Queensland exploration - past, present, future

We are uniquely placed to promote Queensland and Australia as an exploration and mining safe haven. There are signs that this is happening organically as investment capital is flowing into the greenfield and junior exploration space for the first time in many years.

Kim Wainwright, Chair, Queensland Exploration Council

2020 marks the ten-year anniversary of the Queensland Exploration Council’s Exploration Scorecard. The Scorecard was launched in 2010-11 to ‘track Queensland’s progress towards becoming an exploration leader by 2020’.

This is an opportunity to reflect on how industry sentiment has changed over the last decade, acknowledge the challenges of today and look forward to the next decade with optimism.

The scorecard analyses the critical drivers of exploration activity: •

Queensland’s resource prospectivity and endowment

• The price and outlook for key commodities

• Explorer and investor confidence

• Policy and regulatory stability

As the market drives commodity prices, the scorecard concentrates on those lead indicators which can be influenced, notably explorer and investor confidence and access to the essential factors of development and production.

Past

Over the last ten years, Queensland’s exploration industry has shown itself to be resilient to global challenges. The inaugural scorecard tracked the industry’s recovery from the Global Financial Crisis. Ten years later, this scorecard is set against the backdrop of the challenges of the global coronavirus pandemic. Queensland’s exploration industry has remained resilient throughout economic downturns and market uncertainty, a testament to its reputation as a worldclass resources jurisdiction.

Sentiment about Queensland’s resource prospectivity and endowment has remained consistently positive since the inception of the scorecard. Being host to highly prospective mineral, coal and gas resources continues to drive exploration in Queensland.

12 of the 13 scorecard categories which have been measured since 2010 have seen improvement. The first scorecard recorded negative sentiment towards government assistance but since then, Queensland Government has achieved major improvement across the government-related categories – departmental assistance, exploration permit process and access to geoscience data and land available for exploration. In 10 years, the sentiment towards the exploration permit process has changed from a net sentiment of -40 to +5.

Another area that has seen great transformation over the scorecard’s 10 years is Environmental and Social Governance (ESG) as investors’ expectations extend beyond healthy profits. In the first few years of the scorecard, cultural heritage regulations and native title had very negative sentiment scores but this year, recorded a near-neutral sentiment.

Present

Unique to this year is COVID-19’s impact on the industry. Commodity markets were hard hit in the initial months of the pandemic driven largely by a decrease in demand.

The economy is likely to recover swiftly as markets resume regular business, and commodity prices are already starting to recover. Base and precious metals have already recovered well. Gold is trading at historically high prices and copper at the same price as before the pandemic but coal and LNG exploration is expected to see a slower recovery process.

Despite COVID-19, exploration activity across coal, petroleum, gold and copper has increased since last year - an achievement considering coal and gas prices have been decreasing over the same period. Over half of explorers expect to increase activity or expenditure over the next 12 months.

Building on from last year, explorers remain appreciative of the assistance provided by the then Department of Natural Resources, Mining and Energy. The department is making strides towards putting Queensland at the forefront of data-driven exploration.

Geological Science Queensland’s (GSQ) Geoscience Data Modernisation Program has seen government deliver a world-leading data repository which makes reporting and data management more efficient. Its Open Data Portal provides access to a range of pre-competitive geoscience datasets, reports and publications.

Even though the success of this initiative will not be reflected until next year’s results, this year there is steady improvement, acknowledged by industry with 43% of participants selecting the release of pre-competitive geoscience data as part of the top three beneficial government initiatives for the year.

The goal is to ensure that the availability of this data effectively reaches those who are actively exploring.

Queensland Exploration Program continues to release prospective land for coal and petroleum explorers and the Collaborative Exploration Grant is encouraging exploration in areas with high prospectivity of new economy minerals.

To encourage mineral exploration, the department awarded seven grants over the course of last year, reflected in the increase in tenure applications seen in 2019-20. In this year’s Fraser Institute Best Practice Mineral Index, an annual survey of mining companies, Queensland fell two places to 15 out of 79 jurisdictions around the world. It also dropped from the second to third highest ranking jurisdiction within Australia, now trailing both Western Australia and the Northern Territory.

Explorer sentiment towards the prospectivity of Queensland remains positive but anecdotal responses expressed frustration at some of the challenges of obtaining tenure in prospective areas. Given the positive prospectivity sentiment, the limitations for exploration and mining investment seem to be driven by policy uncertainty, environmental regulations and frustrations with conduct and compensation agreements which continue to record low sentiment scores.

Future

Indeed, explorers remain constrained by the regulatory environment in which they operate, with policy uncertainty and issues with the land access framework frequently cited as barriers to exploration.

In June 2020, the Queensland Resources Council released the 2020 Streamlining Report, making four core recommendations to Government to streamline the application processes in the sector. QEC is confident that QRC’s commitment to the streamlining agenda will contribute to increasing the efficiency and sustainability of the exploration industry.

Looking to the future, as global demand for critical minerals looks set to increase, Queensland’s rich prospectivity could establish the state as a key region for exploration and investment.

North West Queensland is home to one of the most prospective mineral regions in the world. The region has significant potential to provide not only base metals like copper, zinc and lead, but also critical minerals used for batteries and other new technologies and defence systems.

There is no question of the importance of mineral exploration to Queensland’s future prosperity. The Commonwealth and State Government have both acknowledged the significance of Queensland’s North West Mineral Province to the future secure supply of critical minerals. There have been a number of initiatives focused on unlocking the barriers to future development but there is still work to be done to capitalise on mineral exploration.

For the first time since 2013, explorers reported no significant impediments to mineral exploration - a positive step, but one which reinforces the importance of establishing a regulatory environment that fosters continued growth in the industry. Queensland Exploration Council has, for 10 years, tracked changes in the sector and while sentiment has grown more positive, familiar challenges remain.

The QEC will continue to bring together a broad spectrum of the exploration sector to promote the industry for the future prosperity of the state. As Chair of the Council, I am currently working on the next 10-year vision for the Queensland Exploration Council. We are uniquely placed to promote Queensland and Australia as an exploration and mining safe haven.

There are signs that this is happening organically as investment capital is flowing into the greenfield and junior exploration space for the first time in many years. Industry is suggesting this is due to not only the prospectivity of our ground but the appeal of the jurisdiction in relation to our COVID-19 response.

One area that the Council will continue to build on is our international capital investment connections and developing established processes for linking into our membership body. This can be achieved through extended engagement with Trade Investment Queensland and Austrade, as well as direct engagement with offshore investment brokers and funds.

One of the biggest challenges I’ve witnessed for the junior explorers in recent years is what happens when investment in ground-roots exploration is not on-trend. It is debilitating for these companies who have no other revenue stream.

Sustainability of investment is definitely a part of my vision. Another goal is to continue to build on the promotion of Queensland as a Critical Minerals exploration destination of choice. This can be done through a range of programs that the QEC has designed to increase and educate markets on the geological potential of Queensland, as well as infrastructure plans to support the downstream planning of potential miners.

Profile building of exploration as the foundation of our industry is also a key vision. Exploration is all too often forgotten about, yet without it there would be no mines. We need to keep exploring to make sure our industry in Queensland is buoyant.

It should be of concern to all stakeholders when there is no investment flowing into grassroots exploration for extended periods of time. The long-term effect on our industry and economy is significant. Profile building of our all-important explorers needs to be a part of the QEC’s long term strategy.