The resources industry has warned that the “uninformed rhetoric” surrounding coal and liquefied natural gas developments near the Great Barrier Reef could ultimately damage the national economy while providing little in the way of additional environmental benefit. Ports Australia chief executive David Anderson said the federal government-commissioned review into the impact of resources projects on the reef was not backed up by good scientific evidence or an objective analysis, stating that the reef was “already one of the most highly regulated marine environments in the world”.
A new research paper by the University of Technology in Sydney shows the resources boom has underpinned the growth of the $71-billion-a-year mining equipment, technology and services sector, countering the claims that the success of the resources sector has been at the compromise of other industries. This comes after research from the Reserve Bank which found resource exports had created about 500,000 jobs across every major industry during the past seven years. The paper states the resources sector has “multiplied and diversified the benefits Australia derives from its natural resource endowment”.
Rusal chief executive Oleg Deripaska has attacked Australia’s carbon tax, stating it has resulted in higher energy costs which have driven local manufacturing and minerals processing jobs overseas. Mr Deripaska said there had been a “big decline” in Australia’s competitive position since 2005, when Rusal acquired an interest in Queensland Alumina. “The government should encourage initiatives that improve national productivity such as more flexible labour laws and sound investments in infrastructure and training, while at the same time removing artificial energy costs such as the carbon tax, levies on renewables, and red tape, which limits coal and gas developments,” Mr Deripaska said.
Chairman of Anglo American Australia Graham Bradley has said the US shale gas boom has increased the threat to Australian coal miners by increasing production and infrastructure across North America to be used for exports. “The availability of cheap shale gas has meant many power stations have switched to gas or have a dual capability, which means there is a lot less demand for coal… So America has suddenly become, thanks to shale gas, much more competitive in coal and will be a major competitor with Queensland and NSW coal,” Mr Bradley said.
The commencement of Russian oil and gas deliveries to Asian markets via the Arctic Northern Sea Route will add further global competition in the sector over the next few years, putting Russian producers up against existing oil and gas suppliers from Australia, as well as exporters from the Middle East and potential future North American LNG exporters.
A new submission to a Productivity Commission inquiry by the Association of Mining and Exploration Companies has outlined that hundreds of millions of dollars are spent on a “significant industry” of anthropologists, archaeologists and native title representatives to deal with Aboriginal cultural heritage regulations, adding mounting costs and delays to projects with little as 10-15 per cent of the funds for heritage purposes going to traditional owners. “The range, number and complexity of approvals processes are constantly increasing, resulting in unnecessary delays, additional costs and ultimately taxpayer revenue foregone,” the AMEC submission has warned.
The Australian Financial Review
BC Iron managing director Mike Young believes Australia’s “drawn-out exploration approval process” is costing resources companies millions of dollars, resulting in many investors being driven offshore. “The money being spent here is people drilling up deposits, so there’s no exploration being done because it’s harder to get the money,” Mr Young said. Association of Mining and Exploration Companies chief executive Simon Bennison blamed substantial delays in environmental approvals, saying they were costing some companies $1.5 million a month. “Investors are going offshore because of the regulatory environment and the whole production cost regime is far clearer than it is in Australia,” Mr Benison said.
Rio Tinto has slammed the federal government’s proposed new environmental regulations on a ‘water trigger’, which will expand federal powers to override state approvals if water resources are at risk, saying it will delay coal projects and add to costs for “an industry already struggling for competitiveness in Australia”. Rio Tinto’s Energy chief financial officer Matt Halliday said that is “replicates the states’ approval processes and is more ‘green tape’ that could delay billions of dollars worth of investment”. Mr Halliday added that increased coal royalties and the government’s carbon tax also contributed to rising costs, saying that Australia was facing “very strong headwinds” that, unless addressed, “will significantly reduce the returns to all Australians”.
A private roundtable in Perth last week has seen several resources company executives call on Julia Gillard to avoid using the budget to make any unexpected policy announcements. Participants told the roundtable, hosted by the Chamber of Minerals and Energy of Western Australia, that there had been a clear call for “no more surprises” in the May budget that could further stifle the resources sector. Grange Resources chief executive Richard Mehan said on Tuesday that the issue of rising costs of doing business in Australia was the most discussed subject: “The issue of cost base is the major concern to the industry,” Mr Mehan said.
Tri-Zen International, a leading Singapore LNG consultancy, has questioned whether Australia will see further LNG projects sanctioned for development in the face of huge cost blowouts to current projects and increasing global competition. In its quarterly LNG report, Tri-Zen said cost overruns had led to “real reservations” about whether Australia will see further projects developed competitively. Australian Petroleum Production & Exploration Association have echoed the sentiments, saying that “inappropriate and inefficient regulation was threatening to strangle future investment in large oil and gas projects and could bring the resources boom to a premature end”. APPEA chief executive David Byers said projects were burdened by overlapping state and federal laws, which duplicate work and increase costs, while delaying approvals.
Fitch Ratings has also offered a “bleak assessment” of Australia’s LNG prospects, forecasting increased development costs, lower gas prices as well as other cost blowouts and delays will threaten viability of new LNG ventures. This is particularly worrying as many Asian gas importers begin to look toward the US for new supplies, the ratings agency said: “An escalation of US LNG exports to Asia will moderate buyer appetite for Australian supplies – and result in a cancellation of some of the proposed projects”.
Despite bipartisan state support for a domestic reservation policy that will see 15 per cent of Australia’s gas reserved for local use, gas producers are still hopeful the West Australian government will scrap that plans. Australian Petroleum Production and Exploration chief executive David Byers said it was an example of unnecessary government intervention in the commercial sector. “The principle is one whereby there shouldn’t be that kind of intrusion into the commercial arrangements,” Mr Byers said.
The West Australian
Toro Energy has been subjected to further delays at its Wiluna uranium project because the revised deadline for a Federal decision was scheduled for Easter Sunday. “Toro looks forward to receiving the Minister’s decision next week following the public assessment process which has lasted almost three and a half years,” said Toro’s managing director Vanessa Guthrie. The state government approved the project last year, but Toro is still waiting for a final verdict from Environment Minister Tony Burke.
Federal Agriculture Minister Joe Ludwig has warned that the government’s Exporter Supply Chain Assurance Scheme, which was introduced last year in response to concerns about animal welfare, was “here to stay”. WAFarmers vice president Tony York said the ESCAS, which makes exporters responsible for the treatment of animals from the time they leave Australia to their point of slaughter overseas, had significantly damaged sheep prices and was a huge threat to the ongoing viability of the industry.
The Courier Mail
Opposition small business spokesman Bruce Billson says the federal coalition will look to cut red tape for small companies in an effort to boost economic growth. This comes as business leaders continue to warn that Australia ranks poorly “as a place where it is easy to do business”, saying that the compliance burden is hurting productivity. Business Council of Australia president Tony Shepherd recently said that business and investor confidence in Australia was low when it should be a global leader.
The NT News
A new mine is set to open in the Northern Territory that could be worth tens of billions of dollars for the region. NT Mines Minister Willem Westra van Holthe said the project, located 105 kilometres east of Mataranka in the Roper River region, would be a “tremendous boost for the Territory economy”. About 27 million tonnes of ilmenite has been identified at the site so far, the first exports of which are expected to go through Darwin port within a month.
An independent investigation has recommended that Queensland uranium should be exported through Darwin port, suggesting that Adelaide and Darwin are the only two ports in the country that are equipped to handle radioactive yellowcake.