Victorian budget creates mixed emotions within the mining sector

This week’s Victorian Government 2023 budget announcements have received mixed reactions from the state’s mining sector.

While some miners have welcomed the government’s initiatives to improve regulatory issues that have plagued the state for many years, others have identified the decision to increase taxes as a major disincentive to future investment.

The Victorian Branch of the Minerals Council of Australia (MCA) was particularly critical of the budget decision to include an additional payroll tax.

James Sorahan, MCA Victoria’s executive director and spokesperson, said the tax increase would have an impact on the confidence of companies looking to invest in the local mining sector.

“This tax increase will be an additional burden on the very businesses that kept the Australian economy from a prolonged recession as the nation battled COVID,” he suggested.

Rich pickings

One of the oldest and richest gold regions in Australia, Victoria has had some recent success in attracting international miners, including Kirkland Lake Gold (now Agnico Eagle TSX-AEM) and its acquisition of the world-class Fosterville gold project.

Victoria’s golden riches are famous for the very high-grade of its gold mineralisation and for producing most of the world’s largest gold nuggets.

Considered by most authorities to be the biggest gold nugget ever found, the Welcome Stranger was found at Moliagul, Victoria, in 1869 by John Deason and Richard Oates. It weighed gross, over 2,520 troy ounces (78 kg; 173 lb) and returned over 2,284 troy ounces (71.0 kg; 156.6 lb) net.

The next biggest known gold nugget was also found in Victoria, the giant Welcome Nugget weighing in at 2,218 troy ounces (69.0 kg; 152.1 lb).

However, despite these riches, the State has continued to rate poorly in global surveys of mining jurisdictions, with the recent Fraser Institute seeing Victoria continue to fall as an attractive mining investment destination, sliding from 33rd to 47th this year – with issues relating to regulations and approvals delays identified as major disincentives.

The MCA also pointed at issues related to “red tape” delays as a major concern.

“More work needs to be done to deliver timely permitting approvals and to support industry investment. Clearer and more certain project approval timeframes, and reform to Victoria’s flawed gold royalty is required if Victoria is to attract mining investment,” Mr Sorahan said.

Budget boost

On the other side of the coin, the MCA welcomed the Government’s decision to allocate $23.2 million in resources initiatives in the budget.

“The establishment of an Earth Resources Approvals Coordinator will provide strategic project facilitation to help complex mining projects navigate through the array of Acts, regulators and tiers of government and deliver much needed investments in regional Victoria.”

The MCA also welcome Budget allocations to assist with amendments to the Mineral Resources (Sustainable Development) Act 1990.

The MCA was particularly heartened by the government’s decision to establish an Earth Resources Approvals Coordinator.

It said this is expected to improve strategic project facilitation and assist complex mining projects navigate through the multitude of regulations and Acts that can slow down future mining developments.

Explorers agree

Sunday Creek gold and antimony explorer Southern Cross Gold (ASX: SXG), also welcomed the government’s decision to employ an Earth Resources Approvals Coordinator.

The company’s managing director, Michael Hudson, said the move will facilitate project approvals and streamline the regulatory landscape across departmental jurisdictions, reducing overlap and accelerate timeframes and outcomes.

“We have a running start. Victoria is now producing more gold than it has for one hundred years. Historically and economically, antimony is the second most important metallic commodity in Victoria, after gold.”

“Antimony is both critical and strategic and Victoria hosts significant antimony resources. However, not all of these resources are currently being extracted, with only 2% of global supplies coming from Australia, and more specifically Victoria,” Mr Hudson added.

Critical minerals moves

In its submission to the government prior to the budget, the MCA highlighted the importance of critical minerals to the state’s future.

Amongst a large list of suggestions, the MCA said the budget needed to include further investment in Victoria’s critical minerals initiatives to match the incentives offered by other states.

It also put forward a proposal for the government to establish a taskforce to investigate impediments and infrastructure needs for mineral sands/rare earths separation and processing.

“The Victorian Government should aim to have multiple new gold, mineral sands/rare earths and base metal mines by 2030 which would create thousands of jobs and establish supply chain opportunities for small businesses across regional Victoria,” the MCA suggested.

It submitted that Victoria needs a broader economic base and the development of the current pipeline of critical minerals projects would mean more mines, more jobs and generate royalties to fund state services and enable sustained Budget repair.

“Victoria is emerging as a major supplier of mineral sands and rare earths with a number of advanced projects in the pipeline which could double the number of mines in the state. Developing Victoria’s mineral sands and rare earth element deposits will embed Victoria into renewable energy supply chains.”

Victorian mining facts

Home to some of the biggest gold rushes in the world, the Victorian minerals industry has played a major role in the state’s economic fabric for over 150 years.

For example, the Bendigo and nearby Ballarat gold discoveries led to Victoria producing over 2400 tonnes of gold – which is 32 per cent of all the gold mined in Australia and almost two per cent of all the gold ever mined globally.

On a yield per area basis, Victoria has produced an average of 10.8 kilograms of gold per kilometre squared – which is greater than any other Australian state.

The MCA says mining companies generate $1 billion in value to the Victorian economy while supporting thousands of jobs and businesses across the state.

Victoria’s mines directly injected $510 million into the state economy in 2020-21 in high wage regional jobs, buying local with more than half their supplier spend in Victoria and support for community grants and taxes.

Notably, Victoria reached a record high exploration spend of $221 million in the 12 months to September 2022 – the fourth highest of all Australian states.

Victorian mining is estimated to pay $140 million in royalties in 2022-23, in addition to various fees and charges imposed by mining.