North Australia Weekly Digest – 12/04/2013

The Australian
BHP Billiton chairman Jac Nasser has said Australia can secure investment and job creation over the next decade if tax and workplace relations policies allow it to do so. “Australia’s resources underpin the once-in-a-century urbanisation and industrialisation of countries like China and India and from a demand perspective the outlook for the industry remains positive,” Mr Nasser said. “But the reality is we are facing a new generation of stronger, smarter competitors… If Australia doesn’t get both of these policy settings right – industrial relations and taxation – we will not drive the improvements in economic prosperity that we should all expect for our country”.
The Australian Uranium Association has demanded changes to laws that trigger federal environmental assessments for even “mild” uranium radioactivity.  The association says that uranium mining and the milling that produces yellowcake should no longer be defined as “nuclear action” under the Environment Protection and Biodiversity Conservation Act. “It seems that the fact of mild radioactivity is justification in itself, not requiring explanation. The discriminatory treatment of the uranium industry under the EPBC Act is not necessary to manage the mild radioactivity,” said Michael Angwin, chief executive of the association.
Although Julia Gillard defended Australia’s foreign investment relationship with China this week at the Boao Forum for Asia, The Export-Import Bank of China’s chairman Li Ruogu said Chinese investors were increasingly cautious towards Australia because of the strict national interest tests applied by the Foreign Investment Review Board. “There are a lot of obstacles in Chinese investors going to Australia,” Mr Li said, adding that the Australian government should encourage Chinese investment in infrastructure, especially the Oakajee development in Western Australia.
AGL Energy chief Michael Fraser has warned that policy changes at state and federal level that restrict development will mean that gas and power prices will rise for consumers. Mr Fraser said that government policies were “short-sighted” and limited production in a time when most projects were already falling short of expectation. “The Industry is saying loud and clear, ‘yes there’s gas in the ground, but you’ve got to be able to produce it and there are consequences if we don’t’,” Mr Fraser said.
The NSW Minerals Council has said that an increase in taxes will put jobs at risk and see further investment in Australia move offshore. “Another nasty surprise in the form of more taxes and more complex regulation will put jobs at risk and more industry investment will go interstate and offshore to our competitors,” said Stephen Galilee, chief executive of the council.
The Queensland government is set to continue the expansion of Abbot Point coal facilities in the state’s north, pushing for two new coal terminals. The expansion will be necessary to meet demands for coal mined at Australia’s new coal precinct, the Galilee Basin, where exports are predicted to start in 2017. This could see Abbot Point’s capacity increase from 50 million tonnes a year to up to 300 million tonnes by 2020. “We believe that there will be a demand for coal from Queensland for many years to come, and it’s important that we have the infrastructure to make that happen,” Queensland Deputy Premier Jeff Seeney said.
The Australian Financial Review
Woodside Petroleum will not continue with its $45 billion plan to develop its Browse Basin gas resource onshore at James Price Point as it “would not deliver the required commercial returns to support a positive final investment decision”. The company would consider other development options, including floating LNG and a pipeline to a restructured, smaller project at the Kimberley.
Investment bank UBS has predicted Chinese investors will continue to acquire further interest in resource projects as demand for raw materials is set to remain at historically high levels in China, despite concerns over wavering economic growth. Jock O’Callaghan, a partner with PriceWaterhouseCoopers, has said GDP growth in China will stay around 6-8 per cent and the Chinese government was planning to move millions of people into cities that have not yet been built, which will require huge amounts of resources.
However, Rio Tinto’s new head of iron ore Andrew Harding has warned that Australia may be too hesitant in furthering its ties with China, saying “we need to spend more time listening to China’s needs, we need to invest more time and effort developing relationships”. He added that while Australia was China’s top mineral importer, accounting for 15 per cent, the overall share was actually in decline as competition from the Canada and the US continues to rise.
Orica chief executive Ian Smith has called on the federal government to “open up gas markets” to increase competition among producers and therefore allow more production and extraction to take place. “You can’t impose restrictions on something to get yourself a better economic place,” Mr Smith said. “I think what governments need to be doing in Australia is opening up what we do have… to create the most competitive and open market we can. A lot of this has not been happening”.
The West Australian
The West Australian also reports on Woodside Petroleum’s decision to dump its plans for the $45 billion LNG project onshore at James Price Point. The Federal Government is confident the Browse gas fields will still be developed despite Woodside pulling out of the onshore project, “just in a different way”. The company highlighted rising costs of construction and difficulty securing labour as key reasons for seeking alternative development options.
Shell Australia boss Ann Pickard has urged for resource companies to increase innovation to meet the demands of a rapidly increasing global population. This includes her support for the development of floating LNG facilities such as Woodside Petroleum’s Browse project, using this as an example of type of innovation that would keep Australia competitive. “We need to ensure that we are setting Australia up for success – Australia is at a crossroads,” Pickard said. “Putting the right long-term policy and frameworks in place will ensure Australia can compete confidently in a very competitive global market”.
The United States will open a “foreign commercial services office” in Perth to facilitate the expansion of US investment in Australia. The US is already the largest investor in Western Australia, with US Ambassador Jeffrey Bleich saying the state was “at the heart” of their export strategy. “Prices will go up and they’ll go down a little bit, but in terms of prosperity relating to these resources, we see this as a very long term proposition and so we’re putting the infrastructure in place to meet the demand,” Bleich said.