Australasian Mining Review
Issue link: http://ebook.aprs.com.au/i/26056
3 [Foreword] The challenges ahead for mining boom II The stellar performance of the Australian resources sector over the past decade looks set to continue for some time to come due to a combination of strong economic growth by our international customers, the pipeline of projects required to support that growth with the minerals and energy they need, and Australia’s international reputation as a reliable and competitive supplier. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimates earnings from Australia’s mineral and energy exports will increase by 28 per cent to a record $177 billion in 2010–11. This record value reflects higher prices for bulk commodities, crude oil and most base metals and higher export volumes for all major minerals and energy commodities. As at October 2010, more than 70 projects were at an advanced stage of development, with a capital expenditure of $132.9 billion – another Australian record and a 21 per cent increase from April 2010. In 2009-10, new capital expenditure was the second highest on record and 2.7 times the 30-year average. The value of advanced minerals and energy projects was boosted by the decision to proceed with the development of BG Group’s $15 billion Queensland Curtis Island LNG facility and Rio Tinto’s $3 billion commitment to expand its iron ore export capacity by 60 million tonnes to 283 million tonnes a year in 2013 – just two more examples of Australia’s growing resource capacity and customer focus. Since that report the joint venture partners on the Gladstone LNG Project have also taken a final investment decision for capital expenditure worth $16 billion. Exploration – the lifeblood of future projects – is also growing. In real terms, exploration spending in 2009-10 was the third highest on record and nearly double the average of the past 30 years. These figures look even more impressive when they are stacked up against the rest of the economy. This year, Australian industry will invest more money into mining than the whole country invests in building new houses - something that has never happened before. And one single project – the $43 billion Gorgon project – is worth about the same as two years of output from agriculture. Australia’s success in resource industries did not happen by chance. It is built on a history of successful reform and effective regulation. But neither the Australian Government nor the resources sector can afford to rest on our laurels. We have significant challenges ahead of us to maintain and manage the momentum of Mining Boom II. First and foremost, we need to maximise the benefit for future generations from the disposal of non-renewable natural resources. This is always the largest challenge during a global resources boom. The Australian Government is meeting this challenge through the Minerals Resource Rent Tax (MRRT), which will apply to coal and iron ore production, and the extension of the Petroleum Resource Rent Tax to all onshore and offshore oil and gas projects, including the North West Shelf. Shortly after the July 2010 announcement of the MRRT and revised PRRT the Government established the Policy Transition Group (PTG) whose task was to consult with industry and stakeholders over the implementation of these resource taxation reforms. The PTG which I co-chaired along with Don Argus, provided its reports to the Treasurer in December 2010. As a result of the work of the PTG I am confident that the new taxation regime will be implemented in a way which meets the twin goals of maximising community benefit from Australia’s natural resources while maintaining the competitive edge that has made Australia the world leader for mineral production and investment. This is in no small part due to the collaborative, cooperative dialogue that the PTG was able to generate with all sectors of the resources industry. We are also addressing the strain placed on infrastructure, especially coal and iron ore facilities, by the past decade of growth. Recently-completed projects from the public and private sector to assist the coal and iron ore industries help meet future demand, include: • Completion of the Minimbah Bank Third Rail Line in the Hunter Valley coal region of New South Wales; • The Brisbane coal terminal expansion and the Coppabella to Ingsdon rail duplication to service coal mines in the northern and central areas of the Bowen Basin; and • The Port Hedland Port Authority’s $225 million Utah Point Berth Project in Western Australia. With a total capacity of 18 million tonnes, this multi-use export terminal has significantly increased the export capacity available to smaller iron ore producers. Australasian Mining Review 2011: issue 2.1