Government’s budget decision a missed opportunity for mining sector

The Australian Government’s decision not to extend the Junior Minerals Exploration Incentive (JMEI) in this year’s budget is a missed opportunity for an industry that plays a critical role in Australia’s economic future, according to BDO Global Leader of Natural Resources & Energy, Sherif Andrawes.

Despite a compelling economic impact report from BDO and the Association of Mining and Exploration Companies (AMEC), the government has opted against extending the initiative, marking a missed opportunity for an industry vital to Australia’s economic future.

Sherif said the decision is particularly disappointing given the proven success of the program in stimulating investment and exploration activity.

"The omission of the JMEI from the Federal Budget is a setback for the mining and exploration sector," Sherif said.

"The program has proven to be highly effective in encouraging investment in junior exploration companies, which are the backbone of our mining sector."

Introduced in 2017, the JMEI has been a key driver in supporting junior exploration companies by providing tax credits to investors. This initiative has not only spurred investment in greenfield exploration but also resulted in substantial economic benefits.

A report by BDO and AMEC highlighted that the JMEI facilitated over A$400 million in exploration activities, generated A$1.2 billion in capital raising, and contributed A$769 million to Australia’s GDP.

For every dollar allocated to the JMEI, more than A$2 was spent on exploration, and over A$6 was raised in capital markets.

"Junior exploration companies are often the pioneers in discovering new mineral deposits critical for the future of mining. Without the targeted support provided by the JMEI, these companies will face increased financial challenges, which could stall exploration activities and delay the discovery of vital resources," said Sherif.

The economic impact report recommended not only extending the JMEI but expanding it with an increase in support to A$200 million over four years.

"The track record of the JMEI speaks for itself, and the recommendations from BDO and AMEC make a strong case for its continuation and expansion.

“While the budget’s decision is a blow to the sector, hope remains that the JMEI will be revisited as an election commitment ahead of the forthcoming federal election.”

For media enquiries:
Tate Papworth 
Manager, Media 
E: Tate.Papworth@bdo.com.au 
Ph: 0433 411 189