North Australia Weekly Digest – 07/06/13

by 7 June 2013

The Australian

In a report released this week, the Australian Council of Learned Academies estimated Australia’s undiscovered shale gas reserves could double to over 1000 trillion cubic feet, but development costs could be high given most reserves are located in remote areas that lack existing infrastructure. “Shale gas in Australia will not be cheap, but it is likely to be plentiful and has the potential to be an economically very important additional energy source,” the report said.

GVK Hancock Coal managing director Paul Mulder has said Australians can no longer afford to adopt the standard “carte blanche” approach to mining as the country continues to deal with falling productivity levels and rising prices. Mulder also spoke on the 457 visas, highlighting that it is actually more expensive to hire workers under the scheme, “If you are paying an Australian a base (rate) of one, with a 457 visa it’s one-plus . . . you would only get a 457 person if it was necessary for finance and to get the project up and running”.

West Australian Premier Colin Barnett has embarked on a week-long trip to China and Japan in hope of securing investment from Chinese state-owned companies in the $5.9 billion Oakajee port and rail iron ore project. Barnett said recent cost blowouts and confusion over foreign investment approvals had damaged China’s perceptions of doing business in Australia, but was seeking to rectify relations. “I hope we can spark up their interest and bring China more formally into the project, perhaps even lead the project. That’s through investment in the infrastructure,” Barnett said.

Australian coal exports rose 5 per cent last month to 27.55 million tonnes as the east coast continues to recover from the torrential rains that caused disruption earlier in the year. Tropical cyclones contributed to significant rain damage across Queensland with several rail links shut from severe flooding, causing many producers to declare force majeure on existing contracts. Total shipments for April were 6.9 per cent higher than the same time last year.

The University of Sydney has embarked on a project that could make the identification of future mineral deposits in Australia much more extensive and accurate. The $12 million ‘Big Data Knowledge Project’ combines computer scientists, financial analysts and natural scientists in an effort to discover hidden information in massive data sets. “Any information that can improve the accuracy of such greenfield exploration would obviously be highly valued,” said Professor Dietmar Muller of the project.

The Australian Financial Review

Origin Energy managing director Grant King has singled out green energy policies as the key upward cost pressure on household utility bills, saying the “green part” of Australian electricity bills had risen from two per cent to 15 per cent over the past five years. “The global consensus that existed for this policy four or five years ago is no longer there and that makes Australia’s carbon policies increasingly disadvantageous to Australia,” King said.

Australian Bureau of Statistics data from last financial year reveals telling signals for the mining sector in Australia. The industry paid $27 billion in labour costs for 195,000 employees, averaging $120,876 a year, and operating profit before tax was $83.7 billion on income of $218.3 billion, reaffirming the renewed focus across the sector on cutting costs and improving productivity to protect these low margins.

BHP Billiton chief executive Andrew Mackenzie is optimistic that Chinese commodity demand, particularly in iron ore, will remain strong following a meeting with Chinese Premier Li Keqiang. ” There was a very clear signal as far as he was concerned this is the only way China’s success can continue on a relatively unbroken path of increasing urbanisation,” Mackenzie said.

The West Australian

West Australian Premier Colin Barnett sees a new opportunity in natural gas development as iron ore expansion comes to an end in the state. “I think our iron ore industry is reaching its long-term maturity,” Barnett said, “There is going to be some growth but not much more”. Yet China’s demand for natural gas is predicted to grow as the country seeks to clean up the country’s pollution problems. “For us, it means a big demand for WA gas,” Barnett said.

The West Australian State Government is set to continue talks with Aurizon that could see a fourth iron ore rail network in the Pilbara, despite concerns that separate deals amongst miners could rush the $4 billion-plus project. However, there are some doubts surrounding the viability of the project in the face of falling iron ore prices, slowing expansion and diverging investment.

The uranium spot price hit a four-year low this week to $40 per lb, adding further pressure to Western Australia’s uranium explorers. Despite confidence within the industry that the price would rebound over the past 12 months, it has failed to lift considerably – the price has not broken the $45 per lb mark since December. A massive increase in price would be needed to get the state’s sector off the ground.

The NT News

The Australian Mines and Metals Association has released a report that shows the Northern Territory is about to experience a “massive tradie drought”, finding 5644 workers will be needed in the next 12 months for 35 major resources and infrastructure projects in the region, only half of which are predicted to be available.

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