December 21, 2022
Changes to royalties and workplace laws, along with price caps, are annoying and mildly painful for companies that exist to maximise profits, but they won’t affect investment decisions.
I wrote an opinion piece for The Australian Financial Review that was published on 14 December 2022 that I want to share with you.
Australia’s mining companies would have us believe they are ready to pack up their drills and diggers and go home. At a time when they are making profits beyond their wildest projections of just 12 months ago, they have become an industry of Chicken Littles shrieking that the sky will fall in over changes that amount to little more than acorns.
Meanwhile, with real storm clouds on the horizon, they are damaging their relationship with the governments that administer our resource wealth on behalf of all Australians.
In daily headlines we are led to believe that Glencore has shelved a major new coal mine and BHP will close its giant metallurgical coal mines early because of Queensland royalties, and that Rio Tinto fears multi-employer bargaining will make it uncompetitive. Meanwhile, the gas industry peak body is saying price caps to ensure viability of domestic supply are a “declaration of war”.
Another day, another threat of a $20 million anti-government advertising campaign.
The reality is that changes to royalties and workplace laws, along with price caps, are annoying and mildly painful for companies that exist to maximise profits, but hardly the end of the world.
Queensland’s increased coal royalty rate, which sailed through parliament with no opposition due to its eminent common sense, only kicks in at the historically high price of more than $300 a tonne.
Despite industry lobbyist Ian Macfarlane’s daily claims of carnage and mass exodus, no coal mining company is making investment decisions based on record prices driven by an unexpected war in Europe.
As head of the Mining & Energy Union, I was perplexed that the mining industry took the lead in campaigning against the multi-employer bargaining provisions in the Secure Jobs, Better Pay Bill.
Mining is one of the least obvious candidates for multi-employer bargaining. Enterprise agreements are already in place in the east coast coal sector, and there is little immediate prospect of widespread bargaining in the west, where ships are setting sail with iron ore worth upwards of $20 million a load.
The proposed price caps would impose reasonable prices for the small proportion of Australian LNG and thermal coal used for domestic energy, to ensure sustainability and affordability of supply for industry and consumers. Companies will still make hay from extremely high prices being achieved on the export market.
Our mining companies need to remember that they don’t own the resources. Our gas, coal, iron ore and other minerals belong to all Australians through the Crown; and the permission to mine and sell them is granted through licensing and regulatory arrangements administered by state and federal governments.
Despite threats to take their investment elsewhere, Australia’s volume and quality of resource deposits in combination with our political and social stability at a time of global volatility makes us a very attractive investment destination.
Australia is by far the biggest exporter of metallurgical coal in the world, most of which comes from Queensland. We are among the biggest exporters of thermal coal and LNG.
Our customers will not be inclined to switch to other suppliers, and the idea that mining companies will pack up because they have more investment certainty on their projects in South America, Africa or Asia is absurd. Mining companies’ bullying and threats are cynical and self-interested at a time when Australia, like all other nations, is trying to manage the fallout of the Russia-Ukraine war.
They are also short-sighted. Mining faces enormous challenges. There are complex relationships with our biggest customers including China; there’s the drive to develop viable industries in “future-facing” minerals such as lithium, nickel, cobalt and manganese; and there is an uncertain future for coal and the industries that rely on it. The industry is booming for now, but for how long?
The mining industry is right to be proud of its enormous contribution to employment, economic activity and government bottom lines in Australia. It’s important – especially for a vibrant future for many of our regional areas – that mining continues to play a big role in our economy. But when our political leaders and much of the public are rolling their eyes at daily threats, it doesn’t bode well.
Our mining industry must work maturely and constructively with our state and federal governments on a path through global instability and economic change. The current display of opportunism is damaging the industry’s credibility, and the workers and communities who rely on mining for their livelihoods deserve better.