Amendments to Queensland’s Vegetation Management Act have been introduced in the Queensland parliament, which will allow Cape York to be opened up for large-scale farming for the first time. The relaxation of land clearing laws will allow citrus plantations, broadacre grain growing and the construction of dams as part of a strategy to “normalise the economy” as well as increase employment opportunities in the region. Deputy Premier Jeff Seeney said the changes would bring jobs to Cape York and introduce measures to increase food production in Queensland, including plans for a foodbowl in the region.
Mining entrepreneur Robert Friedland this week told a Mines and Money conference that Congo and South Africa are more attractive destinations for resources investments than Australia. “There is a huge scramble of investors going for African exposure; China is beating a huge path and is investing in Africa,” Friedland said.
A new Reserve Bank analysis shows that foreign investors have been the driving force behind Australia’s resources investment boom. Publicly listed companies have provided more than 90 per cent of the $284 billion spent on new and upgrading existing resource projects since 2003, around half of which have been foreign entities. Authors of the Reserve Bank analysis pointed out that about three-quarters of the Australian listed resource sector is foreign owned.
Two Queensland port companies are vying for approval to ship uranium through the Great Barrier Reef if the industry becomes commercially viable in Queensland. The state’s Natural Resources and Mines Minister Andrew Cripps said the Liberal National Party was not opposed to the principle, but each application undergo a “very rigorous assessment process through both state government legislation and federal government legislation”. This follows the Newman government’s lifting of a 28-yearh ban on uranium mining in the state, which could see an estimated $10 billion in deposits go into the development phase.
Newcrest managing director Greg Robinson said this week that lower commodity price and higher costs had resulted in lower profits and restricted cashflow for all resources companies, which will ultimately add to delays. “Capital markets are not in a big mood to provide more capital to the industry for project expansion… We will see more project delays over the next 12 months,” Robinson said.
According to The Bureau of Resources and Energy Economics, Australia’s earnings from resource exports will soar by 50 per cent over the next five years as projects are completed, but the government must prepare for a dip in the current financial year. While the bureau was confident about “continued heavy investment in the resources sector and in its increasing contribution to national prosperity”, it expects investment to peak over the next couple of years before gradually declining. It also anticipated that LNG will more than compensate for the slowdown in earnings growth from iron ore over the next five years, projecting its export earnings will increase from $12 billion in 2011-12 to around $61 billion in 2017-18.
Rio Tinto is reported to have slashed up to 100 jobs last week in an effort to cut expenditure in the face of high costs, lower prices and the strong Australian dollar. “Rio Tinto is working to ensure the long-term resilience of its coal operations by taking steps to improve productivity and significantly reduce costs in a range of areas,” a spokesman said.
The job losses continued at Xstrata, which announced it will close its Brisbane head office in a move that is expected to see 100 redundancies. The company is set to merge its NSW and Queensland coal divisions into the one division at its Sydney head office, where it is reported numbers may also be reduced. Xstrata has highlighted issues such as workplace relations laws, infrastructure problems, approval process, taxes and royalties and the high Australian dollar as barriers the Australian coal industry must overcome as it struggles to remain competitive.
The Australian Financial Review
The Bureau of Resources and Energy Economics has said the dollar will remain at close to its record high for the next five years, which could further damage profits from the biggest exporters and affect the federal budget revenue. “If our forecast is correct, it means we can’t rely on the exchange rate to cushion us against any decline in commodity prices,” said Quentin Grafton, executive director and chief economist at the Bureau of Resources and Energy Economics.
Vale chief executive Murilo Ferreira has told the Credit Suisse Asian Investment conference that China’s demand for iron ore should continue growth until 2024, where it will peak at 1 billion tonnes, and that the latest drop in the iron ore price would not be enough to alter forecasts for long-term demand.
President of Rio Tinto’s Pilbara iron ore operations Greg Lilleyman said this week that a slowing in steel demand growth would hurt the iron ore price in the second half of the year. “We’re going to see steel demand growth slowing – I wouldn’t say steel demand is slowing – so inevitably, that’s going to put some downward pressure on iron ore prices,” Lilleyman said. “All projects face significant hurdles with major capital investment and all of the risks that go along with that. With long-run iron ore prices, they are all going to be tough.”
The world’s biggest explosives maker, Orica, has flagged 400 job cuts at its mining unit Minova due to tough market conditions. Chief executive Ian Smith said he was “confident there would be no further write-downs at Minova”, which produces supplies used in underground mining.
The West Australian
The Cattle Council of Australia’s strategy to increase profit returns in the cattle industry has highlighted and urgent need to lift productivity and improve market access. Ruabon farmer Jamie Oates said that while foreign investment could provide benefits, there were still other barriers to address: “Prices we are getting are about 30 per cent less compared to last year because of the dollar, live export ban and competition,” Oates said. Cattle Council chief executive Jed Matz said that the region’s proximity to Asia could be a serious opportunity, “It will grow in prominence as South East Asia and China continue to expand with a growing middle income demographic,” Matz said.
The WA Chamber of Commerce and Industry, WA Chamber of Minerals and Energy, Association of Mining & exploration Companies and Australian Petroleum Production & Exploration Association have all welcomed the Barnett government’s newly appointed cabinet to their respective portfolios by calling on them to cut red tape and help reduce the burgeoning costs of doing business in the state. “Our attractiveness as a place to develop resources projects is under threat because of additional layers of taxation and charges which are driving up business costs,” said CME chief executive Reg Howard-Smith. “Policy initiatives that focus on reducing costs, duplication and red tape will deliver ongoing economic benefits for all Western Australians.”
Analysts and senior executives at BHP Billiton and Rio Tinto have told an iron ore conference in Perth this week that cost barriers for new players in Africa will prevent the region from emerging as an immediate competitor to Australian projects, particularly in an environment of softening commodity prices. Other speakers at the conference cast doubt on whether Africa would be able to bring on supply quickly and cheaply enough to be competitive.
The Courier Mail
Whitehaven Coal has also laid off 40 workers in a cost-cutting effort in the face of lower coal prices and a high Australian dollar. “Decisive action needed to be taken in order to ensure our open cut business remained viable in the current low coal price environment,” said managing director Tony Haggarty in a statement.
North Australia Weekly Digest – 22/03/2013