The Queensland Resources Council has appealed to federal Treasurer Jim Chalmers to consider the potential harm of capital gains tax changes to the exploration sector.

QRC chief executive officer Janette Hewson and Queensland Exploration Council chair Kim Wainwright cosigned a letter to the treasurer stressing the importance of exploration as the engine room for growth in Queensland’s resource sector.

They are concerned that proposed changes to the CGT framework will negatively impact the attractiveness of the high-risk capital investment junior resource exploration firms rely on.

The 50 per cent CGT discount is set to be replaced with cost base indexation for shares held by individuals, trusts and partnerships for more than 12 months

“Junior resource exploration companies are fundamentally reliant on capital raised through an initial ASX listing and subsequent capital raisings. Shares which are significantly invested in by mum-and-dad investors,” they said.

“Unlike established resource-producing firms whose assets generate cash flow, junior resource exploration companies are often funded based on a geological concept and the potential for a future discovery that may still be many years away, if it eventuates at all.

“Investors in these junior exploration firms are accepting an exceptionally high level of risk, knowing many projects will never progress, in the hope a small number ultimately succeed.”

The official approach echoes concerns voiced by AMEC and the Minerals Council of Australia.