first_imgSpeaking at the 2009 Paydirt Uranium Conference in Adelaide, Australia, Hon Paul Holloway MLC Minister for Mineral Resources Development said that the “South Australian Government has worked hard in the past six and a half years to create a climate of certainty in this state that provides investors with the confidence they need to plan long-term investments in the resources sector. We realise investment in our resources sector is critical for the continued development and growth of the South Australian economy. While initially this confidence-building policy led to a record surge in investment and exploration in this state, with mineral exploration expenditure reaching A$355.2 million in the 2007-08 financial year, the latest quarterly result brings overall spending for calendar year 2008 to A$317.5 million, down from A$331.3 million in the 2007 calendar year.“The figures published just last week by the Australian Bureau of Statistics (ABS) show exploration spending slowed in all jurisdictions except New South Wales and the Northern Territory. South Australian wasn’t immune from this slowdown with the A$68 million spent on mineral exploration in the December quarter of 2008, down from A$75 million in the previous three-month period. The main minerals sought during the December quarter were copper with A$20.7 million in spending. Of most interest to this conference is spending on uranium exploration, which ranked second overall with A$17.8 million in expenditure during the quarter, down from A$22.4 million in the previous three-month period.“The ABS figures show total exploration expenditure in 2008 was still more than triple the A$100 million annual target set by South Australia’s state strategic plan. [It] remains in third place behind resource-rich Western Australia and Queensland, states that also experienced a significant slowdown in exploration spending during the December quarter.”Commenting on the effect of the global financial situation Holloway continued: “As I have been warning for some time, even before the global financial crisis began to take its toll on commodity prices, a slowdown in exploration spending in South Australia was inevitable as many projects moved from the exploration to construction and development phase. Even taking the recent slowdown into account, South Australia is still recording historically high levels of spending compared with total exploration expenditure of about A$40 million/y experienced just seven years ago when this Government came into office.“The fact that these numbers continue to hold up in the current environment confirm that the global exploration sector continues to have the highest levels of confidence in South Australia’s mineral potential. With the global financial crisis generating so much uncertainty in world markets, it is quite timely that South Australia has firmly established itself as a low-risk destination for investment.“While the current economic climate is casting a shadow over the short term outlook for the minerals sector, the fundamentals of the mining industry, including demand for resources from Asia, remains positive. Mining companies tend to take a long-term view and so does the Rann Government, and in those terms the investment outlook for South Australia remains promising.”Commenting on the prospects of expansions in the State, Holloway stated: “This Government remains confident in the prospects for BHP Billiton’s proposed expansion of the Olympic Dam mine with a comprehensive environmental impact statement due to be made available to the public for two months of consultation from early May. The continued strength in mineral exploration expenditure in South Australia in 2008 further reinforces the overwhelming success of the Rann Government’s plan for accelerating exploration (PACE) initiative.“This year’s State budget allocated an additional A$14.1 million to ensure South  Australia is better able to translate the hundreds of millions of dollars of investment in exploration into new mines and energy projects. With a second wave of mine projects in the pipeline we are committed to ensuring that South Australia realises its full mineral wealth potential. I am, however, acutely aware of the pressures the current economic situation places on your industry. Funds for exploration are essentially unavailable at present and companies need to preserve their cash.  Similarly funds for the development of projects will be difficult to source until the global credit squeeze eases.“To that end we intend to ramp up our efforts in the promotion of South Australian projects overseas, particularly in China, Japan, and India. These countries continue to invest in South Australia and we have developed excellent relationships with companies such as Sinosteel, CNNC and CITIC in China, JOGMEC and Mitsui in Japan, and the Reliance Group in India. The longer term demands for commodities in China and future demand from countries such as Japan, India and Korea remain fundamentally sound.”He then went on to address the uranium sector in particular: “South Australia continues to make progress toward developing several world-class projects. The recent PDAC Convention in Toronto heard the long-term growth prospects for the nuclear industry and uranium mining remain optimistic. It was predicted that the global industry of 436 nuclear reactors will rise to more than 606 reactors within the next 20 years, with the potential for even more rapid expansion. That is a 40% increase in the number of reactors in the space of two decades, with a consequent surge in the expected demand for uranium.“Much of that increased capacity comes from the search for alternatives in Asia and Europe to carbon-emitting power sources as countries strive to reduce their contribution to global warming. This nuclear generating capacity relies on an international fuel cycle that can ensure a stable and secure supply for decades to come. It is estimated that the global nuclear industry today needs about 181 MIb/y of uranium to supply reactor feed requirements. Primary production provides about two thirds of this annual requirement, while the remainder is drawn from secondary supply which is basically stockpiles of previously produced uranium.“However, these secondary supplies are finite and more primary production will be needed as capacity begins to climb. South Australia is clearly well positioned in the coming decades to be a leading provider to this growing clean energy industry. South Australia’s Premier Mike Rann led the charge to overturn the ALP’s no new uranium mines policy and South Australia has been in the forefront of exploration and development of new projects, as well as putting in place a world’s best-practice regulatory system.“While we expect increased competition within Australia now that Western Australia has dropped its long-standing opposition to uranium mining, this State still retains its first mover advantage. Only a few months ago, Uranium One of Canada and Mitsui & Co of Japan signed a joint venture agreement to develop Honeymoon uranium mine in South Australia, as well as Uranium One’s Australian exploration portfolio. This commitment from Mitsui of approximately A$104 million will help to advance the development of the Honeymoon project into commercial production by 2010 and expect some further news on progress on that project within the next few weeks.”On closing his speech, he announced that: “As before, this downturn will eventually turn into an upswing and this Government aims to be ready to take advantage of this period to lock in the projects and the supporting infrastructure and skilled workforce required to make the most of our State’s mineral wealth.”last_img

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