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Australian mining executives and industry groups are intensifying pressure on the federal government to exempt mineral explorers from planned capital gains tax (CGT) changes they warn could undermine investment and weaken the country’s global competitiveness.
The reforms, announced by Treasurer Jim Chalmers in the May 2026 federal budget, would replace the longstanding 50% CGT discount with cost base indexation and a 30% minimum tax on gains accruing from July 1, 2027. The government granted exemptions to technology start-ups but confirmed in September that exploration companies would not receive the same treatment.
“The capital gains tax is terrible,” Evolution Mining (ASX: EVN) founder and chairman Jake Klein said during the International Mining and Resources Convention (IMARC) in Sydney.
The dispute comes as Australia faces declining greenfields exploration and growing competition for global mining capital. Industry leaders argue the reforms would discourage investors from backing early-stage discoveries, potentially weakening the pipeline of projects needed to support future mineral production.
Exploration at risk
Minerals Council of Australia chief economist Ross Lambie said the reforms failed to recognize the high risks and low success rates associated with mineral exploration.
“Exploration is absolutely critical. We’ve got to be doing more of it,” he told an IMARC panel.
Lambie said investors accepted the possibility of losing money on exploration ventures because successful discoveries could deliver substantial returns. The proposed tax arrangements would diminish those potential rewards.
“So, this is bad policy. We have asked the government to treat junior explorers the same as what they want to treat innovative start-ups and give the industry a concession, given the unique characteristics it has, but so far, that’s fallen on deaf ears.”
Chamber of Minerals and Energy of Western Australia CEO Aaron Morey said the changes also conflicted with Australia’s ambitions to develop its critical minerals industry.
Morey pointed to Prime Minister Anthony Albanese’s visit to the White House, where discussions with US officials focused on advancing minerals projects.
“That is a policy that is fundamentally at odds with that vision,” he said.
The Association of Mining and Exploration Companies has also challenged the reforms. Although the government has opened another round of consultation on the legislation, the association warned the process would be meaningless without substantive changes.
Industry fallout
Klein, who has previously criticized Australian government policy, said the tax overhaul was among several policy headwinds confronting the sector.
“There is no reason why someone starting their career today, as I did 30 years ago, is going to do 25% worse than I did – that just makes no sense at all,” he said.
Westgold Resources (ASX/TSX: WGX) managing director Wayne Bramwell described the proposed changes as an “own goal” that would damage Australia’s exploration industry.
“Federal decisions around capital gains tax – treating exploration in Australia differently than start-ups – absolutely leads to a bad outcome for this country,” he said on the sidelines of IMARC.
Bramwell said the effects were already emerging in Western Australia, the country’s largest destination for exploration spending.
“The largest destination for exploration dollars in this country has started to dry up because the people doing the high-risk work now are not being rewarded for that,” he said.
He warned that the consequences could extend well beyond the immediate investment cycle, potentially damaging the exploration ecosystem for years.
“That’s a real concern for me, thinking that our ecosystem has been damaged long-term by that decision. It can be reversed because we absolutely need the explorers to explore.”
The latest consultation gives the government another opportunity to reconsider the treatment of junior explorers before the reforms take effect in July 2027. Whether it grants the sector relief could influence Australia’s ability to attract the risk capital needed to discover its next generation of mines.