Rio Tinto chief executive Sam Walsh has urged the government to provide fiscal and regulatory stability ahead of the upcoming federal budget. Walsh marked growing concerns that several arrangements that apply to miners, including tax structures, will come under fire given the projected revenue shortfall. “What we and others need in business is stability… We need to be in a competitive environment,” Walsh said. “Stable fiscal and regulatory frameworks provide the foundation for investing in, and operating, long-life, capital intensive assets.”
BHP Billiton chief executive Andrew Mackenzie, who formally took office this week, has launched a “relentless productivity drive” to improve shareholder returns as commodity prices remain low. “We are only going to win new investments, we are only going to support economic growth, if we can produce things for a lower cost per tonne mined, per barrel of oil lifted,” Mackenzie said.
Under new proposals by the Northern Territory government, miners in the region will be hit by a new 1 per cent levy on the Territory’s environmental bonds. Industry representatives have urged the government to reconsider the plans as the sector continues to face growing pressures. “The proposal should be reviewed immediately as it does not send the message that the Territory is ‘open for business’ as the government frequently states,” said Simon Bennison, chief executive of the Association of Mining and Exploration Companies. “At the moment, industry is being hit by a heap of other costs, so the last thing it needs is something like this,” Bennison said.
The Australian Financial Review
BG Group has slammed the increasing regulations on coal seam gas in Australia, claiming they are duplicative, excessive and impose a significant cost that far outweighs any potential benefit. This follows BG Australia Chairman Catherine Tanna’s comments last week that Australia is “hopelessly over-governed” due to its complex regulatory framework. “These costs would be imposed for no identifiable health, environment, community or government revenue gain,” BG said in a submission this week.
Deputy Leader of the Opposition Julie Bishop asked a panel of industry leaders this week whether the resources sector was doing enough to defeat the “social activists” who oppose the development of Australia’s natural resources. “I really wonder whether the mining and resources industry has done enough to promote its reason for being and what it provides for the Australian economy,” Bishop said.
Rio Tinto and BHP Billiton have both expressed confidence that Asian demand for iron ore will remain strong and produce healthy returns. Rio Tinto chief executive Sam Walsh expressed the need to invest in robust and low cost projects, while BHP Billiton chief executive Andrew Mackenzie said customers in North Asia were relying on Australia for ongoing supplies. “The Chinese are looking a long time forward,” Mackenzie said.
Pacific Aluminium claims the proposed 603-kilometre gas pipeline in the Northern Territory would deliver $2.4 billion to the economy in the region over the next 20 years. Construction of the pipeline is scheduled to commence in November and take a year with an initial cost of $600 million, and would support Pacific Aluminium’s struggling Gove operations for up to 40 years.
The West Australian
Rio Tinto has reiterated its intention to boost the company’s overall returns by cutting costs and improving productivity. At its annual general meeting in Sydney this week, Rio Tinto chief executive Sam Walsh said pursuing greater value for shareholders was his single-minded goal. “This will be achieved through a relentless focus on cost reduction and productivity improvement across all aspects of our business,” Walsh said.
Former Federal Resources Minister Martin Ferguson has backed Woodside Petroleum’s decision to use floating liquefied natural gas technologies at its joint Browse venture, saying it would provide an innovative global model and secure a future for Australia’s LNG industry. “Australia should position itself as the centre of excellence for floating technology,” Ferguson said. He also took aim at environmental groups, claiming they were dishonest and added to the challenges the project faced, before turning to unions, who he said needed to “lift their eyes to ensure onerous demands did not cost jobs”.
Cattle producers in Western Australia have faced a massive hit following the suspension of Australia’s $24 million live cattle trade with Egypt after video footage showing cruel practices in Egyptian abattoirs was released. This has been paired with Indonesian companies, including state-owned enterprises, looking to spend tens of millions of dollars buying stakes in WA cattle stations in order to secure beef supplies for its growing middle class of 80 million people. “If a country has an agreement to supply food, it can’t just stop in one day, it has to be discussed at the table with the parties,” said Indonesian businessman Iwan Gunawan, who believed the government’s 2011 decision to halt the live cattle trade with Indonesia hurt relationships between the two countries. Yakka Munger owner Nathan Webb-Smith said opening to foreign investment was one of the only remaining solutions. “After the recent introduction of new Federal policies with regard to live exports, our backs are against the wall,” Webb-Smith said.
The Courier Mail
In its quarterly statement, released this week, the Reserve Bank of Australia said domestic mining investment is near its peak but will remain very high for the next year or so due to the large number of resource projects already committed. The RBA also signalled that employment in the mining sector had fallen this year. Despite slowing investment and employment, resource exports are expected to increase at an annual pace of 10 per cent over at least the next six years.