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Feature Article - Expenditure on Land Access for Mineral Exploration, 2001-02


INTRODUCTION

In recent years the level of mineral exploration in Australia has decreased significantly. A number of factors have been suggested for this, including increasing costs associated with access to land for exploration purposes. There are concerns that expenses associated with legislative requirements on native title, environment protection and cultural heritage are adding to the other costs of land access incurred in mineral exploration. For this reason, the issue of the costs of land access has been identified by government and the industry as being an important area for which statistical information is needed.

In 2002, the Ministerial Council on Mineral and Petroleum Resources (MCMPR) through the Department of Industry, Tourism and Resources (DITR) commissioned the ABS to undertake a survey to collect land access expenditure for mineral exploration. The initiative was made possible by a DITR Regional Minerals Program (RMP) grant. The RMP sponsors projects that encourage a coordinated approach by industry and government to facilitate regional mining and mineral processing activities.
The survey was strongly supported by the industry through the Minerals Council of Australia (MCA) and the Association of Mining and Exploration Companies (Inc.) (AMEC).
Information gained from the survey, which was conducted in respect of 2001-02, will serve to inform the DITR Mineral Exploration Action Agenda process and could support a broader role for the MCMPR in addressing issues associated with land access for mineral exploration.

It should be noted, however, that the survey did not provide any information on how land access expenditure in 2001-02 compared to those in earlier years, so care should be used in relating the results from the survey to changes in total mineral exploration expenditure over time.

The survey was based on a feasibility study completed in October 2001 which investigated the types of land access expenditure that mineral explorers incurred in accessing land for exploration purposes. It also determined the availability of such information in the exploration industry.

In the 2001-02 land access expenditure survey, about 700 private sector businesses were approached with a mailed questionnaire. These businesses were predominantly sourced from the ABS quarterly Mineral Exploration Survey with supplementation from the MCA, AMEC, Geoscience Australia and the Australian Stock Exchange's new and recent listings. The land access expenditure survey was in effect a complete census of mineral exploration undertaken in Australia during 2001-02.


DEFINITION OF LAND ACCESS EXPENDITURE

Land access expenditure includes all 2001-02 financial year expenses incurred in obtaining (or attempting to obtain) access to land for mineral exploration purposes. Expenses may include payments made at the commencement of the exploration cycle (such as exploration licence application fees) through to notification, negotiation, and other processes up to the point where access to land is obtained to physically commence the mineral exploration or attempts to access land have been abandoned. Land access expenditure also includes any on-going payments made in 2001-02 for land access (for mineral exploration purposes) for which an agreement had been made prior to 1 July 2001.


RELATIONSHIP WITH MINERAL EXPLORATION SURVEY

The Australian Bureau of Statistics (ABS) conducts a quarterly Survey of Mineral Exploration. Two of the items collected in this survey are mineral exploration expenditure undertaken on 'production leases' and on 'all other areas'. Production leases are areas where production is underway (mine sites) or where development is taking place. All other areas include exploration leases, and in this article they are referred to as 'non-production leases'. Land access expenditure was collected from the 2001-02 survey in respect of exploration in the areas under non-production leases. The comparisons below are therefore related to mineral exploration expenditure in non-production leases as reported in the quarterly Survey of Mineral Exploration.

When determining the contribution of exploration businesses by size, exploration expenditure collected in the Mineral Exploration Survey was used as a proxy measure of business size.

Exploration businesses in the survey were classified into three size groupings by their 2001-02 mineral exploration expenditure in non-production leases. These groupings are:

• large businesses with expenditure of $5m and over

• medium size businesses with expenditure of $1m to less than $5m

• small businesses with expenditure of less than $1m
  
  

LAND ACCESS AND MINERAL EXPLORATION EXPENDITURE, Non-production leases - 2001-02
			Land access
			expenditure as a
			proportion of
	Land access	Mineral exploration	mineral exploration
	expenditure	expenditure	expenditure
	$'000	$'000	%
New South Wales	1,716	40,088	4.3
Victoria	602	26,328	2.3
Queensland	6,515	65,708	9.9
South Australia	2,157	29,943	7.2
Western Australia	23,771	305,233	7.8
Tasmania	120	2,770	4.3
Northern Territory	3,191	39,040	8.2
Australia	38,072	509,110	7.5

LAND ACCESS EXPENDITURE, By nature of expenditure - 2001-02
		Internal to the business			Outsourced to a third party			Total
		$'000	%		$'000	%		$'000	%
Native title requirements
	Notification, consultation and negotiation expenses	4,836	12.7		3,124	8.2		7,960	20.9
	Compensation expenses	2,456	6.5		. .	. .		2,456	6.5
	Community relations expenses	np	np		np	np		2,177	5.7
	Other expenses	np	np		np	np		39	0.1
	Total	8,647	22.7		3,985	10.5		12,632	33.2
Other land-holder consultation and negotiation expenses		1,310	3.4		326	0.9		1,636	4.3
Government charges for tenements where exploration access not yet obtained		10,816	28.4		357	0.9		11,173	29.3
Cultural heritage expenses		2,543	6.7		2,496	6.6		5,039	13.2
Tenement management expenses for tenements where exploration access not yet obtained		2,383	6.3		1,722	4.5		4,105	10.8
Environment and rehabilitation bonds expenses		1,460	3.8		861	2.3		2,321	6.1
Other land access expenses		782	2.1		384	1.0		1,166	3.1
Total		27,941	73.4		10,131	26.6		38,072	100.0
. . not applicable np not available for publication but included in totals where applicable, unless otherwise indicated

LAND ACCESS EXPENDITURE, By size of business and nature of expenditure - 2001-02
			SMALL BUSINESSES(a)				MEDIUM SIZE BUSINESSES(b)
			Internal to the business	Outsourced to a third party	Total		Internal to the business	Outsourced to a third party	Total
			$'000	$'000	$'000		$'000	$'000	$'000
Native title requirements
	Notification, consultation and negotiation expenses		1,145	1,114	2,259		845	970	1,815
	Compensation expenses		481	. .	481		664	. .	664
	Community relations expenses		np	np	98		np	np	np
	Other expenses		np	np	25		np	np	np
	Total		1,740	1,123	2,863		1,698	1,002	2,700
Other land-holder consultation and negotiation expenses			517	238	755		np	np	454
Government charges for tenements where exploration access not yet obtained			5,104	310	5,414		np	np	3,412
Cultural heritage expenses			464	920	1,384		251	454	705
Tenement management expenses for tenements where exploration access not yet obtained			1,324	1,137	2,461		469	482	951
Environment and rehabilitation bonds expenses			315	293	608		290	198	488
Other land access expenses			384	210	594		183	156	339
Total			9,848	4,231	14,079		6,669	2,380	9,049
			LARGE BUSINESSES(c)				ALL BUSINESSES
			Internal to the business	Outsourced to a third party	Total		Internal to the business	Outsourced to a third party	Total
			$'000	$'000	$'000		$'000	$'000	$'000
Native title requirements
	Notification, consultation and negotiation expenses		2,846	1,040	3,886		4,836	3,124	7,960
	Compensation expenses		1,311	. .	1,311		2,456	. .	2,456
	Community relations expenses		np	np	np		np	np	2,177
	Other expenses		np	np	np		np	np	39
	Total		5,209	1,860	7,069		8,647	3,985	12,632
Other land-holder consultation and negotiation expenses			np	np	427		1,310	326	1,636
Government charges for tenements where exploration access not yet obtained			np	np	2,347		10,816	357	11,173
Cultural heritage expenses			1,828	1,122	2,950		2,543	2,496	5,039
Tenement management expenses for tenements where exploration access not yet obtained			590	103	693		2,383	1,722	4,105
Environment and rehabilitation bonds expenses			855	370	1,225		1,460	861	2,321
Other land access expenses			215	18	233		782	384	1,166
Total			11,424	3,520	14,944		27,941	10,131	38,072
. . not applicable np not available for publication but included in totals where applicable, unless otherwise indicated (a) Small businesses are those with exploration expenditure less than $1m. (b) Medium size businesses are those with exploration expenditure of $1m but less than $5m. (c) Large businesses are those with exploration expenditure of $5m or more.