stand economic development; there is record jobs growth in this state and members opposite do not want to hear about it. Canada's Fraser Institute has also upgraded South Australia from 18th to fourth in terms of mineral potential in its latest global survey, and Access Economics, a Canberra-based independent forecaster used by the Liberal Party and others, says, in its latest assessment of South Australia's economy, 'blue sky beckons in a way that it hasn't for a long time.'

Taking into account these recent, upbeat indications of activity in South Australia's mineral sector and its potential benefits to the wider state economy, will the minister provide information on the outlook for this important industry sector?

The Hon. P. HOLLOWAY (Minister for Police, Minister for Mineral Resources Development, Minister for Urban Development and Planning) (14:55): I thank the honourable member for his question. As he points out, members opposite hate good news, because they know that, in the eight years they were in government from 1993 to early 2002, there was very little good news in that period. In the mining industry, when I became the minister in 2002, there was $30 million, or thereabouts, exploration in a year and there is now over $330 million. In just those six years there was a tenfold increase in exploration.

As the honourable member points out, South Australia has been experiencing a healthy resurgence in mineral exploration, and this strengthening in confidence has been generated by the success of the Plan for Accelerated Exploration which was adopted by this government. Beside the mineral exploration spending figures produced by the ABS and the independent assessments of the Fraser Institute and Access Economics, our own Primary Industries and Resources SA has recently updated its mineral value chain scorecard. It is an industry scorecard that provides encouraging reading. The scorecard measures provide critical information on strategic development targets as well as assisting in the development of programs designed to aid expansion of the mineral industry. All 10 indicators comprising the scorecard have been improved in 2006-07 compared with the previous financial year.

I will share with the council the highlights of the latest reading. Private exploration expenditure rose 78 per cent year on year in 2006-07 to $260.7 million, which remains well above the $100 million target for mineral exploration outlined in South Australia's Strategic Plan. As we have indicated before, if one takes the full calendar year it got up to $330 million, but these figures for the scorecard were for the financial year.

New capital expenditure to estimates rose 79.2 per cent year on year to $760 million. State mineral royalties revenue rose 29 per cent year on year to $78.7 million. Commodity export value rose 19.4 per cent year on year to $2.354 billion. Mine gate production value rose 5.3 per cent year on year in the same period to almost $2.5 billion with well over half of this attributed to the Olympic Dam mine. Net off-site refining, from world-class facilities such as OneSteel's iron ore smelter at Whyalla and Nyrstar's Port Pirie lead-zinc smelter, rose to a value of $1.18 billion. The net mineral industry value rose 8.8 per cent year on year to an impressive $3.672 billion, which is well over the target of $3 billion set in the South Australian Strategic Plan.

The strong increase in new capital expenditure in 2006-07 has primarily been driven by the development of the Prominent Hill copper-gold mine, the Mindarie heavy minerals sands mine and the Angas lead-zinc mine, and OneSteel's Project Magnet which has involved the conversion to magnetite feedstock and an increased capacity for haematite iron ore export This significant increase in capital expenditure indicates that the surge in minerals exploration driven by the PACE initiative is not just an anomaly of the global minerals boom. It signals the beginning of an elevated and sustainable level of mineral development in South Australia which will lead to substantial increases in mining activity and a greater contribution to the state's economy.

Continuing with the good news: South Australia's mineral exports increased by 19.4 per cent to reach $2.35 billion in 2006-07 to become the largest single sector contributor to South Australian exports. Mineral exports from South Australia now comprise more than a quarter (26 per cent) of total state merchandise exports.

The honourable member asked about the outlook for the sector, and I can inform him that the blue skies predicted by Access Economics are, indeed, in sight. PIRSA predicts that, provided mineral commodity prices remain stable or increase, the 2007-08 mineral scorecard will demonstrate growth in key areas. Mineral exploration expenditure is forecast to grow by more than 10 per cent through 2007-08 as exploration continues around Olympic Dam and the statewide search for copper and uranium remains intense.

New capital expenditure is forecast to grow by more than 15 per cent due to heavy spending by projects such as Prominent Hill, Project Magnet and Angas. Mine gate production value is also forecast to grow by at least 10 per cent as BHP Billiton's Olympic Dam is aiming for production of copper, uranium, gold and silver at higher levels. In addition, increased iron ore exports and processing from OneSteel's Project Magnet are also expected to boost production, along with the production of mineral sands for the first time from Mindarie.

The increased production is expected to flow through to growth in mineral royalties and exports underpinned by the expected increase in the export of copper, iron ore and mineral sands. Looking further ahead to the medium term, the outlook also remains promising. PIRSA predicts that mine gate production and exports in 2008-09 will be influenced by the start of production at Oxiana's Prominent Hill deposit, Terramin's Angas deposit and Uranium One's Honeymoon deposit. Several iron ore deposits are poised for possible production within that time frame, including IMX Resources' Cairn Hill deposit, Western Plains Minerals' Peculiar Knob deposit, Centrex Metals' Wilgerup deposit and Ironclad Resources' Wilcherry Hill project.

Surges in private mineral exploration stimulated by this government's PACE initiative have ensured a steady pipeline of development projects to increase mineral production, net off-site refining and net mineral industry values and exports. The minerals industry has already achieved the exploration and production targets set in the South Australian Strategic Plan ahead of time, and it should be able to sustain these levels well into the future. That is good news for the industry, good news for the economy, good news for jobs, and good news for all South Australians.

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