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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-09-09 Daily Xml
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Question Time

MINERAL EXPLORATION

The Hon. D.W. RIDGWAY (Leader of the Opposition) (14:52): I seek leave to make a brief explanation before asking the Minister for Mineral Resources Development a question relating to mineral exploration.

Leave granted.

The Hon. D.W. RIDGWAY: In the ABS figures released today it states:

The trend estimate for total mineral exploration fell by $55.1 million, or 10 per cent, to $461 million in the June quarter 2009. The current estimate is 32 per cent lower than in the June quarter estimate of 2008.

It goes on to state:

The largest contributions to the fall in this quarter were Western Australia down $31.6 million, or 10.8 per cent, and South Australia down $9.4 million, or 19.7 per cent.

I am sure that the minister will blame the global financial crisis for this downturn. Clearly, over the past year, when I have been asking the minister these questions, he has indicated that the PACE program has been the great saviour of mineral exploration. Will the minister now concede that the PACE program has not driven mineral exploration and that, in fact, it has been driven by demand and prices?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (14:54): Isn't it typical that the opposition in this state should try to knock the success and growth of our mining industry?

Members interjecting:

The Hon. P. HOLLOWAY: We will look forward to the support. If members opposite support the mining industry in this state, I look forward to their support over the coming days for the expansion of the mineral industry. We have already seen what they have done in relation to the Olympic Dam expansion. The Leader of the Opposition in another place has already come out and said that she will add hundreds of millions of dollars to the cost of that project without any further scientific study, saying that the desalination plant should go to a different location.

When decisions are made in relation to new ports and so on in this state, we look forward to the opposition supporting them, but I suspect that it will not. I suspect that its local candidates will do what they have done with every other piece of development in this state, that is, rock them, and that is one of the reasons the economy was so poor in the eight years it was in office.

I am delighted that the honourable member raises the issue of mineral exploration. Independent indicators continue to suggest that the South Australian mining industry is recovering well from the impact of the global financial crisis. The turnaround in exploration expenditure, and the continuing development of major resource projects in South Australia, confirms that the industry remains strong.

The Hon. D.W. Ridgway interjecting:

The Hon. P. HOLLOWAY: I will come to the figures. One thing you never do with the opposition is trust its figures. The Leader of the Opposition has been peddling some quite erroneous figures on the contribution the minerals sector makes to this state compared with that of 10 years ago, and they just do not compute with those you get from the ABS.

The Hon. J.S.L. Dawkins interjecting:

The Hon. P. HOLLOWAY: No; I am talking about the ABS figures, and they show that the figures the Leader of the Opposition released a week or two ago—

The Hon. D.W. Ridgway interjecting:

The Hon. P. HOLLOWAY: I will come to those in a moment, and I will come to some other figures, as well. In fact, I could talk about the good economic statistics of this state for the rest of question time if honourable members would like me to because there is so much good news around.

The results in the ABS survey released today coincide with South Australia's being ranked as the fifth best mining jurisdiction in the world for resource investment in the Resourcestocks 2009 World Risk Survey. South Australia has been very successful in capturing opportunities during the recent boom times. Mining projects are continuing to proceed towards development and full operation.

Over the next 12 months, South Australia expects to approve four to five mines, and we can expect a continued resurgence in investment and expenditure once the impact of the global financial crisis recedes. The Australian Bureau of Statistics released its quarterly report today on Australia's mineral and petroleum exploration expenditure.

South Australia's exploration expenditure for the June quarter is $41.8 million, which has reversed the trend from the March quarter figure of $36 million. Overall, total Australian mineral exploration expenditure showed a rise of $80 million in the June quarter, up 19.8 per cent compared with the March quarter.

So, after the low figures of the March quarter, in June we saw exploration up not only in this state but also across the country. South Australia, New South Wales, Western Australia, Queensland and the Northern Territory all experienced a reversal of the previous downturn in mineral exploration expenditure for the June quarter.

Mineral exploration expenditure for the quarter of $41.8 million comprises $25.4 million in the ABS category for new deposits; in other words, 60.8 per cent of that exploration expenditure was on new deposits, and 16.4 per cent (which represents the remaining 39.2 per cent) was on existing mineral deposits.

One of the really good pieces of news out of these latest statistics is that it represents a significant reversal in South Australia towards exploration and frontier greenfield mineral regions, and there are probably good reasons for that. If we compare the figures with those of 12 months ago, many of the dollars being expended on exploration in South Australia were spent at the giant Olympic Dam mine proving out the resources out that mine. A number of drilling rigs were going 24 hours a day, seven days a week in that region.

That exploration ended some time ago, so it is very heartening indeed to see that over 60 per cent of this increased figure (up from $36 million in the first quarter to $41.8 million now) is for new deposits, which of course offers the prospect of further mines into the future.

So, the turnaround in mineral exploration expenditure for the June quarter is across most states. For the June quarter in South Australia it rose from $36 million to $41.8 million, which is a 16.1 per cent increase on the previous quarter. If we look across the whole financial year (because we know that quarterly figures can fluctuate) and look at mineral exploration expenditure for the entire 2008-09 financial year, it was $220.7 million or 9.9 per cent of the total Australian mineral exploration expenditure. So, South Australia has again significantly exceeded the South Australian Strategic Plan target of maintaining expenditure above $100 million per year.

Every time I have spoken on mineral exploration figures in this council—as I have every quarter—I have indicated that, yes, we would expect that in times when it is difficult to raise funds—and it does not get much more difficult when you have a global financial crisis—exploration will be the first to bear the brunt, but the fact that we had $220 million, which was more than double the original target we set back in 2004, is very heartening.

The components of that spend are 44.4 per cent of the national expenditure on uranium within this state and copper, 28.3 per cent of the national spend. They were the main minerals sought during the June quarter. Explorers also searched for gold, silver, lead, zinc, mineral sands, iron ore and nickel. The mineral exploration figure of $220.7 million for the financial year places South Australia third; again, we have retained that position behind Queensland and Western Australia, the two larger states; not only are they larger in size but they also have a longer mining history.

If one looks at petroleum expenditure, one sees that petroleum expenditure for the June quarter experienced a strong increase of $16.3 million from $17.9 million in the March quarter, so that is a total of $34.2 million in the June 2009 quarter. So, the combined mineral and petroleum exploration figure for South Australia for the financial year is $332.9 million; that is, the $220.7 million for minerals and $112.2 million for petroleum.

Many of the world class mining projects that have been identified in the past few years of prospecting and discovery are still being developed by resource companies looking beyond the global economic downturn to the next upswing. South Australia does remain a trusted jurisdiction for exploration spending. That continued confidence in South Australia was highlighted by the state's ranking in the top 10 in terms of mineral potential in the 2009 Fraser Institute survey of more than 70 mining jurisdictions worldwide. In the Resourcestocks magazine's 2008 and 2009 world risk mining surveys, South Australia was ranked fifth in the world and second last year, against all other mining jurisdictions.

South Australia was ranked fifth in the world against all other mining jurisdictions in the 2009 survey. This is an important point, because it comes to the last part of the question asked by the Leader of the Opposition about what role PACE played in this. I will quote the head of the Association of Mining and Exploration Companies (AMEC), who in a recent comment on 7 September on the Resourcestocks 2009 survey stated:

South Australia's results combined with last year's second place finish, proved it is performing consistently. We encourage the other States of Australia to implement the strategy South Australia has been using for the last 5 to 6 years in order to improve their resources industry.

I think that adequately answers the question asked by the Leader of the Opposition.

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