Market Failure in the Australian Mineral Exploration Industry: The Case for Fiscal Incentives

Discussion paper prepared for public release by the Australian Institute of Geoscientists, April 2010

In the lead-up to the Ken Henry Tax Review the Australian Institute of Geoscientists (AIG) commissioned exploration geologists Mr Chris Cairns (Integra Mining Limited) and Dr Jon Hronsky (Western Mining Services) and mineral economist Mr Richard Schodde (MinEx Consulting) to prepare a report on what needs to be done to ensure that Australia keeps its strong reputation as a place for mineral exploration.

The report finds that the heavy reliance of companies exploring in Australia on short-term market capital has impeded their ability to undertake high risk but potentially high reward “greenfields” or “grassroots” exploration capable of yielding the new major discoveries needed to sustain Australia’s precious and base metals mining production.

It also found that Australia’s current precious and base metals mining production is increasingly reliant on a small number of major deposits which are largely ‘mature’ and in decline – presenting a clear threat to mine production and in turn, the export earnings of the Australian economy.

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