Client Update: WA exploration incentive scheme
15 April 2009
In brief: The Western Australian Government has recently launched an $80 million incentive scheme aimed at increasing minerals and petroleum exploration in WA. A key component of the scheme is a co-funded government/industry drilling program, with funding applications having opened on 8 April 2009. Partner Gerard Woods (view CV) and Lawyer Clara Wren discuss some key features of the scheme.
- The scheme
- New geoscience
- Co-funded government/industry exploration drilling program
- Important dates for the 2009-10 co-funded drilling program
- Other EIS initiatives
- Further information
The scheme
On 3 April 2009, the Western Australian State Government launched the Exploration Incentive Scheme (the EIS) aimed at encouraging private sector minerals and petroleum exploration and assisting in the discovery of new deposits in Western Australia.
The EIS has been allocated $80 million in funding over the next five years. It is funded as part of the Royalties for Regions program, a State government initiative under which 25 per cent of Western Australia's annual minerals and petroleum royalties revenue is to be reinvested in regional communities every year.
The EIS consists of a number of separate components or programs and takes a multifaceted approach to boosting exploration in WA. The EIS programs focus on under-explored greenfield regions and will be administered by the Western Australian Department of Mines and Petroleum (the Department).
New geoscience
A key focus of the EIS will be on gathering new geoscientific data.
About half of the EIS funding (around $39 million) has been allocated to a series of surveys and stratigraphic drilling that will be undertaken by the Department.1 There is also funding of $13.8 million to improve the online systems through which the Department makes geoscientific information available to mining and petroleum companies.2
The Coordinator of the EIS commented when launching the EIS that 'one of the key ways to help increase resource exploration expenditure by companies is the provision by government of new, high quality geoscience information in greenfield areas.' 3
Co-funded government/industry exploration drilling program
Another key component of the EIS is a $20 million co-funded government/industry drilling program to encourage innovative exploration drilling by companies in greenfields areas of Western Australia. Under the program, companies can apply for funding to cover part of their direct drilling costs on drilling projects.
A total of $3 million in funding will be available for 2009-10. Companies can apply to receive funding for up to 50 per cent of their direct drilling costs up to a maximum of $150,000.4
The Department has called for applicants to submit drilling proposal applications for the 2009-10 round by 15 May 2009. The proposals received will be assessed by a panel which will consist of internal officers of the Department and be moderated by independent industry representatives.
The final decision on the applications will be at the discretion of the Executive Director of the Geological Survey of Western Australia. There will be no right of appeal.
Funding will be awarded on the basis of scientific, technical and commercial assessment criteria. A drilling proposal is more likely to be successful if it:
- addresses significant knowledge gaps or targets under-explored areas of Western Australia; or
- promotes new exploration concepts and technologies.
Funding will only be allocated to applicants that hold a mining, petroleum or geothermal tenement, or are likely to have a tenement application granted within a reasonable timeframe.
After the announcement of awards, the successful applicants will sign a funding agreement with the Department, a template for which has been developed by the Department. The successful applicants then have a year to complete their drilling programs and submit interim reports and invoices to the Department. They have a further three months to submit final reports. The Department will make information from the reports, including drill sample material, publicly available.
The government funding is subject to conditions and is only paid to successful applicants, in two stages, after they have submitted the reports and other information.
The EIS program is similar to the drilling grant program set up in 2004 as part of the South Australian Government's Plan for Accelerating Exploration (PACE). The South Australian program has been considered a success. In the first four rounds, grants were awarded to 139 drilling proposals out of 269 applications, and a high proportion of the grant recipients obtained successful outcomes from the drilling projects.5
Important dates for the 2009-10 co-funded drilling program
| Date | Action |
|---|---|
| 8 April 2009 | Call for drilling proposals |
| 15 May 2009 | Closing date for submission of proposals |
| 22 June 2009 | Planned announcement of successful proposals |
| 22 – 30 June 2009 | Funding agreements signed |
| 30 June 2010 | Last date for submission of interim reports and invoices and driller's receipts |
| 30 September 2010 | Last date for submission of final reports |
Other EIS initiatives
Other EIS initiatives include:
- The Western Australian Regional Research Initiative, which will co-fund the placement of three CSIRO researchers in company exploration teams focused on greenfield areas.6
- The improvement of online tenement management systems. The initial focus will be on facilitating the tracking of environmental applications and approvals. However, the proposed improvements are ultimately geared towards companies being able to lodge tenement applications online and track the progress of tenement applications through the various approval stages.
- The development of a model indigenous land use agreement for use where land is subject to a native title claim or determination.
Further information
Further information on the Western Australian EIS initiative is available at the Department of Mines and Petroleum website.
If you would like help with a submission or have any questions about this or any other resource matter, please contact one of the below.
Footnotes
- It is proposed that airborne geophysics, seismic, gravity and geochemical surveys will be undertaken. The surveys and stratigraphic drilling will be undertaken or organised by the Geological Survey of Western Australia, a division of the Department.
- In addition to upgrading existing online databases and developing new databases and services, it is proposed to integrate the online information so all geoscience databases can be accessed seamlessly to enable users to create customised geoscience reports and maps.
- News item on Department of Mines and Petroleum website, http://www.dmp.wa.gov.au/7105_7821.aspx (posted on 3 April 2009).
- The direct drilling costs do not include administration and program management costs and costs associated with legal advice, ground access, mobilisation, geological, geochemical, geophysical, laboratory analysis or specific geoscientific analysis other than down hole position surveys.
- The funding for the researchers will be split evenly between the Western Australian Government and the participating company sponsors. Details as to the approach to be taken in allocating researchers have not yet been released.
For further information, please contact:
- Gerard WoodsPartner,
Perth
Ph: +61 8 9488 3705
Gerard.Woods@aar.com.au - Igor BogdanichPartner,
Melbourne
Ph: +61 3 9613 8747
Igor.Bogdanich@aar.com.au - Ben ZillmannPartner,
Brisbane
Ph: +61 7 3334 3538
Ben.Zillmann@aar.com.au - Seamus CorneliusConsultant,
Beijing
Ph: +86 10 8515 0250
Shanghai
Ph: +86 21 6841 2828
Seamus.Cornelius@aar.com.au
