North Australia Digest – 7/11/12

by 7 November 2012

Australian Financial Review

Former V-P regional development of Oyu Tolgoi, David Paterson says the Asian White Century report tells a compelling story about the economic opportunities for Australian companies from the growing demand for minerals: ‘In addition to growing demand for mineral products in Asia, mineral production in Asia will rise…there is significant potential for increased mineral extraction in the future’.

The Australian

Julia Gillard is staring down heightened pressure to ban live animal exports. In a meeting with her Pakistani counterpart, the Prime Minister said ‘Australian’s are distressed to see these acts of cruelty and that I (want) the matter investigated’.

The federal government has been told to ‘back away’ from controversial proposed world heritage listings for parts of the Cape York peninsula. Aurukun Mayor, Dereck Walpo says, ‘They need to back away, they need to give us funding to do our own consultation, and at this point in time we don’t want any part of it (a listing)’.

The CFMEU has vowed to disrupt operations at Rio Tinto’ Blair Athol mine in central Queensland.

Politicians fail to recognise the seriousness of the problems faced by Queensland miners, writes Robert Gottliebsen. ‘Queensland Premier Campbell Newman recently increased royalties on coal because Newman believed (incorrectly) that the industry was earning big profits. The coal problems come on top of the harmful effects the high dollar is having’.

Sydney Morning Herald

Central Petroleum will spend $60 million drilling 10 new oil and gas wells in the Amadeus and Southern Georgina basins in Northern Australia, a move that will boost jobs and wealth in the regions.

The West Australian

The West Australian also reports on the increased pressure on Julia Gillard to cease live exports to Pakistan.

Labour costs in WA’s mining industry remain high, despite commodity price falls and a slowdown in the sector, according to US-based giant Newmont Mining. ‘Clearly we’ve seen a pullback there in Western Australia, particularly as it was probably the hottest region around the world. We have not seen the slowdown impact…yet’. (No Link).

Courier Mail

Engineering company Monadelhous Group has been awarded a $100 million contract to construct a coal handling plant for the Caval Ridge Mine Project. The agreement will bring numerous jobs to the area.

North Australia Digest – 5/11/2012

by 5 November 2012

Australian Financial Review

The federal government’s energy white paper is expected to push benefits of more deregulation and privatisation of the energy supply industry by state governments. Robert Pritchard, executive director of the Energy Policy Institute, expects the white paper ‘will be much more explicit about the supply and demand problem in relation to domestic natural gas’.

The Minerals Council of Australia (MCA) said a Greens call to renegotiate the mining tax would cost jobs and threaten investment. In a submission to a Senate Inquiry, MCA says the industry is already highly taxed and that iron ore prices are suffering as a result.

The Australian

The mining industry says the government should have expected the proceeds from the mining tax to be highly volatile in the wake of the government’s $1.5 billion tax shortfall. ‘The MRRT’s tax base is highly dependent on commodity prices and exchange rates – themselves both volatile and variable’ says the MCA.

With the recent slowing in the mining sector, the $450 million expansion plans of the Tanami Mine in the Northern Territory have been shelved. The move provides job insecurity for workers in the region.

Australian farmers could be squeezed out as New Zealand producer-owned dairy giant; Fonterra has signed a partnership agreement to develop two more dairy farms in China. Kelvin Wickham, Fonterra’s China president, says ‘the demand for dairy products in China is expected to double by 2020. We need to build a safe, sustainable local milk supply to feed this growth’.

The Age

Australia’s mid-tier miners are feeling the pinch from the global slump in commodity prices, with profits tumbling by almost half in the past year.

The West Australian

Australia’s mid-tier miners are well placed to benefit from any economic stimulus by China’s incoming leadership, despite being hit by falling prices and rising costs over the past year, according to a major study by PWC of the sector. ‘With big miners deferring projects in the face of commodity price downturns, there were opportunities for mid-tier companies to capture the next phase of growth after their increased investment through the 2011-12 fiscal year’.

Courier Mail

The Courier Mail also reports on the study by PWC, which says Australia’s mining companies have reason to be optimistic despite a difficult past 12 months.

NT News

The 1800 strong workforce at the Nhulunbuy bauxite mine face future ‘uncertainty’ as Pacific Aluminium said it was considering shutting down operations early next year.


North Australia Digest – 2/11/2012

by 2 November 2012

Australian Financial Review

The Gillard government has overestimated Chinese demand for coal and iron, warns economist and Labor government advisor Ross Garnaut. Furthermore, the forecasts in the Asian Century white paper ‘really duck the issue’ by having low, medium and high scenarios on commodities ‘so wide apart that it doesn’t say anything’.

Iron ore prices will drop over the longer term, according to BHP chief executive for aluminium, nickel and corporate development Alberto Calderon: ‘The physical iron ore demand of China will go down. That high end cost curve will disappear’.

The Australian

Australia’s biggest resources development, the $43 billion Gorgan LNG project in Western Australia, has struck a deal with the federal government to import 150 semi-skilled foreign workers. Australian Manufacturing Workers Union WA secretary Steve McCartney said, ‘We’d be very disappointed if Chevron are going to do a deal to get the labour without doing proper market testing, and we’d be especially disappointed if they didn’t support skills development’.

The Gillard government is investigating another potential breach of its animal welfare guidelines in Indonesia, after allegations that Australia cattle were slaughtered outside an accredited abattoir.

Horticulturists say that the goal of making Australia the food bowl of Asia is impossible whilst high production costs and extensive red tape remain. Huon Valley blueberry farmer Greg McCulloch believes his industry may be viable for only another four to five years because of competition from countries with lower labour costs, such as New Zealand and Chile. (No Link).

As part of a structural review by new chief executive Ted Pretty, Hill Holdings is set to cut jobs from its 2600 strong labour workforce in Queensland and South Australia.

The Australian also reports on Alberto Calderon’s warning that the Australian iron ore industry is in danger in the near future.

Departing chief of the Productivity Commission Gary Banks says productivity has become devalued coinage by being linked to any policy with the any economic dimension: ‘The most important thing a government can do is expose business to international competition. It was the winding down of tariffs in the 1970 and 80s that forced the least productive companies out of business’.

Stephen Bartholomeuz writes that Australia’s LNG industry is under threat as the US is preparing to export cheaper shale gas into the Asia-Pacific market: ‘At current domestic gas prices the US gas would be more than competitive with the Australian producers, even after taking into account the costs of liquefaction and transport’. (No Link).

The Age

The Age also reports of Hill Holdings plan to cut jobs from its South Australia and Queensland companies.

The West Australian

Kwinana Mill is the latest fabricator to shut down amidst lower demand and high Australian dollar. ASI state manager James England has lashed out at Government for failing to better protect the steel fabricators from off-shore competitors.

Courier Mail

Diatreme’s Clermont Copper Project in central Queensland will receive a $US8 million injection, which will result in more jobs for the region. The Brisbane based explorer announced the agreement with UK miner Antofagasta during day 2 of the Brisbane mining conferences. (No Link).

North Australia Digest – 31/10/2012

by 31 October 2012

Australian Financial Review

The Queensland and West Australian economies are stagnating due to a lack of labour. Dr Susanne Bahn, Edith Cowan University academic, says not enough skilled workers are migrating across from the southern states due to the ‘perceived high cost of living, but we’ve found in the mining sector that’s not so true because of the high income you get’.

The West Australian government has set a precedent by denying any financial assistance to mining companies, according to a spokeswoman for WA Mines and Petroleum Minister Norman Moore. ‘Minister Moore’s office has confirmed that no royalty relief has been offered to the company and the request has been denied’, she said.

Tensions are growing within Labor over EMAs for resource projects, after the Prime Minister said she would not act quickly on an internal report urging that stricter conditions be put on the agreements.

The Queensland Resources Council (QRC) has asked the Newman government to consider indexing coal royalty increases to inflation. Michael Roche, QRC chief executive, said it would help ensure the viability of more coal projects.

The Australian

Shadow Treasurer Joe Hockey says the Coalition has ‘serious misgivings’ over moves by US company Archer Daniels Midland (ADM) to buy GrainCorp. Mr Hockey did not say the takeover bid should be blocked but that it would be tough for the Foreign Investment Review Board to approve because of GrainCrop’s monopoly on the east coast.

Due to the recent slowing in the iron ore industry, BHP Billiton have cut more than 150 million tonnes of ore production from its Pilbara iron ore expansion plans; leading to job insecurities in its labour force.

The Age

The Age also reports on the lack of southern workers willing to head west in the wake of the mining boom.

The West Australian

In contrast, Shane Wright writes of an increase in overseas labourers migrating to Western Australia.

Mining contractors and suppliers are set to come under increasing pressure after BHP Billiton iron ore and coal boss Marcus Randolph hinted at intensified efforts to bring down the miner’s Pilbara costs. ‘BHP is aggressively seeking to bring down the price of goods, largely sucking out the excess margin’, he said.

Increasing costs in a range of commodities are undermining WA’s competitive edge, according to Reg Howard-Smith. ‘Most available measures see that Australia’s cost competitiveness is declining, along with our labour and capital productivity’. (No link).

Courier Mail

The Courier Mail also reports on BHP Billiton’s plan to cut costs from its iron ore projects. BHP added that its West Australian projects remained on schedule and on budget. (No Link).

North Australia Digest – 30/10/12

by 30 October 2012

The Australian

Chinese interest in Australian miners continues amid slumping prices and high costs. Endocoal chief executive, Tim Hedley, says that companies face ‘an increasingly challenging operating environment, given recent global financial uncertainty’.

By 2014, most mining investment projects will be completed and there will be very few additional projects for the rest of the decade. Unfortunately, Wayne Swan and the Treasury fail to understand this downward trend in mining investments and expected profits of the industry, writes Robert Gottliebsen. (No link).

The union movement has picked up on the term Special Economic Zones in its campaign against free trade with New Zealand, but they don’t quite appreciate its scope or meaning meaning.

Australian Financial Review

There has been a surprisingly steep decline in the Australian coal exports as China focuses on using hydro-electric power. Analysts are now reviewing their forecasts for China’s long-term demand as most had expected ‘it would continue to grow almost indefinitely’.

China warns ‘if you can’t get your industrial relations act and your pricing act together in mining we will take our business to Africa’, says Margaret Byrne, principal consultant at UGM Consultant.

The Age

Capital cities in Northern Australia are better geographically positioned to take advantage of the Asian Century than the rest of Australia, according to experts.

The West Australian

Unions have been told to ‘take a reality check’ by the West Australian government amidst complaints over the benefits to locals of recently awarded WA companies resource contracts. The $25 billion contracts have created around 70,000 jobs since July 2011.

Courier Mail

The Courier Mail also reports on China’s sustained interest in Australian miners despite the high production costs.

North Australia Digest – 29/10/2012

by 29 October 2012

Australian Financial Review

While the Asia Century White Paper has placed a large emphasis on developing Darwin as a regional hub for a significant number of goods and services, Australian Agricultural chief executive, David Farley has warned ‘they are nice words, they just have to be able to do it’.

Jennifer Hewett writes that the Asian Century White Paper has idealised objectives of supplying iron ore, liquefied natural gas and high quality food to middle class Asia, but contains very little detail of how they will occur.

Strong demand throughout Asia continues to drive the Australia coal, liquefied natural gas and iron ore export, but with commodity prices unlikely to reach the heights of the last few years, there is a significant slowing in the industry.

A compromised Wheat Export bill to fully deregulate the wheat market could pass the lower house with the support of cross bench and several Liberal MPs, in defiance of Opposition Leader Tony Abbott, according to Liberal MP Mal Washer.

The Australian

Darwin will be both a regional hub and a gateway to Asia according to the Asian Century White Paper.

The Northern Territory government will develop a strategic plan centred on Indonesia in response to the Asian Century White Paper. Territory Chief Minister Terry Mills said he would establish an Australian-Indonesia forum at Charles Darwin University, where senior figures from the two countries could share ideas.

Australia is in prime position to become the food bowl for the Asian market, as the needs of the region are ‘surging’. With food demand from Asia expected to rise by 70 per cent by 2050, the White Paper has predicted a significant increase to Australia’s economy. (No link)

Trade Minister Craig Emerson has said there is ‘no plans’ to change the MRRT if Labor were to be re-elected next year, after it was revealed that the MRRT had failed to raise any revenue in its initial three months.

Perth Now

Australia’s trade with Asia is expected to rise steeply under the federal government’s new Asia Century policy blueprint. Trade Minister Craig Emerson said the government would position Australia as a ‘connecting rod’ between Asia and Latin America as part of its goal of securing an Asia-Pacific free trade deal.

The West Australian

Australia should become a food bowl to Asia by providing high quality food to China’s growing middle class, according to Prime Minister Julia Gillard.

Shane Wright also provides comment on the growing demand for natural resources in the Asian region.

North Australia Digest – 26/10/12

by 26 October 2012

The Australian

Although the mining tax will not raise any revenue, Australia’s junior iron ore sector will still have spent millions of dollars in compliance costs just to confirm they do not have to pay. Atlas Iron managing director Ken Brisden said they had already spent roughly $2 million only to find out they will not have to make any payments for the new tax.

BHP Chief Executive Marius Kloppers told shareholders yesterday that the future of mining will depend more on production costs and volume than commodity prices.

Whitehaven Coal’s Sunnyside mine has been ‘suspended indefinitely’ due to weak market conditions. Managing director Tony Haggarty said although Whitehaven is a low-cost operator, it is not immune from low global commodity prices.

Following the Queensland government’s decision to overturn the ban on uranium mining in the state, Goldsearch announced it will conduct a review into the potential for mining the resource at its Elaine prospect in Queensland.

Australian Financial Review

Senior Treasury and Finance officials say the government was told four months ago that the minerals resource rent tax wouldn’t raise any revenue in the first quarter, and possibly the rest of the year.

Peobody Energy chairman and chief executive Greg Boyce warned the Queensland government that increased royalties were counter-productive to the industry and would lead to lower coal volumes produced in the state. Tony Boyd also writes about Boyce’s warning in his column.

BHP chief executive Marius Kloppers says that governments must provide ‘stable, predictable policy regimes in our key operating jurisdictions that support our own efforts to reduce costs.’ Kloppers says this is necessary to provide a competitive structure within which investment is encouraged, not hindered.

An annual index of Australia’s engagement with Asia shows our relationship with China has risen sharply in the past year. Australian investment in China rose by 278 per cent compared to a 51 per cent fall in Chinese investment in Australia. PwC Partner Tim Cox says this demonstrates Australia’s commitment to Asia beyond exports.

Newcrest Mining chief executive Greg Robinson says the company is looking into offshore growth due to the high Australian dollar. Robinson told reporters that costs were ‘killing competitiveness’ in Australia.

A report to be released on Sunday will determine whether the West Australian government will allow a Chinese company to buy 15,000 hectares of irrigation land in the north of the state. The opportunities for Chinese capital to facilitate expansion in Northern Australia’s agricultural industry will be highlighted.

APA Group chairman Len Bleasel has accused regulators of ignoring commercial considerations and caving in to political pressures, saying overregulation will reduce profitability and deter investment

The Age

The Greens and independents are calling on the government to redevelop and re-legislate the minerals tax, making it tougher for mining companies after the discovery that not a single cent will be raised in its first three months.

Construction unions are demanding the Labor government abandon an agreement that would allow Australian mining companies to bring in temporary workers from overseas. The special agreements were devised last year to ease labour shortages in the mining sector.

The Courier Mail

Labor frontbenchers claim a group of Gillard’s own MPs is pressuring the Prime Minister to abandon enterprise migration agreements through a report condemning the policy. The agreement would allow the resource sector to bring in semi-skilled foreign workers on a temporary basis. The report also touches on mining companies contributing more to local communities and spreading the benefits of the mining boom.

AAP senior political writer Paul Osborne states how the release of the Asian century white paper on Sunday has highlighted Julia Gillard and Tony Abbott’s belief that the future of Australia lies in Asia, particularly in agriculture, which is expected to grow from two per cent of Australia’s GDP to over five per cent by 2050.

The Courier Mail also reports on the mining tax, with Canberra-based firm Macroeconomics forecasting the mining tax will raise only half the revenue the government claims over the next four years. No link.

The West Australian

Standard and Poor analysts believe Western Australia’s reliance on mining sector royalties could create budget problems in the short to medium term.

BHP Billiton’s Nickel West has cut up to 100 support staff yesterday, although no mining or operational positions were affected.

North Australia Digest – 25/10/12

by 25 October 2012

The Australian

The government’s new mining tax raised zero revenue in its first three months. Price cuts, the high dollar and falling profits, mostly due to lower commodity prices, have drastically reduced mining companies’ tax contributions.

Rio Tinto are set to review alumina operations in a remote Northern Territory mining community, which could see 1400 jobs at risk.

Australian Financial Review

BHP Billiton has decided to sell its West Australian uranium deposit to Canadian company Cameco. The move has added to current debate on foreign ownership rules, but politicians and executives in Australia’s uranium industry say the deal is being used to push for changes to Canada’s own investment policy.

A report by consultancy Booz & Co warns that low productivity and high cost could potentially see a third of Australia’s coalmines unprofitable if the price of the resource falls much further.

Reserve Bank of Australia board member John Edwards believes the mining sector is still the most productive sector of the Australian economy, despite signs that productivity is dropping. Edwards said that mining ‘continues to make a positive contribution to overall productivity growth in Australia.’

The Courier Mail

The Courier Mail also reports on the failure of the mining tax to raise any revenue due to falling commodity prices. The government’s MYEFO, released earlier in the week, has slashed predictions for the mining tax from $3.7 billion revenue down to only $2 billion.

The West Australian

A rise in the consumer price index of 1.4 per cent in the last three months was led by a 13.1 per cent increase in electricity prices, likely to be fuelled by the carbon tax.

As in yesterday’s Courier Mail, the West Australian reports on Resources Minister Martin Ferguson’s claims that Australia’s resources sector has become ‘fat and lazy’, that lower commodity prices should not prevent expansion and development.

The Daily Telegraph

A draft report of Labor MPs has called on Julia Gillard to appoint a special cabinet minister to ensure local workers are used in the mining industry ahead of foreign labour. The report lead to the resignation of the committee’s deputy chair Andrew Leigh.

North Australia Digest – 24/10/12

by 24 October 2012

The Australian

Queensland mining companies believe Premier Campbell Newman’s decision to overturn the 23-year ban on uranium mining indicates the industry is ‘becoming normalised’ and opens up huge opportunities for the state’s economy.

Julia Gillard announced yesterday that developing a national soil health strategy would be a top priority for her government. Such a strategy will be vital as farmers are being asked to double food and fibre production by 2050.

Ferngroves Wines director Anthony Wilkes says he has had only positive experiences with foreign investment on his West Australian winery. It has allowed him to buy and plant an additional 100 hectares of vines, new tractors, oak barrels and expand more modern wine-making facilities.

In a separate article, Canada’s Laramide Resources chief executive Marc Henderson said the Queensland government’s decision to lift the ban on uranium mining could see Australia becoming the ‘default natural supplier of choice’ to all Western utilities.

BP Australasia president Paul Waterman criticised government policies that drive up costs for resource companies and affect job creation opportunities, saying ‘Australia is an expensive place to do business and it’s getting more expensive.’

Energy Minister Martin Ferguson says nuclear power is a proven clean energy source that will become cheaper in the future.

Australian Financial Review

The government’s Asian Century white paper, set to be released on Sunday, will focus on strategies aimed at deepening ties with Asia to secure Australia’s long-term economic and security future. It will argue that Australia needs to engage in lower-level areas such as education, the workplace and people-to-people connections, while also being more receptive to foreign investment. Trade Minister Craig Emerson, who helped write the paper, is pushing for foreign investment in northern agriculture.

Julia Gillard told the National Farmers’ Federation congress that the federal government will establish a register for foreign ownership of farmland in order to ease concerns that foreign investors are buying up Australia’s prime agricultural assets.

The Financial Review also reports on the future of uranium mining, with Australian Uranium Association chief executive Michael Angwin saying the mining of the resource could rival Australia’s massive iron and coal industries.

The Age

The Age also reports on the government’s move to establish a register of foreign-owned farms in Australia. The register will provide ‘a more comprehensive picture’ of the nature of foreign investment.

The Courier Mail

With the ban on uranium mining lifted in Queensland yesterday, Senator Barnaby Joyce has put nuclear power back on the agenda, claiming that if we are prepared to export the resource, we should be willing to use it domestically.

Resources Minister Martin Ferguson says the resources sector has become ‘fat and lazy’ and that Australia should continue expansion and investment in the face of low commodity prices.

Burke Shire Deputy Mayor Paul Poole said lifting the ban on uranium mining would ensure jobs in the state’s remote northwest, particularly as other job opportunities diminish. Chairman of the Australian Institute of Company Directors Keith DeLacy said the ban ‘achieved nothing in terms of the environment or security’ and ‘only serve to make us poorer as a state.’ No Link.

The West Australian

South African based Gold Fields announced yesterday that it would cut 170 jobs from mining operations in Western Australia by the end of the year due to rising costs.

The West Australian also covers BP Australasia’s accusations that the Federal Government is failing to address the problem of rising operating costs, making Australia uncompetitive and unconducive to foreign investment.

The Weekly Times

A report by Port Jackson Partners director Angus Taylor showed under the right leadership Australia could more than double agricultural exports by 2050, adding an extra $710 billion to Australia’s exports. Taylor said the industry must capitalise on market opportunities in Asia, which would need large amounts of capital from both domestic and foreign investment.

North Australia Digest – 23/10/12

by 23 October 2012

The Australian

Queensland Premier Campbell Newman has decided to lift the ban on uranium mining in Queensland, unlocking a huge opportunity to recommence development of the resource in the state. This comes 30 years after the state’s last mine closed and could see development worth up to $18 billion. Newman says the change was prompted by Julia Gillard’s visit to India, where she discussed uranium exports with the country.

The Commonwealth now expects its mining tax to generate only two-thirds of what they had predicted earlier in the year due to falls in commodity prices. Yesterday’s MYEFO forecast the earnings from minerals resource rent tax down 32 per cent from this year’s May budget.

Australian Financial Review

BHP Billiton Mitsubishi Alliance employees have endorse a new workplace deal at the company’s Queensland coal mines that will see annual pay rises of 5 per cent over three years, a $15,000 bonus and increased superannuation.

Former AWB managing director Gordon Davis says preventing foreign investment into GrainCorp could deter necessary flows of capital into the agricultural sector.

Treasurer Wayne Swan denies claims he announced the budget review earlier than usual in order to avoid revealing how little revenue the Mineral Resources Tax has generated.

The federal government has said Australian coal mines could see more job cuts as the industry comes under greater pressure due to steadily low commodity prices.

Trade Minister Craig Emerson is encouraging farmers to welcome foreign investment in order to take advantage of Asia’s increasing demand for Australian agricultural exports.

The Age

The Age also reports on the lifting of the uranium mining prohibition in Queensland after a 30-year ban. This follows the federal Labor Party decision to remove policy bans on uranium mines and begin discussions to sell uranium to India, as well as policy changes on uranium in Western Australia and New South Wales.

The Courier Mail

Again, the Courier Mail reports on Queensland Premier Campbell Newman’s decision to overturn the 23-year ban on uranium mining, facilitating the redevelopment of an $18 billion industry, which could also see thousands of jobs created.

A CPA Australia report found Australian business leaders are struggling to engage with Asian markets due to relatively poor knowledge of the region and its languages. The report discovered that Australia may not be able to capitalise on its geographic location if it doesn’t overcome cultural barriers, stating ‘[t]here is a strong risk that without a change in mindset from Australian businesses, Australia will be a peripheral player in the Asian century.’

The West Australian

Analysts say uranium explorers in Queensland are unlikely to begin production any time soon, despite the recent policy change to mining in the region. No Link.

The Brisbane Times

The Brisbane Times also reports that Australia’s uranium sector will be given a huge boost as Queensland Premier lifts the ban on uranium mining in the state.

The federal government announced it will introduce a foreign register for agricultural land in an attempt to ‘take the politics out of foreign ownership’.