Distinguished guests, members of the Queensland Resources Council, and friends.
Thank you for such a warm welcome to someone from that far away country, West Australia. But across the miles we do share something very important, the contribution our industry makes to our states and country. It’s great to be here with Ian and Larry and members of our essential industry, in the Olympic city of Brisbane.
This month is a special one for our mining company, as we are celebrating our Hope Downs mines development together with the 50 percent partner who we brought in, back in 2005, Rio Tinto iron ore. This was a game changer for our then little Aussie company.
Indeed, from a very personal perspective, Tad my long-term executive director, Sue my long-term secretary and I noticed it from the day after signing with Rio, when we took then Rio CEO iron ore Sam Walsh up with some of his staff, to see what they’d bought into. We lunched together on top of the mountain of the deposit which became, just a year plus later, our first joint mine, Hope North 1. Hancock had already achieved the thousands of approvals, just a revised approval to link into Rio’s infrastructure was required.
Now, Hancock style Pilbara lunches meant, drinking out of the water bag, tin mugs if we brought a thermos of coffee, or wanted to boil the billy, sometimes some cans, sandwiches, maybe some delicious home-made sausage rolls, while sitting on the larger rocks under the shade of a tree.
But we immediately saw the difference with Rio. Two flags appeared waving in the distance, underneath and attached to the flags, appeared two trucks. They staggered over the rough gravel track up the mountain. Out of them came chairs and a table, with serviettes, cutlery, glasses, wine glasses too, plates and bowls. Followed by refrigerated items to eat, not a sandwich in sight, cold drinks, and there we were, happily sitting on top of the Hope mountain and toasting our brand-new joint venture partners with their delightfully cold white wine!
And the changes weren’t just for us, but more importantly if you look back to first export from Hope North 1 in 2007 and our subsequent mines, the Hope mines have brought to the state, and Australia:
- Almost $5 billion in royalties to the West Australian government.
- Over $400 million in payments to local indigenous groups.
- $62.5 million in payroll tax.
- $300 million in employees’ tax.
Plus, more via company tax, GST, capital gains tax, licence fees, stamp duty etc.
Plus, billions of dollars spent on West Australian and Australian companies to enable the mines and relevant infrastructure to be built and to operate, in turn significantly providing from these companies and their employees, more tax revenue. Of course, this benefit is similar from all mines.
And next month we celebrate with our minority joint venture partners, 10 years of our mega Pilbara project, Roy Hill.
The screen shows you what revenues Roy has brought to West Australia and our country.
- $3 billion in royalties to the West Australian government.
- $300 million in payments to local indigenous groups.
- $5.3 billion in company tax.
- $200 million in payroll tax.
- $1.1 billion in employees’ tax.
And as you would know, it’s not just get a tenement and money spurts out, indeed most tenements, money never spurts out, it’s a risky business after all, and takes years of hard work, thousands of approvals and licences, and significant investment.
When we’d invested almost $100 million, which for us was huge money back then, we learnt on the last day of office, the three berth areas we thought we had at Port Hedland, had been allocated to others preferred by the then WA government, companies that hadn’t spent a fraction of the money we had, and were unlikely to build the berths and achieve development.
That’s one of the problems when governments chose favourites, they don’t choose well. That would have left our deposit stranded, unable to export, and our investment down the drain.
The government changed, and after some effort we were eventually able to do a new deal to get back two of the berth sites, on unfavourable terms, requiring us to spend money we didn’t actually have, years before our project even required, and accordingly years before our project financing had occurred. We were and remain, grateful to POSCO, who we invited into Roy, and they supplied the hundreds of millions of risk money to undertake the ahead of project government dredging requirement.
Then the then government stranded our Roy again, despite a competitor showing in their own reports no ore in two places we needed our designed, environmentally approved rail to cross, granting the competitor tenure that made no allowance for and blocked our proposed rail. Again, after by then spending around $100 million, our project was stranded, given one side was a non-permanent swamp protected for migrating birds that our rail could not cross, and the other side was rugged hilly country, expected not able to get through given the sacred sites amongst those hills.
Hundreds of millions more capital investment was required to get our rail through those rugged hills, after approvals to do so were granted, which longer route also adds significant operating cost for every tonne railed to port.
But this we did, plus the more than 4,000 government approvals and licences pre-construction, more again for actual construction, and the bonanza to the state and country was born.
I’ve never been as proud of our company group as I am now. I have six outstanding CEOs who I love to work with, including Adam Giles who is here with us today, plus my long-term executive director, Taddie, who despite being even older than me, is still helping out too, and thousands of staff proud to work for our group and contribute to our country.
The mines are active, delivering benefits to many, more projects we are struggling with approvals , in pipelines, mining revenue achieved can also be used to help our agricultural properties and stock during severe droughts and floods, including in Queensland, safety has improved for staff, conditions significantly improved, wages for our Pilbara miners, averaging the highest in our country, indeed, some of the highest in the world, morale is terrific. I love to hear staff tell me, “this is the best mining company I’ve worked for.”
I really love to hear our staff say “we have the best company in Australia.” If I may, thank you to every one of our staff.
Our company and industry is exciting isn’t it. But then we have the governments!
So, with things going so well, and remembering as some of you may, the disruptions, strikes, even violence back in the late 70s, and early 80s, huge damage to our international reputation that our consequent unreliability caused, one has to wonder why our government has brought back such IR risks for the mining industry, an industry our country so desperately needs and relies upon.
Let’s remember, in Queensland, typical wages in the mining sector are 60% higher than across the rest of the state economy. And again, many businesses and their employees are indirectly supported by the mining industry.
But I’m not here to tell you about how proud I am of our staff, struggles, endeavours and contribution, instead what we should all be focusing on is the great mines of the future, the investment required for these great mines, in the case of mega Roy, it took some US$7.2 billion of debt, then the largest debt funding raised for a mainland largely greenfield project, plus billions of equity monies, now a decade plus ago. Roy is estimated to have a mine life left of only approximately 10 years. There is potential if more investment, and if further regulatory hurdles and approvals are achievable, for this to be extended.
If we want our standards of living to continue, we simply must have more investment in mines, and more mines developed, and for that we need to do far more to ensure that our government much better understands and puts policies in place, that actually welcome, not deter, investment.
I don’t mean government handouts of billions of taxpayers’ monies for unproven technologies, or millions to assist companies the government may prefer, but policies that let us build the great mines of the future.
New mines are said to take on average some 16 plus years to develop. But that was at 2019, things are far worse in Australia now, with more and more unattractive to investment legislation, and more and more coloured tape making approvals increasingly burdensome, time consuming and risky.
As I look around this room, and see the faces of the young miners here, I can’t help thinking, as it’s getting harder and harder, how can they become the next Hancock Prospecting? And achieve for themselves and Australia, mines that contribute high paying jobs and billions of dollars in tax revenue, and other benefits.
It’s very popular now to restrict mining in the name of the environment, even for dangerous snakes, mice, weeds, and the hundreds of metres below the surface, Stygofauna, which are so tiny they can’t even be seen with our natural eyes. But let’s not forget, all this environmental tape takes up staff time, costs money, and means, less investment, less philanthropy, less bonuses, and less money available for salary increases, improving conditions, training, and other benefits.
If we want to consider rightly or otherwise net zero policy, we are simply not going to get there unless we drastically change the government burdens and drastically and urgently reduce regulations and approval times.
For instance, according to the International Energy Agency (IEA), onshore windmills for electricity generation, take approximately nine times the amount of minerals required for a gas-fired power plant of the same capacity.
And, also according to the IEA, the average electric vehicle takes six times the amount of minerals required for a non-electric vehicles.
Where are these minerals to come from and when?
The ex-head of Snowy Hydro, Mr Paul Broad, made these practical and telling observations recently when he said:
“This transition, if it ever occurs, it will take 80 years, not eight… there’s massive changes [that] need to occur. And I’m deeply concerned about the rush… The notion that somehow this is all magic. I’m going to wave a magic wand. We’ll close a big baseload power plant. It’s kept our lights on for years of my life, and we’re just going to close them and [there is] all these alternatives out there. Well, it’s not. I can be absolutely 100 per cent certain it’s not available.”
Many of you would have noticed the recent findings of the highly respected Fraser Institute of Canada, which found that despite this fantastic state rating 7th for mineral potential, given government policies Queensland ranked 28th, just ahead of Brazil and Victoria, and behind South Australia, Tasmania, West Australia, New South Wales and the Northern Territory. Yet only two of which, Northern Territory and West Australia, ranked higher than Queensland on mineral potential.
Our recent federal government budget had a small surplus thanks to our industry, but still huge debt, a debt that is costing Australians in interest around $60 million each day.
Surely, we should be making Queensland and each of our states and the Northern Territory so that they with their mineral wealth, are in the top 10 for favourable investment and mining conditions in the world, so more mining revenue can be achieved and available to provide more for our inadequate hospitals, police to protect us from crime, pay back our debt, and reduce this terrible wastage on interest as we live beyond our means.
And, with all reputable defence intelligence telling us that our country needs to urgently ramp up its defence in these times, grossly insufficient taxpayers’ funds available after increased welfare payments and net zero schemes, for our government to meet its prime responsibility, the defence of our country.
Again, let’s urgently bring more of our minerals to production, so we can achieve more funding for our defence, elderly, hospitals, police and emergency services and more. Not hamper our projects with regulations and approvals that make it harder and harder for any new mines, or even extensions of mines to be able to be achieved. And as a consequence, see investment head overseas to Australia’s detriment.
Just one example of this is our partner Rio, we have mines still to be developed at Hope Downs, but Rio instead is heading to the giant resource in very risky Guinea, spending billions and more billions to start Simandou, which once started, that giant resource despite any attempted spinning, will be generating huge tonnes to compete with Australian ore markets and impact world ore prices. And in turn, impact the media articles showing on the screen, concerning how critical the fantastic iron ore contribution has been to our nation. Why on earth are we encouraging miners to turn to and invest heavily in high-risk Guinea, instead of our north?
One of the examples of government hampering, when there is an acute worker shortage that is seeing businesses close or reduce their hours and ability to timely supply, yet governments burden pensioners and even our veterans, with onerous paperwork, and onerous financial consequences, if they work more than the few hours per week that our government permits them to do.
Morally this is so wrong, how can a government, knowing of the worker shortage crisis and businesses needs and the cost of living crisis, restrict pensioners to dreadful poverty, effectively preventing our Australian pensioners from being able to work if they wish, and better able to pay for the rising cost of electricity, food and fuel that they need? The extra approx. 3 hours per week, assuming minimum wage, is grossly inadequate, let pensioners work as much as they like, like they do in New Zealand, and simply pay income tax like the rest of us on their work earnings.
And doesn’t your blood boil, when you know that our veterans, who were sent to terrible conditions overseas, many risking their lives, too many live in poverty, some even homeless on our streets, not able to work more than a few hours per week in the country they served. How can our government do this to our vets? And at the same time, stop funding Soldier On, who were already struggling to support our fantastic vets. I’m holding a lunch this Sunday at my home, to raise money for the vets, Dave please stand-up, if you’d like to join us, please see our general manager for Queensland, Dave Davies.
Our uni students too, on government support, also restricted in the hours they can work. On many levels, wouldn’t they be better off getting jobs and the experience, responsibility, sense of contribution and self-value that brings, and able to save for safer cars and even their first homes.
Why bring in more immigrants when we all know there is a housing shortage for Australians already, rents are escalating, our hospitals are inadequate without adding more, police already can’t police crime and crime is escalating, electricity requirements will increase, adding to unreliability and increased costs, and so on.
Why not let those of our pensioners, vets, students and the disabled, work if they wish without onerous government consequences, to ease the worker shortage crisis. Australians already in Australia, won’t add to the housing shortage, electricity requirements and over strain our infrastructure.
In Queensland alone, research from the Institute of Public Affairs shows that there are currently 85,000 job vacancies, more than double pre-pandemic, and almost a quarter of businesses are unable to find the workers they need. But at the same time, if the current unfair system was reformed, approximately 104,000 age pensioners would like to re-join the workforce, more than covering Queensland’s worker shortage.
With the quads being held in Sydney next week, I should mention geopolitical matters of import.
Another reason Australia needs to get its act together and get mining, is to be a reliable supplier to our allies. As the Japanese Ambassador stated before his departure, quote on screen.
“You only have to look at the vibrant streets of Japan’s never-sleeping capital. It’s hard to imagine the neon lights of Tokyo ever going out, but with Australia now supplying 70 per cent of coal, 60 per cent of iron ore, and 40 per cent of Japan’s gas imports, this is exactly what would happen if Australia stopped producing energy resources.”
And: “Alongside coal, Japanese investment and trade in Australian gas is a cornerstone of our partnership based on trust.”
And another ally, India.
India imports around 50 million tonnes of steelmaking coal each year, and Australia provides about 80% of this.
India wants to double its steel production by 2030, meaning Australia should ramp up our critical metallurgical coal exports to help our ally.
As the managing director of Tata Steel said on a recent visit to Australia: “…if India does not see the coking coal supply from Australia increasing over the years then Obviously India will have to start looking at other sources. Which would be a pity because India and Australia have a strong relationship.”
When he was questioned, “is Russia the likely alternative if you can’t get enough coal from Australia?” He answered clearly: “It is”.
We cannot forget the important role Australia’s exports play in regional security and stability…
Takayuki Ueda, CEO of Japan’s Inpex said recently: “On the geopolitical front, Australia’s ‘quiet quitting’ of the LNG business has potentially very sinister consequence. The question of who will replace Australian supply into the market is front and centre.”
We should learn from the reality of Germany and USA, their imports from Russia effectively funding Russia’s terrible war against Ukraine.
If Australia does not step up our investment and exports, if we allow Russia to become the preferred supplier of energy and met coal to Asia, that will have consequences for the security of western countries.
Australia’s recent business delegation to India barely dealt with the issue of energy exports. And, it didn’t mention coal at all, even though coal exports are 70% of Australia’s exports to India!
The IEA states in one of their recent reports: “…in a scenario consistent with climate goals, expected supply from existing mines and projects under construction is estimated to meet only half of projected lithium and cobalt requirements and 80% of copper needs by 2030.”
The IEA also highlighted that under currently stated government policies, demand for lithium will increase an estimated 750%, demand for nickel will increase 540%, and demand for cobalt will increase 534%, compared to 2020 levels.
The reason for this is simple: the so called ‘green economy’ is built by massive amounts of metals and minerals that must first be mined.
You simply can’t build minerals-guzzling EVs without massive mines. The average EV contains over 206 kilograms of copper, lithium, nickel, manganese, cobalt, graphite, and rare earth elements. As I said before, that’s six times more than the average internal combustion engine car.
As the Fraser Institute noted in their recent report, quote: “Policymakers across the globe should understand that mineral deposits alone are not enough to attract investment.” End quote.
Current government policies are making Australia less attractive for investment.
When this state, with little or less consultation, increased royalties on coal, Ambassador Yamagami said, quote: “Regarding the Queensland coal royalty, we have been communicating to the relevant authorities the concerns of Japanese businesses operating in Australia to the effect that they were not properly consulted prior to the announcement of the measures, and that the decision could damage the trust in Queensland and beyond as a safe and predictable place to invest.”
Again, recently, Ambassador Yamagami noted that, quote: “Probably for the first time, this word of sovereign risk is coming from the lips of Japanese business leaders, in discussion in boardrooms in Tokyo, and this is something we have to address.”
Concerningly too, some one-quarter of government restrictions in this state are imposed through delegated legislation, meaning they did not pass through the open for review parliamentary process.
Governments that massively increase regulation, or who introduce regulatory uncertainty, cannot then expect investors to be forthcoming, even when commodity prices are high. We need to encourage our governments to understand these consequences and change direction.
And this has been confirmed. The previous federal Budget in October noted that, quote: “Although commodity prices are currently elevated, the pick-up in mining investment is still expected to be modest compared with the very large increase in investment during the previous mining boom around a decade ago. Business liaison suggests mining firms are only looking to invest to maintain their current production capacity”.
The most recent budget, handed down a week ago, also forecasts that mining investment will not noticeably increase in the next few years.
We’re simply not seeing the massive investments you would expect given high commodity prices, and despite the stated need for rapid expansions in metals and minerals supply to be able to meet the governments green policies.
The unit value of our commodity exports are currently 30 percent higher than during the last mining boom, a time when annual mining capital expenditure peaked at over $100 billion. However, today we have just $40 billion in mining capital expenditure. This $60 billion investment gap is massive, and a missed opportunity for Australia, and can be explained in large part because of the increasing size of government and their increasing regulation. Importantly the reduced investment has huge consequences for our future.
For example, looking at recent interventions in the gas market, Saul Kavonic of Credit Suisse noted that the formerly stable policy environment made up for quote, “an otherwise uncompetitive cost base” and that “now (with) the gas tax regime, Australia is losing its only competitive advantage in gas, and also putting at risk investment in other sectors.” End quote.
And why create such an unattractive investment environment when we need gas? We can’t shut down our coal and gas, because there is simply nothing in place to replace them for reliable power generation.
As I have said repeatedly, we as an industry need to constantly speak up for ourselves, to remind politicians and the public that without our critical resources industries, our living standards cannot be maintained, indeed, nor can our defence.
And, nor would our state and federal governments have their massive tax revenues to waste without our industries. We should remind our governments they need to change and be pro-mining and why, and drop their use of propaganda like “dirty mining” and “evil mining”.
We must take every opportunity to remind people that we need mining, be that for mobile phones, iPads, refrigeration, air conditioning, electric vehicles and more. And that Australia wouldn’t have our high living standards, envied by those around the world, who would love to have our natural resources and the opportunities they bring.
In the current high school national curriculum, which mandates what every school child in Australia is taught, iron ore is referenced only twice.
Yet climate change and renewable energy are mentioned 48 times. Mining, coal, and iron ore do not receive even one mention in the entire high school economics and business curriculum.
“Dirty” or “evil” mining, greater government burdens, and school curriculums are examples what we are up against, and why we must accelerate standing up for our industry.
It was said by France’s Louis XIV’s finance minister that the art of taxation is to pluck the goose in a way that delivered “the largest possible amount of feathers with the smallest possible amount of hissing.”
Our industry is facing being that increasingly plucked goose!
I’ll conclude, before Larry’s discussion, with a request. Please take every opportunity you can, be it talking to your families, friends, your Uber drivers, doctors, chemists or your local member of parliament, and others, or online or letters to the editor, to remind everyone of the essential contribution of mining.
Please don’t let a day go past, without devoting at the minimum, 15 minutes each day to spread the mining message. As confirmed on the screen today, the media is helping with showing our industry’s huge financial contribution, but what isn’t getting through to our government, is the need to urgently and significantly wind back their regulations, approvals and interference, and the consequences if they don’t do so, for their green policies and importantly, all Australians.
Indeed, we need people from our industry standing up and heading to parliament.
Mrs Rinehart then commenced a Q&A discussion with Hon Larry Anthony, including discussing National Mining and Related Industries Day, 22 November.