Raleigh Finlayson, chief executive of Genesis Minerals, has called on the Albanese government to reconsider its planned overhaul of capital gains tax (CGT), expressing concerns that the changes could severely impact junior miners and explorers in Australia. Speaking at the Melbourne Mining Club on Wednesday, Finlayson warned that reducing CGT discounts might discourage investment and potentially drive mining capital offshore.

Under the current system, investors in junior mining companies receive a 50 percent discount on capital gains, a benefit that Finlayson said helps offset the high risks associated with mineral exploration. However, from July 2027, this discount will be replaced by a system that indexes the cost base for inflation combined with a 30 percent minimum tax rate. Finlayson argued that while the downside risk for investors remains unchanged, the upcoming changes would significantly limit the potential upside, thereby reducing incentives to fund exploration projects.

Finlayson, who led Genesis Minerals’ growth into an $8.3 billion gold miner and formerly managed Saracen Mineral Holdings before its $16 billion merger with Northern Star Resources, described the junior exploration sector as particularly vulnerable. He cautioned that diminished investor enthusiasm could “kill the golden goose” by starving the sector of crucial capital needed to discover future mines.

The federal government initially faced backlash from the technology sector over the tax changes, prompting Treasurer Jim Chalmers to carve out certain “innovative” start-ups, including those in tech and biotech, from the new CGT regime. However, junior mineral explorers were explicitly excluded from this carve-out. This decision has drawn criticism from industry groups like the Association of Mining and Exploration Companies (AMEC), which argue that it undermines efforts at the state and territory level to grow royalty revenue through increased mineral exploration.

AMEC chief executive Warren Pearce described the exclusion as “counter-productive,” stating the government’s approach appears “out of touch with markets and how the real world finances mineral exploration and discovery.” He emphasized that the changes could impede the mining sector’s ability to generate investment and employment.

Finlayson also highlighted that junior mining companies primarily rely on retail investors rather than institutional funding, making them more sensitive to tax-induced shifts in investment sentiment. He noted that uncertainty around the tax changes had already begun to cool investment in smaller companies, raising concerns about the future pipeline of mining projects in Australia.

Beyond the headline CGT rate, Finlayson pointed out that mining companies face the corporate income tax, which is higher than the top personal income tax rate, further diminishing after-tax returns. He added that investors might be forced to hold shares longer to realise gains, potentially restricting liquidity and growth in the sector.

In response to these challenges, Finlayson urged the government to not only revisit the CGT changes but also to recommit to expanding the federal Research and Development tax incentive program, which is currently under review. He said such measures would help foster more exploration investment, supporting the discovery and development of the “mines of the future.”