The Asia Miner

APR-JUN 2017

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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6 | ASIA Miner | Volume 14 • Issue 2 | 2017 AUSTRALIA continues to benefit from investments made by the mining sector over the last ten years," according to Association of Mining and Exploration Companies (AMEC) CEO Simon Bennison. This was supported by recent government statistics that have re- vised up Australia's resources and energy export earnings by 32% from the previous forecast. The Office of the Chief Economist's March 2017 Resource and Energy Quarterly indicates that the nation's resources and energy export earnings are forecast to reach an all-time high of $215 bil- lion in 2016-17 and 2017-18, with 85% of these earnings from the minerals sector. Simon Bennison said, "Higher iron ore and metallurgical coal pric- es have been a key driver of this revision. Iron ore prices reached an unexpected 30-month high of US$89 a tonne in mid-February 2017. Australian iron ore exports are forecast to have increased by 50% in 2016-17, to reach a three-year high of A$72 billion. "Because of the large investment to boost production capacity in the past decade, recent extensive cost-cutting and the high quality of Australia's resources, export earnings from mining are forecast to remain high. "The growth in global demand for 'non-energy resource commod- ities' such as iron ore, gold, aluminium, copper, nickel and zinc is projected to be slower than in the previous five years, with the Office of the Chief Economist predicting that, while remaining significant, the rate of Chinese urbanisation will taper in the next five years." "However, India is predicted to expand its steel production and overtake Japan as the world's second biggest steel producer– so with the correct public policy settings, Australia could position itself to take advantage of these opportunities," he said. AMEC's CEO said the organisation maintained its view that the Federal Government and state governments must ensure that Aus- tralia, and all states, remained attractive to investment to overcome any potential slowdown in the growth of demand. "The Federal Government's Exploration Development Incentive (EDI) program has stimulated investment in eligible Australian junior mineral exploration companies, making it more attractive for inves- tors to decide to support the next generation of mines. "AMEC calls on the national government to continue its support of the EDI, which is currently under review, Simon Bennison said. "The EDI has provided eligible shareholders with a tax offset equivalent to the company tax rate. "The Resources and Energy Quarterly does not quantify the num- ber of barriers, including land access, increasing red tape and rising costs, that Australian mining and mineral exploration companies face." He said the proposed introduction of cost recovery for the Austra- lian Securities Investment Commission would undermine Australia's attractiveness to mining investment. "AMEC continues to advocate for ongoing funding for exploration incentive schemes and co-funded drilling programs to encourage innovative mineral exploration in Australia and generate significant economic returns for the economy. "Australia is currently benefiting from the investment that mining companies have made during the construction phase in the last decade. This investment by the mining sector has created jobs, royalties and revenue for Australia. Governments must focus on en- couraging investment in the mines of tomorrow so the community can continue to benefit from mining," Simon Bennison added. Nation benefits from mining investment METS Ignited has welcomed a report by Deloitte Access Econom- ics on the significant contribution made to the Australian econo- my in 2015-16 by the mining equipment, technology and services (METS), and mining sector. Together, the total contribution by the sector was $236.8 billion, or 15% of the country's gross domestic product. The report, 'Mining and METS: engines of economic growth and prosperity for Australians', was commissioned by the Minerals Council of Australia. METS Ignited CEO Ric Gros said the report revealed the econom- ic footprint of the sector and showcased the innovative thinking of the industry through a series of case studies. "We are delighted to be recognised alongside the mining sector for our contributions to the Australian economy and community," Ric Gros said. "The report found mining and METS activities support more than 1.1 million jobs, many of them in the Pilbara, Bowen-Surat and Hunter regions. And it states that innovation is an integral part of this global and highly competitive sector. "These messages form part of the existing narrative around our industry - METS companies provide world-class products and ser- vices that are shaping the mines of the future," he said. Overall, Deloitte Access Economics estimates that the direct eco- nomic contribution of mining and METS activities was $133.2 bil- lion in value added in 2015-16, with 484,114 full-time equivalent (FTE) jobs directly supported by the sector. This figure represents the 'economic footprint' attributable directly to the mining and METS sector in the Australian economy. In addition to this direct economic contribution, the mining and METS sector depends on outputs from other industries in the Australian economy, such as petroleum, electricity and manu- facturing, as inputs to production. This indirectly generates eco- nomic activity by facilitating production and paying wages and profits in these other industries. This indirect economic contribu- tion added a further $103.6 billion in 2015-16, supporting another 655,654 FTE jobs. Mining and METS: economic growth engines

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