North Australia Digest – 10/01/2013

by 10 January 2013

Here is a digest of the major stories that have impacted Northern Australia over the past three weeks.

The Australian

A major new survey commissioned by SBS shows most Australians believe the mining industry saved the economy during the global financial crisis and has even played a role in shaping the national identity. Despite this, many of those questioned felt foreign investment and the use of overseas workers should be limited. (02/01/13)

Rio Tinto iron ore chief executive Sam Walsh warned that the spike in iron ore prices over the holiday period was likely to be temporary; the company would still aim to cut costs aggressively as market conditions improved. Walsh said the boost in iron ore prices was due to widespread restocking by steel mills and uncertainty in supply due to the cyclone season, which has seen iron ore prices continue to rise without a corresponding increase in share prices. (03/01/13)

Matthew Crawford, managing director of Cuesta Coal, says stability in the price of coal and an increase in demand from China and India will deliver a better year for junior explorers. “China in November had record import and the long-term outlook for energy consumption out of China and India is still huge,” Crawford said. (03/01/13)

KPMG global chairman Michael Andrew said that raw materials demand from India and Brazil will fill the void as demand from China is expected to slow. “You are starting to see those economies modernise,” Mr Andrew said, “You are seeing reforms in India for the first time in a decade where they are opening up the retail sector promising financial services and Brazil has announced major infrastructure packages. (04/01/13)

Indonesia’s largest livestock importer, Santori, has taken steps towards the Chinese market as restrictions on importing Australian cattle to Indonesia are unlikely to be rescinded. Santori once imported almost a quarter of the Australian cattle going to Indonesia, but has now signed an agreement to build a 30,000 head feedlot in China’s Shandong Province. (27/12/12)

The Australian Financial Review

In its 2012 market wrap, the Australian Financial Review summarises the ups and downs the year held for commodities, highlighting that volatile prices made 2012 a tough year in the industry, with Australia’s two largest commodity exports, iron ore and coal, going through massive swings as demand from China fluctuated and the Australian dollar grew stronger. Despite these unstable commodity prices, the mining industry was one of the fastest-growing industries in job creation in 2012, with jobs in the sector increasing by 12 per cent. (24/12/12)

Queensland and Western Australia have called on the federal government to resolve ongoing disputes with the mining states over approvals processes that have seen many large projects delayed unnecessarily. West Australian Minister for Mines and Petroleum, Norman Moore, said he hoped the federal government was not “pandering to the greens” in its decisions, including the recent delay at Toro Energy’s Wiluna project. Queensland’s Infrastructure Minister, Jeff Seeney, added that the federal government was unreasonably adding environmental approvals to projects, saying “unnecessary political interference” was delaying development in the state. (10/01/13)

Iron ore prices have risen to well above $US150 a tonne as Chinese steel mills enter a phase of ‘panic buying’ to bolster current stock. Atlas Iron commercial director Mark Hancock said China was concerned about securing volumes of iron ore for the year as prices rise, “volumes were seen as less of a benefit when prices were falling this year but people have seen tightening availability of product and are now keen to lock down contracts again,” Mr Hancock said. This current surge in prices is leading analysts to predict that the minerals resource rent tax may generate revenue for the government, but the boost in national income will do little to ease pressure on the federal budget. (07/01/13)

Law firm Allens has warned oil and gas explorers around Australia of further “tightening of controls” in 2013 as a result of two offshore fatalities in 2012. Under the proposed law changes, senior employees and offices in the petroleum industry are likely to face increased safety regulations and harsher penalties for any breach of the new standards. (31/12/12)

A poll conducted in late 2012 suggests that oil prices will remain above $US100 a barrel for the third year in a row in 2013 despite the massive growth in production in North America following its ‘shale revolution’. Analysts believe that the rise in North American output may be offset by declining production elsewhere, including the UK, Norway and even Saudi Arabia. (03/01/13)

The West Australian

West Australian Premier Colin Barnett has said the state could have four uranium mines within a decade. Barnett said that although the industry’s growth had been “a little slower” than anticipated due to “scaremongering” by green groups, most people in Western Australia and Australia were in favour of uranium mining. (24/12/12)

Rio Tinto and Alcoa have been granted a two-year extension on their plans to develop a bauxite deposit and aluminium smelter in the Kimberley. This news comes despite Premier Colin Barnett’s suggestions earlier in the month that the project would unlikely ever be developed due to its remote location and the lack of existing infrastructure.  (28/12/12)

National Party MP Wendy Duncan has given her support to Len Buckeridge’s plan for a private bulk commodity port in Kwinana, saying it was desperately needed for the region’s live animal exports. Green groups have responded to Duncan’s support by entering into heated debate on the issue, saying that more effort should be made to develop chilled meat exports. Greens animal welfare spokeswoman Lynn MacLaren said the live export industry in Australia is “on the way out” and that Australia is “not meeting its animal welfare obligations”. The port would also handle other commodities such as minerals, wheat and building products. (07-08/01/13)

The Courier Mail

This piece reflects on the year past for the mining industry, describing how the sector’s focus shifted from rising commodity prices earlier in the year to cutting expenses as commodity prices fell and the Australian dollar grew stronger, making Australia a “costly place to do business.” CSLA analyst Oscar Oberg says the cost-cutting trend will continue into 2013. He also suggests companies may aim to diversify geographically and in commodities over the coming year as an “opportunity for growth”. (07/01/13)

A submission to the Queensland Competition Authority shows the state’s cotton industry has been plagued by rising energy costs, which have increased by as much as 300 per cent. Cotton Australia says changes to tariffs following the QCQ draft determination would have a significant effect on growers who rely on electricity for irrigation pumps, with many farmers abandoning expensive electrical infrastructure. (09/01/13)

The Age

Port Hedland’s Port Authority has revealed December was a record month for trade in iron ore, with 25.995 million tonnes shipped. This was about 22 per cent higher than the volume exported in December 2011 and significantly higher than the previous monthly export record of 22.8 million tonnes. (04/01/13)

NT News

Despite a long fight to keep Rio Tintio’s Gove refinery open, Pacific Aluminium – Rio Tinto’s subsidiary – said that it was considering shutting the loss-making plant in the Northern Territory, effectively putting over 1000 jobs in the area at risk, unless a $900 million pipeline is built and Territory gas to provide power to the site.  (07/01/13)

The Weekly Times

Trade Minister Craig Emerson’s Feeding the Future report says that Chinese investment will be the key to driving rural Australia’s development. The report, released in December, welcomes foreign investors to “provide employment, drive technological advances and boost prosperity in rural Australia”. (26/12/12)


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