Economic Zones Proposed for Northern Australia

Vision for the Future


Rio Tinto’s decision to team up with a Chinese State Owned Enterprise to develop the

massive high grade iron ore Simandou province in Guinea might sound attractive to Rio

Tinto’s London based board. But this, and the emergence of 400,000 DWT ships and Asian

ports being modified to handle, will dramatically affect and potentially damage the future of

West Australia in ways that, regrettably, are getting little attention in the public domain.

Simandou is a very high grade iron ore province that, when developed, will be able to

produce not only iron ore for decades at low cost, but once infrastructure is established in

Guinea, will pave the way for other minerals in serious competition to Australia’s interests.

Rio are wanting to take advantage of Guinea’s relatively low labour costs to export iron ore

in increasing quantities to Asian markets, markets that we would like to think of as

Australia’s forever. These changes will occur in the near future – within four to five years –

meaning that Australia has a very short time to prepare.

We cannot simply wish these developments away or ignore them.

Australia has been protected against its high costs for several decades by a freight advantage.

It has been cheaper for Australia to ship resources to nearby Asia than for countries further

away, like Brazil or countries in Africa. With our freight advantage disappearing quickly this

makes it even more pressing for Australia to implement new measures to keep our own costs

competitive, to endeavour to compete against Guinea and Brazil.

What can we do?

Firstly, we must recognise the problem. Far too often our focus as a country is on spending.

But what we need before we spend is revenue, including having as much certainty as possible

about Australia’s ability to continue to expand that revenue base. We need expanding

revenue to be able to afford to improve our hospitals (which badly need it) and other

necessary infrastructure, and to provide more for our elderly, for defence, our defence force

and their families, for abused women and children, for police, and for those who are ill, all of

which are only possible if revenue is increased.

In West Australia, as the Gorgon project and other resource developments occur, we must

address a critical problem that is already becoming obvious again, that is, the shortage of

construction workers willing to work in remote Northern areas. Australia can no longer cling

to old policies that restrict the availability of temporary short term construction workers from

overseas. Such old policies risk stopping or unnecessarily delaying development and can

make Australian projects prohibitively expensive, while at the same time raising costs for

other non mining businesses. We must recognise that long term jobs and revenue are more

important than very short term construction jobs and the very real risk of losing projects and

their long term revenue altogether.

The comparison with what is happening in Guinea is obvious given that its labour costs are

so much lower, yet even they are planning to include Chinese workers to speed up

infrastructure establishment and provide the required rail building skills.

Australians, particularly West Australians, are excited about the growing Chinese market,

and think that as long as we keep supplying minerals to China, the resource and related

industries employees can keep buying more expensive cars, homes, boats and holidays etc.

But to be able to keep enjoying all this, we must get ready for the important changes

immediately ahead of us, when Simandou will be developed and supplying higher grade ore

with lower costs for decades to come, and our freight advantage will be lost. Competition

from Guinea does not simply apply to iron ore, as once Guinea’s infrastructure is improved,

this will help to realise the potential for other minerals flooding from Guinea into Asian

markets, (e.g. bauxite, diamonds etc), in fierce competition to our own minerals. Let’s

remember Asian markets will not want to buy more expensive minerals from Australia, their

priority will turn to countries that can supply minerals competitively. Australia was able to

go through the recent GFC and GEC with fewer problems than other countries largely

because our mineral industry was able to continue to supply to the growing Chinese market.

There will be more GFCs or GECs, and Australians and our politicians “burying their heads

in the sand”, will not protect us.

So we must look at the options before us as to what should we be doing.

For instance, we can of course, ask the Rio board in London to change its mind about

developing Simandou given the effect this will have on Australia. Sadly, this is unlikely to

happen. Rio may have grown to the company it is today on the back of Australia and the

Pilbara in particular, and still make a major part of its profits from the Pilbara, but it is a

multinational company with its own focuses.

The only real alternative is to make Australia more attractive to investors and more


Our suggestion is to set up special “economic zones” for remote or major projects in our

remote North, be they “Brownfield” or “Greenfield”. We must change the political attitude

that focuses on prioritising a relatively small percentage of Australians undertaking short

term construction jobs in remote regions and, instead, focus as a national priority on longer

term jobs and revenue that come from enabling major projects in remote areas to actually

proceed in order to have a better chance of being competitive in the world markets. Making

our projects too expensive to compete internationally only jeopardises Australia’s future.

Hence, in these special Northern “economic zones”, we should allow competitive and

temporary short term workers to build our projects, say for a duration of up to two years nine

months or so, which once built on Australian shores, earn revenue for Australia. An

alternative to this option could be to modify so that our Government could choose, if such

workers had proven to be good workers and potentially good citizens, whether to extend their

stay to a longer period, or even after such testing period, to become immigrants, but not to

give the temporary workers any prior commitments.

Temporary labour for a remote North in a special “Economic Zone”

would be a “win, win and win” for:

the revenue, to protect Australia’s economy and improve our standards of living;

the opportunity for longer term jobs after construction, for Australians, including

Indigenous Australians, for decades;

temporary workers, with the opportunity to provide for their families and then return to

their own countries;

assisting population growth in Northern areas, particularly if government regulations and

approval processes are no more onerous than for established producers, and preferably

recognise the need to encourage capital investment to earn revenue for Australia;

reducing the growth strains on our expanding cities; and

reducing the inflation factor which drives upwards our interest rates, and causes problems

for the many Australians with home mortgages and other loans not able to benefit from

construction jobs in Northern areas.

Special economic zones in Northern Australia would be particularly effective if governments

recognise via the tax system (such as reducing pay roll tax) and via reducing regulations the

absolute need to encourage capital investment in these areas.

The Government could also encourage individuals to move to and work in these Northern

Economic Zones by reducing the levels of personal taxation while they are there.

Special economic zones, and/or temporary labour opportunities and fewer tax impediments to

investment and fewer regulation impediments to investment, have worked very well in other

countries, such as our neighbours in Singapore, and greatly benefited their people – why not

let Australian’s enjoy such advantages?

This article and recommendations herein is supported by:

Greg Anderson

Managing Director

Minetec Communications

Lachlan Broadfoot

Chief Operating Officer

Salva Resources

Mick Caratti


Lycopodium Limited

Barry Humfrey

Chief Executive Officer

Humfrey Land Development

Chris Codrington


NCS Communications Pty Ltd

Mark Creasy


MG Creasy

Faith Dempsey

Managing Director

TransCoal Pty Ltd

Brian Elloy

Director Technology

ATI Solution Group

John Featherby



Peter J Fitzpatrick AM

Managing Director

Crusader Management Group Ltd

Jan Ford

Chairman of the Port Hedland Community Progress Association

(Nominee for the West Australian Business Woman of the Year)

Pilbara Chair of the Real Estate Institute

Jan Ford Real Estate

Gastomo Galati-Sardo

Managing Director

United Industries WA Pty Ltd

Dave Garcia


Merton Group Ltd

Barbara Grieve


AXCEN Australia & China Business

John Hearne

Manager WA

Coffey Mining

Barry Humfrey

CEO & Director

Humfrey Land Developments

John Innes


Inputs Pty Ltd

Norman Johnson


Johnson Enterprises

Ian Kent

Managing Director

Mitchell Corp

Michael Kiernan

Managing Director

Stirling Resources Limited

Executive Chairman

Swan Gold Mining Limited

Mr Imants Kins

Executive Chairman

E Com Multi Limited

Dominic Lalor


Thai Australian Resources Company Limited.

Peter Macey

Chairman & CEO

Australasian Resource Consultants Pty Ltd

Ron Manners


Mannkal Economic Education Foundation

Craig Marshall

Managing Director

Empire Oil & Gas NL

John McRobert

Managing Director

The Brisbane Line Inc Pty Ltd

David McSweeney


Avalon Minerals Ltd


MSP Engineers Ltd


Aspire Mining Ltd


Bauxite Resources Ltd

Hans Mende


AMCI Group

John Meyer

Managing Director

Fairfax IS PLC

Hugh Morgan AC


First Charnock Pty Ltd & Board Member of an International Advisory Board.

Dennis T R Morris

Avian Mining

Paul Mulder

Managing Director

Alpha Coal

Ian Plimer

Director, CBH Resources Ltd

Director, Ivanhoe Australia Ltd

Greg Poland

Managing Director,

Strzelecki Group of Companies

Graham Reveleigh:

Managing Director

Gulf Mines


Bounty Oil and Gas NL


Hill End Gold Limited

Georgina Rinehart


Hancock Prospecting Pty Ltd & the Hancock Prospecting Pty Ltd Group

Michael Ruane


Reward Minerals Limited

Tony Sage


Cape Lambert Iron Ore

David Saxelby

Managing Director

Thiess Pty Ltd

Bert Stahr


Moonraker Pty. Ltd

Austral Dutch Kaolin Pty. Ltd.

Mr Ken Stapleton


MineOp Consulting Pty Ltd

Peter Tierney


Spinifex Contracting

Tad Watroba

Executive Director

Hancock Prospecting Pty Ltd

Karl Wentzel


Wen Trading Pty Ltd

Andrew White

Managing Director

Modern Industries Holdings Pty Ltd

and others, including David Humann, Vince Hyde, Tim Humphries, Nicholas Van Der Sluys,

John Hancock and Bianca Rinehart.

May we ask readers their initial views on the above?

a. Should we establish “economic zones” in remote Northern areas,

to help to save costs;

to help us to compete on the world market;

enable more investment in Australian mineral projects and infrastructure;

to increase revenue for Australia and provide greater certainty of future

revenue to improve our hospitals, our infrastructure, defence etc;

provide long term Australian job opportunities;

assist population growth in remote areas and lessen population strain on our

major cities; and

to lessen the impact of inflation and consequent rising interest rates?

If you agree with this please email “yes” to …….. or if you disagree, do you have any

better suggestions? (Can the West Australian provide an email address?)


b. Should we not establish “economic zones” in remote Northern areas, and not allow


temporary workers to competitively build projects in our remote North?


If you agree with this, please email “yes” to ……. (Ditto, or would the West prefer us to set up an email address.)