What makes Western Australia the world’s top mining destination

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What makes Western Australia the world’s top mining destination

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 What makes Western Australia the world’s top mining destination
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Highlights

  • Western Australia is the world’s top mining destination, revealed a survey of mining and exploration companies for 2021.
  • The Australian region replaced the US state of Nevada, which fell to the third position in the survey.
  • South Australia is among the top 10 mining destinations, as per the survey.

Western Australia has emerged as the world’s leading destination for mining investments. The 2021 annual survey of mining and exploration companies by Fraser Institute has ranked Western Australia as the world’s most attractive mining destination for 2021. The resource-rich Australian region replaced the US state of Nevada, which slipped to the third position in the survey.

The Fraser Institute’s survey was based on two factors- how mineral endowments and public policy factors affect exploration investments. The public policy focused on factors like taxation and the regulatory environment of the state or country. The survey covered an evaluation of 84 mining jurisdictions.

Four mining states from the US made to the top 10 list, the highest among all participating countries. Canada has three states in the index, while Australia has two regions- Western Australia and South Australia in the top 10 jurisdictions. Zimbabwe was ranked last in the survey, followed by Spain, Congo, and Mali.

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The survey combined the Best Practices Mineral Potential index and the Policy Perception Index to create an overall Investment Attractiveness Index. The Best Practices Mineral Potential index rates regions based on their geologic attractiveness, while the Policy Perception Index measures the effects of government policy on exploration investment.

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The latest data released by the Department of Mines, Industry Regulation and Safety revealed that WA clocked a record revenue of AU$230 billion from resources sales in 2021. The revenue figure is up by 30% from the previous year.

The region’s resources sector has been a major driving force in shaping the state’s economy, and in turn, contributing significantly to the country’s GDP. The region is heavily endowed with natural gas, iron ore, alumina, gold, and other resources.

Western Australia, the second largest exporter of LNG, has some of the world’s largest iron ore and lithium mines.

Here are few factors that aid WA to lead the world’s mining destinations.

  1. Most diverse and prospective geology

WA has some of the most diverse and prospective geology among major mining jurisdictions in the world. The resources sector witnessed an investment of AU$1.7 billion in mineral exploration and AU$379 million in petroleum exploration in 2020.

Exploration is a risky business and investors expect returns on their investment. If a region is highly prolific, the risk factors decrease significantly and help in future investment flow.

WA, with its prospective geology, seems apt in this regard.

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  1. Government’s flagship scheme

The WA State Government has an Exploration Incentive Scheme (EIS) in place, which provides financial aid to carry out exploratory drilling and other exploration activities if the project fits certain criteria. This helps to lower the financial risk of investment and promotes more exploration activities in the region.

For 2021-22, the State Government has increased the funding to AU$12.5 million annually under the scheme.

  1. Robust ESG framework

To ensure sustainable development of the resources sector, the WA State Government has put in place some of the best-practice regulatory frameworks for responsible resource development.

The government’s key decisions include reviewing Aboriginal heritage legislation, creating a greenhouse gas emissions policy, and modernising health and safety legislation. The focus is on positioning WA as a world leader in sustainable development and making the region a hot spot for resource-related investment.

Understanding ESG

  1. Easy and accessible regulatory framework

The complexity of a resource project involves various stakeholders, including the environment, aboriginal population, and various departments of state and national governments. The WA government has shown commitment to improving regulatory frameworks through various changes in existing regulations, making them contemporary and effective.

For instance, there are initiatives like single-window policy for acquiring state and national government approvals. It reduces the time for approval as well as saves considerable cost and paperwork.

  1. Attractive royalty and taxation system

The WA government received AU$19.1 billion in royalties from the resources sector in 2020. The revenue for the period for the industry was nearly AU$180 billion. The government has ensured to have a transparent and robust royalty system to attract investments in the sector.

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