The Minerals Council of Australia (MCA) has asked the federal government to preserve the 50 per cent capital gains tax (CGT) discount for junior mining exploration companies beyond June 30, 2027, warning that proposed changes risk stifling greenfields mineral discoveries.
MCA CEO Tania Constable cautioned that building a mine carries extraordinary financial risk, with only one in every 100 exploration projects on average reaching a final investment decision.
Retail investors in junior explorers typically receive no income for a decade or more, relying entirely on capital gains if a discovery is made.
In its submission to the Senate Economics Legislation Committee, the MCA calculated that the proposed CGT changes would reduce after-tax investment returns for junior explorers by 19 per cent.
For instance, a shareholder on a 37 per cent marginal tax rate investing AU$10,000 over five years for a AU$20,000 capital gain would see their return fall from AU$16,300 to AU$13,064 under the revised rules.
The mining body warned that suppressing investor returns would further erode greenfields exploration, which has already fallen from roughly one-third of total Australian exploration spending in recent years to just a quarter in the last financial year.
Constable argued that early-stage mineral exploration shares a similar risk profile to start-ups and venture capital, warranting equivalent tax treatment to keep local geologists and engineers competitive.
“Crippling our junior explorers by increasing capital gains tax would undermine the development of our critical minerals sector just when the world is demanding stronger supply chains and greater strategic resilience in minerals supply,” Constable said.
She added that with global pressures and trade dynamics shifting, Australia must act to de-risk exploration and maintain investor confidence rather than driving domestic explorers offshore with higher tax burdens.
The MCA urged lawmakers to retain the discount to safeguard the country’s long-term critical minerals pipeline.
“The MCA supports measures that de-risk early-stage exploration, maintain investor confidence, and sustain the discovery pipeline needed to underpin future resource projects and national economic growth,” Constable said.
