WA Mining lobby claims junior explorers should be exempt from Albanese’s capital gains tax changes

WA’s powerful mining lobby has weighed in on the Albanese Government’s tax changes warning exploration of new resources projects could be on the line if there is no carve-out for junior explorers. Chamber of Minerals and Energy chief executive Aaron Morey will have an online meeting with senior Federal Treasury officials and members of Treasurer Jim Chalmers’ office this week where he will go into bat for mine explorers, and mums and dads who traditionally invest in emerging WA projects. “Our current position is that junior explorers play a critical role identifying new mineral deposits and should be excluded from the capital gains tax changes to ensure they can continue to attract investment,” Mr Morey said. Mr Morey joins a chorus of political and business leaders who say getting rid of the 50 per cent discount on capital gains will disincentivise investment into exploration of our mining industry. Under the changes, that come into effect on July 1 next year, tax payable on shares sold after a company made a discovery could double. “Investors in junior explorers are funding the riskiest stage of nation-building,” Mr Morey said. “They are making the first and hardest bet in the whole mining pipeline, fully aware that most exploration projects fail without ever earning a cent.” Mr Morey said it wasn’t just cashed up overseas investors making exploration possible – but the battlers too. “Mum and dad investors have helped fund some of WA’s most significant recent mineral discoveries, including the Hemi gold deposit and Kathleen Valley and Pilgangoora lithium mines,” Mr Morey said. He said all of Australia benefited from the investment. “Those projects contribute thousands of jobs, millions in taxation and royalty revenue and billions of dollars’ worth of economic activity,” Mr Morey said. This week, WA Premier Roger Cook finally broke Labor Party solidarity and joined NSW Premier Chris Minns in raising concerns about the federal tax overhauls. “We do not want to disincentivise exploration in our mining industry, nor do we want to disincentivise foreign investments in our large-scale projects, which are essential for bringing these mega projects to life,” Mr Cook said. The Premier said he “will continue to talk” to the Albanese Government. The Association of Mining and Exploration Companies on Friday demanded an exemption from CGT changes for mineral exploration investors. AMEC CEO Warren Pearce said any exemption granted for tech start-ups should also apply to junior explorers. “A junior explorer is a start-up,” he said. “It raises capital, takes enormous risk, often has no revenue stream and employs people. “Inevitably, it then either fails or creates enormous value for investors and in turn the nation.” The CME pointed to “recent success stories “ in WA mining, naming companies who had taken substantial risks - and had been helped by investors - to turn a dream into reality. Amongst those names were Liontown, which had acquired the Kathleen Valley lithium rights in 2016 when it was a junior explorer and financed and constructed Australia’s first underground lithium mine - the value of shares rising from just a few cents to its current $2.42 per share. Other investments include Pilgangoora lithium which now has one of the world’s largest hard-rock lithium operations and De Grey Mining. Mr Morey said exploration companies like these could not have survived without the support of investors. “Only a tiny fraction of these exploration investments ever pays off, and they often require extreme patience from backers who are willing to park their money for years and endure disappointment after disappointment,” he said. “It is vital that capital gains taxation settings continue to respect that risk. Without investors willing to take the first punt, Australia will miss out on the mines, jobs and royalties that benefit us all “I will be speaking with Canberra officials next week to ensure there are no unintended consequences for the resources sector from the announced changes.” Dr Chalmers has hinted at a possible carve out for startups. Whether that would apply to junior mining explorers is yet to be seen. “We’ve been working with the startup sector to recognise the unique elements of that part of the economy and to see if we can find a way through,” Dr Chalmers said. ‘We don’t yet (know) what that might look like, but I’ve been engaging, my department’s been engaging formally as well.”