Glencore Xstrata’s head of global coal assets Peter Freyberg has warned that the coal industry is being “smashed” in Australia. Freyberg said a significant portion of the coal industry was loss-making, and cost-cutting was now a matter of survival in Australia’s unstable investment and policy environment. “Instead of supporting one of Australia’s largest export industries, policymakers at both state and federal level have imposed additional costs, taxes and other burdens at a time when the industry is under enormous pressure,” Freyberg said.
Parting Santos Chairman Peter Coates has warned that Australia’s regulatory uncertainty and decreasing global competitiveness will present major challenges for the gas industry, particularly as new export development opportunities emerge from the US, Canada and East Africa. “The industry now faces substantial duplication of processes, uncertainty about further changes to the regulatory framework and, frankly, not enough urgency on the part of governments to resolve these issues,” Mr Coates said. “If we don’t remain competitive, others will step in”.
Industry leaders have warned that new tax measures announced in the budget will lower returns and increase barriers to investment in the resources sector. This comes at a challenging time of high costs and low commodity prices, which could force companies to move operations to other countries. Ernst & Young’s Oceania mining and metals leader Scott Grimly said the changes, which specifically target exploration deductions and thin capitalisation rules, would damage confidence in Australia. “This will result in risk capital for exploration moving to other countries with more favourable regimes for exploration,” Grimly said.
Focus Minerals Chairman Don Taig believes the decade-long resources boom may be coming to an end if governments do not take action to fix the many problems imposed on miners. Taig said he hoped to see a shift in the way both the government and the public perceive the resources sector. “None of the miners object to paying tax, none of them does, but there’s been this message put across by the government and others that the miners are basically getting away rent-free,” Taig said.
Results from a survey released by consultancy firm Wood Mackenzie suggest investment in Australia’s resources will remain strong over the next three years. Despite the fact that many companies are shelving resources projects due to high costs and falling commodity prices, Wood Mackenzie said it expected committed gas projects and coal developments would keep investment capital at a high level.
The Australian Financial Review
ANDEV Chair Mrs Gina Rinehart has issued a fresh warning that the mining industry can no longer be taken for granted by the Australian government, who relies on the sector to pay off the mounting national debt. Mrs Rinehart called for the industry to stand up for itself while governments continue to use it as an ATM without first giving it a chance to earn money. “We’ve been saddled with bad government policies that make us uncompetitive, when we could instead make the north a productive food bowl and source of minerals, as well as a centre for medical care, tourism and services for not just Australia but our Asian neighbours,” Mrs Rinehart said.
Rio Tinto has been granted federal environmental approvals for its $1.5 billion dollar bauxite project in Queensland. However, the company’s new austerity drive means the project, which was subject to lengthy delays, may have missed the timeframe for board approval. Despite the Queensland government approving the project last May, it took over 12 months for Federal Environment Minister Tony Burke to sign off on approvals, subject to 76 strict conditions.
Vice president of the Australian Institute of Geoscientists Wayne Spilsbury has warned that they are the “canary in the coal mine”, with the jobless rate among Australian geoscientists rising nearly two per cent this quarter. The Institute has blamed Australia’s lack of international competitiveness in exploration investment, including excessive red tape, for forcing investment capital overseas.
The West Australian
Resource lobby groups have slammed this week’s budget, claiming it lacks focus on productivity improvements and ignores small business, adding that the tax changes would further hurt Australia’s cost-competitiveness. Although the budget relies on the private sector to bring the national finances back in order, it was doing little to reduce red-tape and regulatory burden for business. “It makes no economic sense to place further barriers in front of the strongest industry in the country when the long run aim is increased revenues,” said Reg Howard-Smith, chief executive of the WA Chamber of Minerals and Energy.
Craig Mostyn Group chief executive David Lock has branded the Federal Government’s move to restrict the current 457 visa scheme as a retrograde decision that could damage the agricultural industry. Lock said skilled worker migration had been critical for the success of the company given the dire labour shortages the agricultural sector faces in WA. “Without 457 visas our meat business would have either not existed at all or have been in an extremely difficult position over the past five years,” Mr Lock said.
The latest Maritime Union wage claims highlight the ongoing concern of rising labour costs in Australia, making the country uncompetitive and driving investment elsewhere. According to calculations by Nelson Consulting Group, the new penalty rates could see a cook paid approximately $230,000 a year. This comes after former resources Minister Martin Ferguson warned unions not to “Kill the golden goose” by demanding unreasonable conditions just last week.
The NT News
The Northern Territory Government will close two existing “tax loopholes” in order to extract an additional $10.6 million from mining companies. This will be achieved by capping the amount companies can claim as a transfer price for a mineral at 5.5 per cent of its value and putting a cap on the amount corporations can claim on tax for administrative costs for a foreign head office. The additional revenue would provide funding for the Department of Mines and Energy.