AMEC has welcomed a move to replace the Exploration Development Incentive (EDI) with the Junior Mineral Exploration Tax Credit (JMETC) as visionary and great news for Australians.
The announcement today by Prime Minister Malcolm Turnbull would see a $100 million JMETC in effect for four years from 2017/18.
Association of Mining and Exploration Companies (AMEC) chief executive officer Simon Bennison said it came at a time where IPOs and mineral-related greenfield drilling had been at an all-time low.
The JMETC allows mineral exploration companies (with no mining income) to renounce and pass future tax deductions (losses) to their Australian resident investors.
“The JMETC is a critical investment in Australia`s future, particularly as contemporary research in relation to existing mines indicates that there will be significant reductions in production and Government revenue streams as those mines reach the end of their current lives. They need to be replenished by new discoveries as soon as possible,” Mr Bennison said.
“Mineral exploration is a long-term, high-risk activity which needs scarce equity capital in a globally competitive market place.
“Tax credits under the JMETC will be available to new capital raisings, more akin to the Canadian model.
“The credit to investors will represent 30 per cent of the eligible greenfield mineral exploration expenditure incurred, and renounced by the company. This is an extremely attractive arrangement which should result in more investors entering the equity market.
“The rewards are even greater for those investors in successful exploration companies which subsequently develop a new mine.”
Mr Bennison said analysts had projected that employment would decrease in the base and precious metals industries by up to 75 per cent over the next 15 years if action was not taken now.
Mr Turnbull said the JMETC would encourage ‘junior explorers’ to take risks and to have a go at discovering the next large-scale mineral deposit.
“We want to back enterprise. We want to turn around the greenfields minerals exploration expenditure that have declined by almost 70 per cent over the past five years,” he said
Tax credits of up to $100 million over four years will be made available from this financial year on a first-in first served basis consistent with arrangements to be administered by the Australian Taxation Office.