QEC scorecard confirms growing optimism

We’ve barely scratched the surface

Kim Wainwright, Queensland Exploration Council

Optimism is set to continue among Queensland’s minerals and energy explorers. That’s the headline result from the ninth annual QEC Exploration Scorecard launched in December 2019.

The scorecard analyses the critical drivers of exploration activity:

• prospectivity and resource 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 lead indicators that can be influenced. These are explorer and investor confidence and access to the essential factors of production.

Over the past three years, confirmation of Queensland’s reputation as a world-class resources jurisdiction, combined with more buoyant commodity prices has driven exploration activity. In addition, there is strengthening interest in Queensland’s potential to host rare earths, critical and strategic metals seen as building blocks for 21st-century technologies.

Queensland’s exploration optimism in 2018- 19 is illustrated by expenditure increases across all major commodities – including a 25% increase in exploration expenditure for coal, 19% for petroleum and 10% for gold and copper.

Table 1: Scorecard snapshot: resource prospectivity/endowment sentiment 2011-19

Queensland’s world-class prospectivity continues as a net positive, with sentiment positive since the first scorecard published in 2011.

This outlook is forecast to continue with 60% of Queensland explorers surveyed planning to increase expenditure or activity, and just 6% looking to downsize. It’s a similar story for drillers, with 92% of those surveyed saying their activity would stay the same or increase in 2019-20.

And for the first time since the scorecard’s debut in 2011, explorers were forthright in their appreciation of the assistance provided by the Department of Natural Resources, Mines and Energy. One explorer summed up industry sentiment perfectly saying DNRME is “extremely helpful and a great department to deal with.” The state government’s Queensland Exploration Program has been a welcome boost for industry through its proactive approach to opening new areas for exploration.

Importantly, the program recognises that resources companies are best placed to identify the most prospective and potentially commercial areas for investigation. Petroleum and gas exploration opportunities offered in 2019 covered 43,200 km2 - more than double the acreage released at any time in the past.

For the government, the focus is future energy security. They aim to increase Queensland gas supply by earmarking selected land releases for domestic gas only.

Potential coal land released comprised ten areas covering 1,100 km² in the Bowen and Eromanga basins. Nine of the areas are in the Bowen Basin, acknowledging the government’s longterm commitment to the development of the state’s premium metallurgical coal reserves.

The Geological Survey of Queensland (GSQ) continued working to make its pre-competitive geoscience data among the best in the world. GSQ’s industry support is evident in highly popular initiatives such as the Collaborative Exploration Initiative, now in its twelfth year.

GSQ is also working to put Queensland at the forefront of data-driven exploration with its Geoscience Data Modernisation Program to improve access to geoscience data.

The foundations form around a $9.6 million geo-data investment to bring together exploration, geophysical, geochemical and geological datasets to help better understand Queensland’s resource endowment. This includes making a century of geological data more accessible to explorers.

The focus is on the North West Minerals Province where, despite the presence of Australia’s second-largest copper mine at Mount Isa and a diverse range of other minerals including zinc, lead and silver, few substantial new discoveries have been made in the past 25 years.

Projects include new pre-competitive geophysical surveys (aeromagnetic, radiometric, gravity and magnetotelluric), with data produced over new areas at a higher resolution than ever before. The goal is to ensure that new research, data, technology and products effectively reach those who are actively exploring. All that said, it wouldn’t be exploration if it were plain sailing.

Once more, increased activity revived familiar challenges such as the limited availability of equipment and labour. Meantime, prices for some of Queensland’s major commodities have softened and policy uncertainty continues to dampen growth.

And despite dropping from third to twelfth spot in Canada’s Fraser Institute Best Practice Mineral Potential Index, explorer sentiment towards Queensland’s prospectivity remains strong.

Looking to the longer term, it’s an exciting time for Queensland exploration against a backdrop of rising global interest in critical minerals.

We broadly define critical minerals as those metals and non-metals vital for the development of new technologies, but subject to supply chain limitations that might include geological scarcity, geopolitical issues, trade policy or other related factors. Among these minerals are building blocks for the manufacture of mobile phones, flat screen monitors, wind turbines, electric cars, solar panels, and multiple high-tech applications, especially in fields such as defence and cyber-security.

The importance of rare earth elements and other critical minerals stems from their unique catalytic, metallurgical, nuclear, electrical, magnetic, and luminescent properties. As the demand for critical minerals grows, there are significant economic opportunities for Queensland.

Along with existing projects and significant geological reserves of minerals deemed critical by other nations, Queensland, and Australia are well-placed to capitalise on rising global demand for secure supplies of critical minerals.

We are also attracting attention because of world-class expertise in resource extraction and processing, high-tech engineering and renewables research, making us an appealing investment destination with competitive advantages across the spectrum of technical, capital allocation and risk considerations.

Such opportunities are in addition to commodities that Queensland is already producing. While not featured on many critical mineral lists, nickel and aluminium are major components of lithium-ion batteries and lightweight metals. The latest reports suggest Australia has moderate to high geological potential in 24 minerals deemed critical by many countries.

With the world’s population growing faster than at any time in history, minerals and energy consumption is more than keeping pace as more consumers enter the market and as the global standard of living increases.

Technological innovation and exploration are obviously going to play increasingly important roles in meeting new and existing demand. And to be honest, we don’t know what that demand will target.

Exploration is crucial to the long-term success of Queensland’s resources sector, laying the groundwork for long-term investment. With minerals and energy commodities also making up 82% of Queensland’s export value, exploration is profoundly important to the future of the state and national economies.

One historical example is strontium, not widely used until the 1960s when it was found to be the most cost-effective means of preventing radiation escaping colour television picture tubes. This new market stimulated extensive exploration and the discovery of many new strontium deposits.

And that’s where the Queensland Exploration Council (QEC) fits into the picture, covering a diverse and resource-rich state of more than 1.8 million square kilometres. The QEC brings the key elements of the exploration sector together in the shared interest of promoting Queensland as a leading, world-class destination for exploration investment.

With the ongoing support of QEC’s members, corporate partners (EY, McCullough Robertson, Queensland Government) and the Queensland Resources Council, we are looking forward to playing an increasingly important role in Queensland’s future. From a geological perspective, we have barely scratched the surface of the state’s true resource potential.