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North Australia Digest – 15/11/2012

by 15 November 2012

The Australian

Nationals Senate Leader Barnaby Joyce and NSW Liberal Bill Heffernan appealed to the WA government to rethink its deal with Shanghai Zhongfu. Senator Joyce asked if Zhongfu would pay Australian tax on any sugar or ethanol biofuel products produced from Ord land.

The joint venture partners of the $43 billion West Australian Gorgon LNG project have played down speculation they are facing a $20bn cost blowout that would dwarf anything in the country previously announced.

BHP Billiton will focus more on cost cutting after the dip in iron ore prices, but is still expected to drive production increases at its Pilbara operations in Western Australia. Earlier this year, BHP deferred its expensive outer harbour development at Port Hedland in favour of lifting productivity at the inner harbour, in the wake of high costs and low iron ore prices.

Fracking technology has enabled the energy equivalent of Saudi Arabia to be discovered in America. That’s why the cost blowout at the Gorgon LNG project is so dangerous to Australia, according to Robert Gottliebsen. ‘The US shale discovery has already contributed to the demise of our thermal coal and is now set to contain future gas developments’.

Australian Financial Review

Hancock Prospecting will formerly begin asking lenders for $7 billion in debt financing for the Roy Hill iron ore project within days. Executive Director Tad Watroba says, ‘we have very good support from the big Aussie banks…They are very keen to invest in this project. They are telling us Roy Hill is one of the best mining opportunities for them. We are looking forward to ticking all of the boxes’.

If Hancock Prospecting finds the $7 billion debt financing required to fund the Roy Hill project, another extraordinary chapter in WA resources development is underway, writes Jennifer Hewett. ‘It certainly challenges the idea that only major established miners can capitalise on the continuing Chinese demand for volume at prices likely to be far lower than their peak’.

Chevron only has itself to blame for any cost blowout at the Gorgon LNG project, says Chris Cain, head of the West Australian arm of the Maritime Union of Australia. ‘It’s (the wharf at which construction materials for the Gorgon project is loaded) going very well at the moment… Delays at Chevron are their own fault’.

Sloppy management practices have driven rising costs on large resources developments and made Perth ‘close to being the most expensive place for engineering in the world’, according to Worley Parsons managing director Ian Wilkinson. ‘There needs to be a re-check of expectations in places like Perth… I think we will see a rebalancing of costs in Australia over the next few years’.

The Australian Financial Review also reports on the oil and gas industry, blasting the cash-bidding scheme for offshore exploration licences.

Former Patricks boss Chris Corrigan has lambasted port managers for lacking ‘vigour and talent’ by allowing industrial activity to weaken productivity on the waterfront. ‘The management practices and management capabilities in the terminals are not being prosecuted with the right amount of vigour and the right amount of talent’.

The Age

The petroleum industry has slammed a federal government plan to extract cash bids for exploration permits, which would add to the cost pressures afflicting Australian oil and gas projects. Amid speculation of the Gorgon projects cost blowout, federal Energy Minister Martin Ferguson surprised the industry on Wednesday by announcing the government would introduce cash bidding for release of offshore acreage. ‘This will apply only to mature areas or those known to contain petroleum’ he said.

The West Australian

Consolidated Minerals has become the latest Pilbara operator to slash its workforce, with the manganese and chromite miner chopping jobs at both of its WA mines. The company said its cash costs had fallen since it moved to an owner-miner model earlier this year after sacking the mining contractor. However, ConsMin reports cash costs on a consolidated basis and does not separate its Australian and Ghanean operating costs.

Sugar cane growers have backed moves by a Chinese company to revive the industry in WA under a lease agreement with the State Government which will give it control of 15000ha of prized Ord River farmland. Australian Cane Farmers Association general manager Stephen Ryan says, ‘we have no issue with foreign investment, we are just dismayed that there is no more Aussie investment. The important thing to do is develop the industry’.

North Australia Digest – 14/11/2012

by 14 November 2012

Australian Financial Review

Australia’s biggest ever resources development, the Gorgon liquefied natural gas project, faces a $20 billion cost blowout to more than $60 billion because of the high dollar, union demands, high-cost local manufacturing and productivity issues. West Australian Premier Colin Barnett says companies were going through a tough period across the energy and mining sectors. ‘Some (companies) have become bloated with administration during the heady days…and they’ve come to the realisation their production is too expensive’.

The message from Resources Minister Martin Ferguson can’t be much clearer. Too many Australian projects are no longer competitive, according to Jennifer Hewett. ‘Partly that’s escalation in costs is due to the strong currency. Partly it’s because some resource companies allowed themselves to become “fat and lazy”’.

West Australian Premier Colin Barnett says his government will approach Chinese state-owned enterprises directly in a bid to kick start the $6 billion Oakajee port and rail project proposed to service iron ore miners in the state’s mid-west.

Australia’s rural sector has lost up to $43.5 billion in export income thanks to the Australian dollar, according to a report by think tank the Australia Institute. ‘The idea that any growth in the mining sector will serve to enhance Australia’s income is simply untrue’ the report reads. ‘The mining boom has not been managed well. It has been allowed to expand with little consideration for the collateral damage it causes to other sectors of the economy’.

The Age

The Age also reports on the Australia Institute’s study on the effect a high Australian dollar is having on rural export income.

Rio Tinto has accused the Australian government of taking its ‘eye off the ball’ in terms of productivity reforms, and called for action on workplace laws, taxation and foreign workers. Rio’s Australia chief David Peever says ‘Interventions like the recent increase in Queensland coal royalties and the more perverse aspects of the carbon tax…will help strangle the sector if they are not addressed’.

On Thursday, Mackay Sugar will flick the switch on its new $120 million co-generation plant and start supplying electricity to Queensland’s regional power grid. Rob Murray-Leach, chief executive of industry lobby group the Energy Efficiency Council says Australian companies are catching on that investments to improve energy productivity can deliver significant economic and environmental benefits.

The Australian

A Chinese property development conglomerate has won the sole right to develop 15,200ha of high-value irrigated agricultural land in northern Australia’s Ord River region after the state and federal governments spent $510 million to support the deal. The West Australian government will formally announce the deal next Tuesday.

The West Australian

A proposal for a new port in the Pilbara has been lodged by Iron Ore Holdings for a 20 million-tonne-a-year multi user facility. With an initial export capacity of 10mtpa, the port could eventually double in size to allow other iron ore companies in the region access to export markets. The proposal would provide countless jobs for the Pilbara.

The West Australian also reports on a Chinese conglomerate’s successful bid to secure 15000ha of farming land on the Ord.

Chervon insisted yesterday that the 15.6 million tonne a year Gorgon LNG project remained on track to be finished by late 2014 despite speculation of a cost blow out. Chevron’s Australia general manager Brian Smith said the project, based on tapping the Gorgon and Janz-Io fields off the Pilbara coast and piping the gas to Barrow Island for processing, was 50 per cent complete. Nine thousand workers were involved in Gorgon’s construction, including 400 on Barrow Island.

Despite the setbacks that have plagued the Oakajee Port and Rail project in WA’s Mid-West , the WA government should be commended for showing leadership and trying to find a long-term solution to the lack of infrastructure in the region, according to Simon Bennison. The state government needs to undertake a complete review of infrastructure and work co-operatively with industry to ensure infrastructure needs are met. (No Link).

Courier Mail

Rio Tinto has called for unions to get out of the workplace, blaming them for falling productivity, as some of its coal workers planned to strike. David Peever, Rio Australia managing director, says ‘Reform of the Fair Work Act needs to go much further than has so far been flagged by the government…Direct engagement between companies and employees, flexibility and the need for improved productivity has to be at the heart of the system’.

North Australia Digest 13/11/2012

by 13 November 2012

The Australian

Fears are mounting that Woodside Petroleum may develop its $40 billion Browse energy project using floating LNG technology, after the company dismantled its work compound at James Price Point in the Kimberley. The move comes as Woodside evaluates the tender bids for construction of the Browse project amid estimates that cost of a greenfields project in the Kimberley is likely to be prohibitive.

Speaking at the Origin Energy AGM, Managing Director Grant King has said the regulatory environment is causing “substantial challenges” as the company tries to fund its share of the $23 billion Australia Pacific LNG project.

The Australian Financial Review

BHP is “studying closely” the possibilities of shipping US shale gas to supply Asian markets –entering direct competition with huge liquefied natural gas projects in Queensland, the Northern Territory and West Australia. Mike Yeager, chief executive of BHP’s petroleum division, has expressed concerns about the cost of developing Australian gas fields, with high wage and material costs, heavy government regulation and remote locations all adding substantially to costs.

The mood at the Australian Resources Conference and Trade Show in Perth this week reflects a far more cautious tone than six months ago, according to Jennifer Hewett. Despite hundreds of billions of dollars of resources investment under construction, regular announcements of project delays, shelved expansion plans, job cuts and scepticism from investors have curbed any “wild exuberance – even in Western Australia.”

Rio Tinto has added to fears of a slowdown in the resources boom after warning capital costs in Australia have accelerated faster than any other mining jurisdiction in the world. In his address to the Australian Resources Conference in Perth today, Rio Tinto Australia managing director David Peever will argue that more than half of Australia’s coal, copper and nickel mines have cost above the global average.

A shock 20 per cent cost blow out at ExxonMobile’s LNG project in Papua New Guinea has raised fears of more heavy overruns for Australian projects. Australia currently has $170 billion worth of LNG projects under construction – many of which are already billions of dollars over budget. “All the LNG projects are facing similar issues, but with ExxonMobil having such a good reputation for delivering projects on time and budget we are a bit surprised that capex has blown out by that much,” Bell Potter analyst Johan Hedstrom said.

Property prices in the town of Geraldton are expected to stagnate after the news Mitsubishi Corp would freeze spending and cut its workforce on the troubled $6 billion Oakjee port and rail development in the region.

The Age

ExxonMobile’s PNG LNG project cost blow-out has stoked fears a planned second wave of Australian LNG projects might struggle to gain approval. Bell Potter energy analyst Johan Hedstrom said Monday’s announcement was “yet another sign we are facing serious cost pressures.”

The Courier Mail

A biannual report by consultants Economic and Market Development Advisors (EMDA) predicts 137,000 jobs will be added to the Australian economy by August next year –  led by demand in the mining industry. EMDA’s report predicts Western Australia will lead the way with 2.5 per cent employment growth, followed by Queensland at 1.2 per cent.

The West Australian 

BHP Billiton has identified the Canning Basin in the Kimberley as a possible site for shale gas expansion. The head of BHP’s petroleum division, Mike Yeager, said Australia’s “preferential location” to Asian LNG customers meant BHP had to look at unconventional opportunities here, and he singled out the onshore Canning Basin as a key target.

North Australia Digest – 12/11/2012

by 12 November 2012

Australian Financial Review

BHP Billiton’s new iron ore chief, Jimmy Wilson, has targeted more job cuts and a boost in labour productivity to revitalise its iron ore business now that boom-time ‘scarcity pricing’ has passed. BHP cut about 200 iron ore jobs after the sharp plunge in the price of the steel in August.

Jennifer Hewett reports on decision to put the $6 billion Oakajee port and rail project on indefinite hold following tensions between Japan and China.

The mining-related construction boom will peak in 2014 and business investment is set to become a spent economic force by the following financial year, Deloitte Access Economics says. “What has been the big growth driver of the Australian economy over recent years will now be absent,” Deloitte partner David Rumbens writes. “By 2013-14, business investment will be pretty neutral with respect to economic growth, and thereafter it will actually be acting as a brake on our future growth.”

Investors are worried about policy and regulatory risks to their business’ and future investments, particularly in LNG projects. The vice-president of finance and strategy for Shell Australia, Michael Carey, said “we just need to have confidence that the settings will be stable over several decades.” He said that though much of the $30 billion of spending earmarked for the next five years was already committed on projects such as Gorgon LNG, Wheatstone and the Prelude floating LNG venture, the next wave of investment was still in the balance.

Nuclear power generation is ramping up around the world despite the Fukushima tragedy and Australia could have its first reactor within 10 to 15 years if there is sufficient political will. Nuclear physicist and former Telstra boss Ziggy Switkowski says “Once you’ve got the first reactor approved and built you can build them quickly…as other countries like France have shown, you can move from zero reactors to 50 in a period of 20 years.”

The Australian

The Greens are increasing the pressure on the Gillard government to shut down the live export trade, releasing a position paper today that proposes a five-point plan for a transition from the $1 billion trade to domestic meat processing. Greens animal welfare spokeswoman Lee Rhiannon said the public was distressed over live export cruelty and the government needed to respond properly rather than just hold “half-baked inquiries.”

West Australian Premier Colin Barnett is threatening to campaign against a push to develop the $40 billion Browse project using radical floating liquefied natural gas technology, arguing the move will cost thousands of construction jobs and set a dangerous precedent. “If you think about it, not a single job in construction for Australia, not a single crew member on it for Australia…the two choices are floating LNG or develop at James Price Point.”

The Age

Project cancellations and profit downgrades are mounting as the mining services sector confronts its post-boom future. In announcement made late on Friday, two groups servicing the mining sector said contracts with large mining companies had been cancelled and were not expected to be renewed.

The West Australian

Claims about the death of the mining boom may be premature, with a new report showing a further increase in resource investment in WA and across the nation. The Deloitte Access Economics quarterly investment monitor, released today, shows total planned or existing investment grew $6 billion in the September quarter to a record $926 billion.

More than 100 farmers are expected in Katanning today for a crucial meeting on the future of WA’s sheep meat and live export industries. The sheep industry is reeling after the brutal slaughter in Pakistan of sheep from WA. Sheep Industry Leadership Council chairman Rob Egerton-Warburton said the meeting would give farmers accurate information after a 30-40 per cent drop in prices and protests about live exports.

The West Australian government has backed a Chinese consortium’s move to create its own supply chain to grow and ship grain from WA to China. Agricultural Minister Terry Redman said yesterday the plan would create an alternative path to burgeoning market and attract foreign investment.

Courier Mail

The Reserve Bank of Australia says that weaker commodity prices and a high exchange rate have dealt a double blow to Australia’s mining sector, making companies less willing to invest and driving expectations for domestic growth lower. “The forecasts have been revised down slightly since the August Statement, largely reflecting a downward revision to mining investment, which reduces GDP growth over 2013 by around half a percentage point (net of imports),” the RBA said in its Statement on Monetary Policy.

North Australia Digest – 8/11/12

by 8 November 2012

The Australian

Economics Editor David Uren points out the length of the mining boom will be decided by the industry’s ongoing competitiveness. Despite the huge possibilities for major investment in LNG in Australia, investors would need to be convinced that projects can be brought in on time and on budget, and the evidence on that, Uren argues, “is not  good.”

Despite pressure from her back bench, Julia Gillard is expected to stand by the live-export industry. Labor MPs Steve Georganas and Darren Cheeseman have joined the call to scrap the trade after images aired on Four Corners this week showed thousands of animals being culled.

Buru Energy’s attempt to develop Australia’s most promising onshore oil and gas region has received a major boost after a deal was struck with the West Australian government to build a $500 million pipeline to connect the Kimberley site with the domestic gas network in the Pilbara. WA’s controversial gas reservation plan, which ensures 15 per cent of gas from new projects is quarantined for domestic use, has been applied to the project.

Western Australia’s peak business lobby group has joined the State’s Labor party in attacking the Barnett government’s decision not to abolish its powerful potato regulator. The regulation of WA’s biggest vegetable crop has caused much debate in recent weeks after allegations of fraud.

Clive Palmer’s Waratah Coal has been accused of breaking indigenous heritage laws at one of its burgeoning coal mines in the Galilee Basin – with both roads and camps being built without consultation of indigenous groups.

The Australian Financial Review

Workers from Australian’s eastern states are reluctant to move to WA – particularly key mining areas – as it feels like a foreign country. A survey by Edith Cowan University also found the lack of infrastructure, high costs, and geographic and social isolation acted as major deterents to moving west.

The federal Coalition will submit the government’s Minerals Resources Rent Tax to the new Parliamentary Budget Office – indicating the role the new agency could play in debate’s over the government’s projected budget surplus.

West Australian

The labour shortages that have threatened to stall WA’s growth are finally easing according to figures released from the Chamber of Commerce and Industry. Revised figures for the shortfall in 2020 have dropped from 222,000 to 180,000.

WA’s biggest dairy enterprise looks to be the target of several major Asian companies – a sign of increasing demand for Australia’s agricultural assets.

The NT News

Darwin and Palmerston house prices have jumped 8.2 per cent over the past year, the fastest growing in the country. Perth was next highest – growing at 4.4 per cent – according to the Australian Bureau of Statistics.

A marine supply base could be built on the Tiwi Islands under plans proposed by an international marine logistics company.

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.