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Iron ore delivers Budget windfall

ining will continue to lead Australia’s Australia’s key economic assumptions for healthy, diverse and skilled workforce will
Meconomic recovery post the COVID-19 the coming financial year. also build the economy for the future as
pandemic despite Federal Treasury prepar- “If iron ore stayed at an elevated level as Australia recovers from the COVID-19 pan-
ing for the iron ore price to dramatically tum- opposed to coming down that would be ex- demic,” she said.
ble to $US55/t over the next nine months. tra dollars.” “Treasury notes that mining delivered
Only one day after the iron ore price If iron prices remain elevated over the higher-than-expected company tax re-
soared to an all-time high of $US230/t, first three quarters of FY2022 instead of ceipts, forecast to reach $100.5 billion in
Treasurer Josh Frydenberg revealed the declining to $US55/t as suggested by Fed- 2024-25. The Australian minerals industry
nation’s top export product was helping to eral Treasury, a further $12.5 billion will be accounts for 30% of company tax collec-
offset spending elsewhere in the Federal added in tax receipts over the three years tions.
Budget. to FY2023. “Mining exports will grow 5% next finan-
With Australia’s budget deficit expected Company tax receipts are expected to be cial year and increase strongly in the future.”
to blow out to a record $161 billion this fi- $8.8 billion or 10.4% higher in FY2021 than Constable added that additional spend-
nancial year, rising iron ore prices are allow- forecast in FY2022, largely due to elevated ing on vaccine distribution and quarantine
ing more room to keep the fiscal tap open iron ore prices delivering higher-than-ex- services “will help make mining workers,
to aid the recovery from the coronavirus pected collections from mining companies. their families and communities safe”.
recession. The forecasts in this year’s Federal Other notable Budget announcements
Federal Government predictions show Budget were roundly welcomed by Austral- expected to support the resources industry
Australia’s nominal economic output could ia’s leading resources sector representative include; $15 billion in infrastructure funding;
be around $11.6 billion lower than forecast bodies. $2.7 billion to create 170,000 new appren-
in FY2021 if the iron ore price fell to $US55/t New analysis by Deloitte Access Eco- ticeships, traineeships, and 5,000 places
immediately. nomics shows the resources industry paid for training support for women to break into
By contrast, if prices were to remain el- $39.9 billion in company tax and royalties non-traditional trades; $130.4 million to im-
evated until the end of March next year, it in FY2020 and $238.8 billion over the past prove digital connectivity in regional, rural
would be a $1.1 billion windfall in FY2021 decade. and remote communities; and $17.1 million
and close to $50 billion boost the following Minerals Council of Australia chief execu- for additional resourcing to improve EPBC
financial year. tive Tania Constable said mining continued assessment and approval times.
“It’s a conservative forecast,” Frydenberg to be “the bedrock of the nation’s finances”. – Paydirt staff with Reuters
told reporters in Canberra after announcing “The industry’s commitment to a safe,

oPInIon

mid all the headlines generated by example of how a ‘little’ thing – the Hemi to renewable energy. In a world that is in-
AMay’s Federal Budget, a four-year ex- discovery of 2019 – is poised to become creasingly focused on sustainability, cop-
tension announced to the Junior Minerals a development from which some very big per’s high recycling rate is also appealing.
Exploration Incentive might have escaped things could grow. With an extra 10mt of copper forecast to
some people’s attention. More than half of the 85 junior explorers be needed worldwide by 2030 and prices
Make no mistake though, it’s a very wel- who have benefited from the Junior Miner- spiking recently into record territory, the
come and highly important development for als Exploration Incentive to date have been race is on to discover new and untapped
the West Australian mining and resources WA-based. Given the ongoing strength of resources.
sector. the gold price, it seems reasonable to as- WA has an opportunity to be a major
To start with, it’s worth $100 million, a sume the scheme will continue to be at- player in meeting that demand – particularly
strong investment in tax incentives for some tractive for local explorers focused on that with South American copper mines being
of the smaller players doing heavy lifting at commodity. impacted by both the COVID-19 pandemic
greenfields sites around WA. However, I can also see it offering some and declining ore grades, and African ju-
But the benefits that flow from the con- real encouragement for juniors undertaking risdictions continuing to present uncertain
tinuation to the scheme are likely to be sig- copper exploration. investment conditions.
nificantly more far-reaching than that. Like the Junior Minerals Exploration In- Rio Tinto Ltd’s highly promising Winu
In short, every major project has to start centive, copper may not be in the forefront project in the Pilbara, which is scheduled
somewhere. And more often than people of many people’s minds. It’s easy to under- to reach production in 2024, shows the po-
might realise, those projects start out be- stand why: we’ve long grown accustomed tential copper resources that are on offer in
cause a junior went looking for something to its unobtrusive role in our everyday lives our State.
new and found it. and it’s hardly new, having been among In turn, programmes like the Junior Min-
To provide some context, it’s been esti- WA’s top handful of exports as long ago as erals Exploration Incentive give smaller
mated that every $1 invested as part of the the 1860s. operators around WA the confidence they
WA Government’s Exploration Incentive But the high electrical and thermal con- need to go and look for them.
Scheme has returned $31 in value to our ductivity that first made copper so attractive It’s going to be exciting to see what they
State. for electrical purposes 200 years ago are find.
De Grey Mining Ltd’s Mallina gold pro- exactly the same properties that make it Paul Everingham is chief executive of
ject in the Pilbara is just one high-profile so integral to the ongoing global transition The Chamber of Minerals & Energy WA

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