the reverse crash, page-8

Small explorers plead case for federal help



Sarah-Jane Tasker | November 15, 2008
Article from: The Australian

THE junior mining sector is urging the Rudd Government to throw it a much-needed lifeline by introducing a flow-through share scheme to stop the industry collapsing.

The Government promised to introduce the scheme in its first term but has failed to move on that commitment, leading industry bodies -- headed by the Association of Mining and Exploration Companies -- to provide a submission this week to Resources Minister Martin Ferguson calling for urgent action.

Association advocacy and public affairs national manager Graham Short said the document had wide industry support and covered important issues for the minister's consideration.

The scheme, based on a Canadian system, allows investors to claim their share of exploration losses against their personal tax rather than it mounting up on the balance sheet of a minerals explorer.

As the fallout from the financial downturn and plunging commodity markets intensifies, explorers are among the hardest hit in the resources sector.

Major miners have curbed exploration spending or deferred planned projects but it is the juniors that desperately need the tax incentive just to survive.

Robert Kennedy, chairman of Monax Mining and a director of other juniors, said it was imperative the scheme was introduced in the next six to nine months.

"If that doesn't happen, many of the junior explorers will go to the wall," he said.

"It is giving an incentive and capitalising our industry right now when it is crucial, because if we don't do this we won't be ready for the next wave."

Mr Kennedy said it was not just the industry, but the country as a whole that had to push to keep Australia going from an exploration point of view.

"It is in the interests of the country because when we find a mineral resource the whole country benefits from the royalties," he said.

Minerals Council of Australia chief executive Mitchell Hooke said the current economic climate intensified the need for a flow-through shares scheme.

"It would send a strong signal that there was confidence in the future of the minerals sector, and help spur investment," he said.

Avalon Minerals managing director David McSweeney said the exploration industry was on its knees and in need of government intervention to survive.

"The Government has gone out of its way to stimulate other industries but the real economy, which is exporting goods for world markets, is left to wither on the vines," he said.

"I have seen very little evidence that any government -- state or federal -- has taken into account investment in the real future."

Calls for incentives had previously fallen on deaf ears because of the financial windfall from the boom, but Mr McSweeney said confidence in the sector was "over in the blink of an eye".

"This is nation-building and investing in the next big 20-25 year cycle. Junior explorers are the bread and butter for regional towns in Australia. We have to keep the flame alive," he said.

Mr Ferguson declined to comment on the scheme.