The Association of Mining and Exploration Companies (AMEC) has urged on Australian Prime Minister Julia Gillard and her government to grant more incentives specially to small to mid-tier miners to boost continued mining exploration activities in the resource-rich nation in the midst of falling commodity prices and slowing growth in China, its major trading partner.

"We are going through a very difficult period for junior exploration companies to raise equity finance," AMEC's Simon Bennison said. "There are some serious issues confronting the industry with rising production costs and its international competitiveness."

"We'd certainly like recognition of the shift in the commodity prices."

The tax incentives, according to Mr Bennison, will aid Australia's mining to move on with its exploration activities as it exerts to manage rising costs alongside falling commodity prices.

"The rising cost of doing business in Australia is deterring investment in the exploration sector . . . those tax incentives will help increase activity in the exploration sector," he said.

"Local, state and federal governments should prepare for lower revenues unless new discoveries are made to replace Australia's ageing mines."

Even the Bureau of Resources & Energy Economics (BREE) is noting that more mining projects face cancellation.

"If prices continue to decline - and they declined substantially in the last six to eight weeks - then then that clearly will have a negative outlook in terms of what companies are prepared to invest over the long term in projects," Quentin Grafton, chief economist, said in MarketWatch. "The long-term trend now with the second phase of the commodity boom is substantial supply increases which will therefore moderate prices further into the future."

Mr. Grafton said he was alarmed by "the extent and by how rapidly" the price of iron ore, Australia's largest export, dipped in recent weeks.

Prices of iron ore in the world market hit US$88.70 a dry metric tonne last week on Thursday, its lowest since October 2009. It dropped 24 per cent in August alone.

In its last forecast in June, BREE projected that prices of iron ore will average US$136 a tonne in the current year, and US$131 a tonne in 2013.

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