The Minerals Council of Australia (MCA) has warned that the federal government’s proposed changes to capital gains tax (CGT) will deliver a blow to junior exploration companies and threaten the future of the nation’s mining pipeline.
Under the sweeping reforms announced in the federal budget, the long-standing 50 per cent CGT discount will be axed from July 1, 2027 for individuals, trusts, and partnerships holding assets for more than 12 months.
Instead, the discount will be replaced by a cost-based indexation system linked to inflation, paired with a 30 per cent minimum tax floor on real capital gains.
The MCA argues the policy completely rewrites the risk-versus-reward equation for investing in junior resource companies.
Because small-cap explorers are pre-revenue and unable to pay regular dividends, investors take on high risks purely for the potential of a capital gain if a successful exploration campaign uncovers a commercial mineral deposit.
The sector claims the reform represents a double whammy for the industry following the abolition of the Junior Minerals Exploration Incentive (JMEI), which expired in June 2025.
According to data cited by the MCA, junior explorers have entirely transformed how resources are found.
In 1980, small exploration firms accounted for just 10 per cent of new mineral discoveries across the Western world. By 2023, that figure skyrocketed to 77 per cent.
Industry leaders fear the tax overhaul will bring this greenfield progress to a halt, just as global demand for battery minerals spikes.
Experts project that more than 260 new copper, lithium, nickel, and cobalt mines must be developed by 2030 to meet global electric vehicle and energy transition targets.
With only one in a thousand exploration sites successfully progressing to an operational mine, the MCA emphasises that continuous capital raising is essential.
The council is calling on the government to retain the 50 per cent CGT discount for small mineral explorers and permanently reinstate the JMEI without an annual credit cap to protect the sector’s long-term viability.
