Here is a digest of today’s major stories that impact North Australia:
The Age
In another blow to the Australian resources sector, Fortescue Metals has dramatically scaled back multibillion dollar expansion plans and cut several hundred jobs. The move has promoted fears other miners could follow suit if Chinese demand for iron ore fails to pick up and comes just weeks after BHP shelved $30 billion worth of projects, including the massive Olympic Dam expansion and its outer harbour expansion at Port Hedland.
Elizabeth Knight points out that as one of the great mining optimists, the move by Fortescue Metals is a sure sign that the mining booms has been derailed. Because of its particular financial situation Fortescue has had to undertake a radical response. However, if commodity prices do not improve other miners will also have to rethink projects.
The Australian
Julia Gillard has further inflamed tensions with the resources sector, using a speech to a major mining conference in Perth yesterday to promote her school funding program, rather than addressing mounting concerns about rising taxes and high costs in a climate of falling commodity prices.
Sharp falls in iron ore and coal prices have shaken the Reserve Bank’s confidence in China. Glenn Stevens’ statement yesterday added to concerns that Asia is being swept into a global downturn, however the bank kept its cash rate steady 3.5 per cent.
Indigenous miners are the unintended victims of the resources pull back. Fortescue Metals yesterday flagged 1000 job cuts as a result of the fall in iron ore prices, however, the miner also confirmed that it would not be able to fulfil its commitment to award $1 billion in contracts to Aboriginal businesses.
Former Queensland treasurer Keith DeLacy has declared he would be surprised if the government got a “single red cent” from the mining tax this year as plummeting commodity prices and soaring costs squeeze the profits out of iron ore and coal projects.
Peter Van Onselen describes the Prime Minister’s speech to the Mining and Exploration conference yesterday as a “classic case of not understanding one’s audience”. In a bizarre move, the PM’s 20-minute speech, opening the conference, hardly made mention of the resources sector, instead concentrating on education.
Reports from China’s biggest steelmaking province say the industry is in “extreme depression”. The Hebei Province is unlikely to recover for some time as steel mills undergo a long-awaited restructure.
The Australian Financial Review
The Reserve Bank is considering cutting interests rates because of concern about falling commodity prices, the deteriorating outlook for the global economy and conditions in China.
BHP Billiton chief executive Marius Kloppers has expressed “categorical” confidence the iron ore price will rebound from current lows by the end of the year. Mr Kloppers said Chinese spending on fixed assets would bounce back up, leading that nation’s steel mill to restock raw materials in the near term.
The West Australian
The ripple from BHP Billiton’s decision to shelve more than $20billion of Pilbara expansion projects has become a wave, with one of the mining company’s engineering contractors moving to slash 500 jobs.
The lead Aboriginal organisation in talks with the State government over the proposed $40 billion gas hub at James Price Point has appeared against the Environmental Protection Authority’s approval of the project. The Kimberley Land Council said the EPA’s report was “virtually silent” on the project’s social and cultural effects and traditional owners could be forced to withdraw their support.
The Courier Mail
The Prime Minister has said that Australia will not compete with Africa on mining wage rates, but has other advantages to encourage investment.