21 June 2014
At a time when annual minerals exploration expenditure has slumped by as much as $2 billion in response to weaker commodity prices and the exit by risk-adverse investors, Rio argues that Australia has thrown up barriers to encouraging more investment in the search for the next generation of mineral deposits.
Rio’s global head of exploration, the Singapore-based Stephen McIntosh, said yesterday there were real and perceived threats to exploring in Australia.
“It is a complex process to conduct exploration here. And I am not talking about mining, I am talking about the ability to simply go out and do some low impact exploration,’’ Mr McIntosh said at a Melbourne briefing.
Rio’s own experience is that it takes between 2.75 and 6.25 years in Australia to move from the concept stage of an exploration project through to the point at which on-the-ground exploration can start.
“That’s an enormous impediment that has not been understood in Australia,’’ he said.
Slow progress through a range of red tape, green tape and native title approvals and agreements is creating the impediment. In some instances, approvals can take up to 20 years. Mr McIntosh emphasised Rio was not arguing for approvals to be swept away.
“It’s absolutely important to be mindful of environmental and community issues, as those so-called ‘soft’ issues could well become hard issues for miners if not treated with importance. But approval time frames (for starting exploration on the ground) can be and must be done in a much more efficient manner.”
Mr McIntosh said the number of years it took in Australia to gain approvals was on the “very high side”. He said one to two years was achievable in other countries.
For Rio, he said, the lengthy approvals process could be seen as a comparative advantage as unlike companies with a pure Australian focus, Rio had exploration opportunities around the world. Delays in project approvals here meant they could be rescheduled to later dates, and potentially be dropped because of the impact of commodity cycles or new overseas opportunities.
He said the circumstances had also given rise to the situation of granted exploration ground being churned over more than is warranted. Instead of taking up new ground, explorers were in effect forced to cover old ground because of the impediments.
Unlike its rival BHP, Rio retains a broad exploration hunt, both in terms of the commodities it is exploring for (seven) and their location (18 countries). BHP has essentially retreated to looking for copper in the Andes.
Rio’s annual exploration on greenfields exploration (geographies or commodities away from existing operations) is estimated to be the highest in the world at about $US200 million.
“We are generally commodity agnostic as long as the size of the prize is right,’’ Mr McIntosh said. He said the investment had paid off, with Rio delivering one world-class discovery a year, on average, for less than $US100m.
Courtesy of The Australian