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COMMONWEALTH OF AUSTRALIA Proof Committee Hansard HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON INDUSTRY AND RESOURCES Reference: Resources exploration impediments MONDAY, 11 NOVEMBER 2002 CANBERRA CONDITIONS OF DISTRIBUTION This is an uncorrected proof of evidence taken before the committee. It is made available under the condition that it is recognised as such. BY AUTHORITY OF THE HOUSE OF REPRESENTATIVES [PROOF COPY] INTERNET The Proof and Official Hansard transcripts of Senate committee hearings, some House of Representatives committee hearings and some joint com- mittee hearings are available on the Internet. Some House of Representa- tives committees and some joint committees make available only Official Hansard transcripts. The Internet address is: http://www.aph.gov.au/hansard To search the parliamentary database, go to: http://search.aph.gov.au HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON INDUSTRY AND RESOURCES Monday, 11 November 2002 Members: Mr Prosser (Chair), Mr Adams, Mr Fitzgibbon, Mr Gibbons, Mr Haase, Mr Hatton, Mr Randall, Mr Cameron Thompson, Mr Tollner and Dr Washer Supplementary members: Mr Fitzgibbon and Mr Ticehurst Members in attendance: Mr Adams, Mr Hatton, Mr Prosser, Mr Randall, Mr Cameron Thompson and Mr Tollner Terms of reference for the inquiry: To inquire into and report on: Any impediments to increasing investment in mineral and petroleum exploration in Australia, including: • An assessment of Australia’s resource endowment and the rates at which it is being drawn down; • The structure of the industry and role of small companies in resource exploration in Australia; • Impediments to accessing capital, particularly by small companies; • Access to land including Native Title and Cultural Heritage issues; • Environmental and other approval processes, including across jurisdictions; • Public provision of geo-scientific data; • Relationships with indigenous communities; and • Contribution to regional development. WITNESSES BASHFORD, Mr Keith, Marketing and Communications Manager, CSIRO Exploration and Mining, Commonwealth Scientific and Industrial Research Organisation .............................................229 EARLY, Mr Gerard Patrick, First Assistant Secretary, Approvals and Legislation Division, Environment Australia .................................................................................................................................259 FORBES, Mr Malcolm Andrew, Assistant Secretary, Environment Assessment and Approvals Branch, Environment Australia...................................................................................................................259 KAHN, Mr Tim, Director, Mining and Industrial Section, Environment Assessment and Approvals Branch, Environment Australia................................................................................................259 LAVERING, Dr Ian Herbert, Adjunct Professor and Course Coordinator in Energy Management, Master of Business and Technology Program, University of New South Wales .............250 PHILLIPS, Professor Geoffrey Neil, CSIRO Exploration and Mining, Commonwealth Scientific and Industrial Research Organisation ........................................................................................................229 REVILLE, Dr Barry, Assistant Secretary, Heritage Assessment Branch, Environment Australia......259 WIDDUP, Mr Robin Anthony, Managing Director, Lion Selection Group Ltd .....................................239 Monday, 11 November 2002 REPS I&R 229 Committee met at 10.41 a.m. BASHFORD, Mr Keith, Marketing and Communications Manager, CSIRO Exploration and Mining, Commonwealth Scientific and Industrial Research Organisation PHILLIPS, Professor Geoffrey Neil, CSIRO Exploration and Mining, Commonwealth Scientific and Industrial Research Organisation CHAIR—I declare open this fifth public hearing of the House of Representatives Standing Committee on Industry and Resources inquiry into investment in exploration in Australia. I welcome everyone here today. The witnesses appearing before the committee today are from CSIRO Exploration and Mining, Lion Selection Group Ltd, the University of New South Wales and Environment Australia. I welcome representatives from CSIRO Exploration and Mining. I invite you to make a short opening statement before we proceed to questions. Prof. Phillips—Thank you very much, Mr Chairman. Exploration downturn at the moment is certainly the most severe in my working career. In the short term, the impact of this, perhaps the less important part, is that people are unemployed. The more important part is what it is going to do to Australia in the long term. I want to look very quickly at where we are and how we have got there and then afterwards suggest one or two ways we can deal with it. World exploration has seen an increase through the nineties and then a precipitous decline in the last four or five years—as shown in blue at the top of the graph. Underneath that is what has happened in Australia, and you can see the parallel between the two. I want to carry on that theme and look at the ratio of world exploration spending in Australia compared to the whole world. In other words, about 20 per cent of world exploration spending has been in Australia throughout the nineties, regardless of that fluctuation; so we are not seeing a move away from Australia, relatively speaking. The second thing is that this is not something to do with one commodity and it is not something to do particularly with gold. It is to do with a series of commodities. That is the percentage of exploration money, Australian money, spent on gold. It really has not changed; it is about 55 to 65 per cent. This is to do with several commodities. Let us be positive and see what we can do about this. I wanted to put ourselves in the situation of an exploration manager making decisions on where he is going to invest. That exploration manager could be in Toronto, Vancouver or London, but I have actually chosen to use Denver or Perth as an example. The questions that are going to face that exploration manager and his board are, ‘What are the various risks of different countries where I might invest the exploration dollar, and how easy is it to explore?’ ‘Are there huge impediments to my exploration or is it made easy for me?’ Looking quickly at this exploration risk—I believe you have a copy of this; this is one of several surveys, so there are different ways to get the numbers—I think most people would agree that countries like PNG and Zimbabwe have a high risk and that Australia and Canada, all other things being equal, have a relatively low risk and are therefore attractive places to invest exploration dollars. Numbers that are high in this table mean that there is a high risk to do with sovereign risk, land access, green tape, red tape and so forth. Numbers that are low mean that there is a low risk. INDUSTRY AND RESOURCES I&R 230 REPS Monday, 11 November 2002 Two interesting things come out of this. If we look at Australia, we see a lot of ones and zeroes, but there is relatively high land access, green tape, land claims and red tape. If those threes and twos become fours and threes, Australia makes itself a much less attractive place to invest riskwise. If we can make those twos and ones, we can increase the percentage of world exploration dollars that come here based on risk alone. It becomes a more attractive place to invest. Let us look at the uniqueness of Australia. Put yourself in the situation of a person overseas making investment decisions to come to Australia. They might be used to the glaciated terrains of northern Canada and northern Europe; Australia is a very tricky place for them to get used to in exploring. The regolith, which is the soil and cover, can be a friend or foe. To a lot it has been the foe. In previous days, 150 years ago, people would explore the quartz veins and the base metal deposits which would stick out of the ground at Broken Hill, Mount Isa, Kalgoorlie and Mount Charlotte. Those days are probably mostly over. The challenge for Australia is that two- thirds of Australia is covered by the regolith—the rubble, soil and sediment—and somewhere beneath that, one metre or 50 to 100 metres, are the same rocks where we might have potential to find the ore deposits. We have different techniques to cover Australia to make the job easy for the exploration manager sitting in his office in Denver, Toronto or elsewhere. Satellite imagery can come in digital form. Layers of geology and geophysics again can come in digital form. If you are sitting in your office with your laptop and you have all that on hand, that is a much better scenario than if you are given a blank sheet and told, ‘That’s Australia. You go and find out the rest for yourself.’ We can either make it difficult or we can make it easy for people to work in Australia and to have access to up-to-date information in the best form possible. On this a map of Australia there are two layers. This layer shows all the regolith, which is covered. A lot of ore deposits were found in the outcropping areas—Mount Isa and the Victorian gold province. The layer under here is the geophysics, and that lets you see through the cover. There are traces under here. The magnetics show that these continue under cover, and so they will be the new frontiers. Let me just go through a little bit of work over the last 15 or 20 years leading up to where we are in gold at the moment as a nation, as a major producer of gold. This is difficult country to work in; there is a lot of rubble there. It is obviously 20 years ago. The different colours are the clay areas and iron rich areas; it is pretty straightforward. The research in the seventies showed that assembling this particular material would collect and concentrate gold from anywhere round here in the regolith, whereas this material, which was commonly collected, was useless, and you could be right next to an ore deposit and totally miss it. That type of work on the regolith was pioneered in the seventies, and I want to show how it fits into where we are with one of our largest mineral industries at the moment, and that is gold.

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