One of the fundamental reasons why a high number of projects within the mining trade are not fully completed is due to a lack of effective liaising and compromise between governmental institutions and mining companies. These parties seldom naturally agree on the salient matters surrounding exploration and project development plans, with concessions either accepted through gritted teeth, or else projects effectually shelved. Bridging this significant, and often conflicting, gap between national politics and industry leaders in Australia is the Association of Mining and Exploration Companies (AMEC).
AMEC has evolved into the peak representative body for mineral exploration and mining, on a nationwide scale, since its formation in 1981. The organisation aims to facilitate a positive political and economic environment, so that leaders in the mining sector can achieve the best possible practical results. Boasting a wide-ranging advocacy portfolio, stretching from Aboriginal affairs to mining legislation, AMEC provides a strong link between the federal government and its members.
AMEC has 114 full members including Roy Hill Holdings Pty Ltd and Fortescue Metals Group (ASX: FMG) as well as 144 associate members, who all receive a number of practical benefits. Along with extensive federal government lobbying, members are also provided critical industry information and afforded opportunities to network with other like-minded firms at events such as the annual AMEC convention. Simon Bennison, CEO of the organisation speaks to RGN, outlining how AMEC traverses the mining industry, and how it implements its aims.
Federal government lobbying is a crucial part of AMEC’s ongoing activity in the field, with current focus attributed to a review of the Exploration Development Incentive. “This is something that we have championed with Ian Mcarlin and had this successfully built into the 2013 election commitments”, says Bennison. The scheme attempts to encourage shareholder investment in small exploration companies undertaking greenfield mineral exploration in Australia. AMEC has been conducting an ongoing assessment of the scheme, and is, “looking forward to this getting rolled over and refunded for at least another three-year cycle,” according to Bennison.
Furthermore, extensive industry research is undertaken by AMEC, which is then presented to the federal government in order to ensure key political actors are well-informed about the current conditions within the national mining sphere.
“We have commissioned work to map out current market conditions so that politicians and decision-makers in particular have an understanding of how much our resources in certain industries are left, given our understanding of mine lives,” explains Bennison.
“This research is very important when making strategic decisions about where to invest dollars that will result in future discovery. That drives a lot of our agenda as well as the ongoing Exploration Development Incentive review.”
Another crucial aspect of AMEC’s federal government liaison strategy revolves around taxation policies. The organisation has consistently supported the government’s move towards decreased corporation taxes and also advocates for the protection of the diesel fuel tax credit for the industry. AMEC has a corporate regulation and taxation committee, which advises its council on several ongoing issues surrounding taxation regulations and policies which will affect mining exploration companies.
In light of the current market climate, leaders in the Australian mining industry face a number of challenges, of which AMEC is working hard to reduce the impact these issues will have in the mining community. A number of mines across the nation are coming to the end of their life-span which has contributed to a general mood of hesitance in recent years. Combined with a global commodity price down turn, AMEC has had to intensify its efforts to liaise with government bodies to ensure a steady flow of resources.
Forthcoming policies proposed by governmental organisations are also regularly interrogated by AMEC. For example, recent plans devised by the National Party of Western Australia to introduce a AUD$5 per tonne production tax on mining companies are entirely condemned by AMEC. “We think the mining tax proposed by the WA Nationals is a fairly ridiculous policy. The behaviour of the National Party is very unpredictable so we are having to be very reactive to a lot of these issues,” says Bennison.
Rises in costs of tenements across Western Australia have also had an adverse effect on the operations of a high number of mining companies. In particular, the federal government has imposed a noticeable increase on the price of tenement rentals. Bennison explains, “Increasing the valuation of tenements has had a secondary flow on the sector by increasing shire rates. I don’t think government have thought this through well, and we are trying to get exemptions for the resources sector.”
The recent proliferation in the number of federal government agencies that oversee planning permission in the industry is another issue of concern to AMEC. These government agencies attempt to accelerate the approval process by assigning a greater number of personnel to the job, which AMEC fears could come at the expense of safety procedures. “We need to get greater efficiencies in the government agencies to make sure things like safety and environmental approvals are done on a risk basis and not just ticking 500 boxes,” says Bennison.
AMEC’s solution to this government agency problem involves simplifying and fine-tuning the current risk assessment system that Australian mining companies operate in. The organisation is encouraging firms to develop a software system that enables them to track applications throughout the approvals process, so that they can pinpoint exactly where approvals are being held up. Bennison says transparency throughout the approval process is of ‘paramount importance’.
Looking towards the future of Australian mining, Bennison believes a corner has been turned in recent months following the recent enduring price dip across global markets. The CEO described the behaviour of Australia’s mining and exploration companies as ‘responsible’ throughout the downturn, and displayed a level of guarded confidence in the revival of the industry.
“We are quite optimistic that from here on prices should slowly but gradually improve, albeit in a volatile fashion.
“Areas such as gold, lithium and graphite have all had a good injection resulting in a growth in exploration numbers, which has been terrific. We are keen to track this progress and will do all we can to further contribute to this growth in these sectors,” adds Bennison.
As the global economy and commodity markets show signs of recovery, the international mining community may begin to flourish once again in the coming years. However, the work of national organisations such as AMEC goes a long way to ensuring new and existing mining and exploration projects can operate in the best possible political and economic environment.