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Death of mining industry “greatly exaggerated”

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“Resources is to the Australian economy what the baggy green is to Australian sport,” according to Australian Minister for Resources, Energy and Northern Australia, Josh Frydenberg, referencing the iconic cap worn by the Australian national cricket team. “Totemic. Iconic. Indispensable to our national story and synonymous with out national identity.”

Speaking to the National Press Club in Canberra, Frydenberg launched a passionate defense of Australia’s resource industry and outlined a number of policies to support the industry through the current downturn.

“I want to dispel the fallacy that because the Chinese economy is transitioning that suddenly the demand for our hard commodities and the subsequent export income we earn from their sale will dry up,” Frydenberg continued. “To paraphrase Mark Twain: the rumours of death in Australia’s resource sector are greatly exaggerated.”

To back this up, the minister pointed to resilient exports of Australian iron ore and coal – which have increased substantially over the period from 2011 to 2015, despite falls in commodity prices.

“Despite price falls of between 43% and 57%, export earnings from [iron or and coal] fell only 16%,” Frydenberg said. “This reflects the lower Australian dollar and a 30% increase in coal export volumes and 60% increase in iron ore export volumes.”

Looking forward, Frydenberg noted that China – so often painted as the cause of the commodity markets woes – would still need Australia’s commodities, noting in particularly the need to grow China’s rail system.

“For a country with such a large land mass and population, its rail system is one third of the size of that of the US and sixth of that in the EU,” Frydenberg noted. “That seems to provide a lot of scope for Australia’s iron ore and metallurgical coal.”

Frydenberg also pointed to Indian demand – particularly for thermal coal – noting that India’s Minister for Power, Coal and New and Renewable Energy, Piyush Goyal, has said on a recent visit to Australia that his country could “be expanding our coal-based thermal power. That is our baseload power.”

India’s steel consumption is also comparatively low, offering opportunities to increase metallurgical coal imports as demand grows. Unlike thermal coal, India lacks the good quality metallurgical coal that is Australia’s speciality.

“But we can’t be complacent,” Frydenberg concluded, calling on the industry to continue to invest in science and innovation and outlining a number of policies that the federal government was exploring to support the country’s resources industry.

These focused on using government expertise – in the form of Geoscience Australia – to support geological exploration, as well as reforming industrial relations within the mining industry.

“Geoscience Australia has the technical capacity to undertake geological mapping of mineral deposits both near the surface and to depths down hundreds of meters,” Frydenberg said. “This can be of great assistance to companies who cannot afford mapping on such a large scale in search of the next tier one deposit”

Frydenberg also pointed to a Western Australian study that estimated that the rate of return for every dollar invested in pre-competitive programs has a multiplier of more than 20 times. “With pressures on company balance sheets leading to a significant decline in exploration activity, there is no better time for the government to undertake such a programme,” Frydenberg concluded.

The minister also called for a more collaborative approach to industrial relations, arguing that there was a need to “leave the mindset of capital versus labour".

That claim may sound hollow to unions, however, as Frydenberg described a number of reforms that would see the reestablishment of the Australian Building and Construction Commission, which was abolished in 2012 by the government of Julia Gillard and which had been responsible for monitoring workplace relations in the Australian building and construction industries.

Frydenberg also said the government would reduce union right of entry at sites where they have no members and have not been invited, as well as extending the duration of greenfield agreements to the duration of the construction period.

The minister finished on a note of optimism: “The resources and energy sector have been here before […] The good new for the sector is that Australia has the economies of scale, innovative practices, highly-stilled workforce and proximity and access to markets that give us the resilience we need at this time.”

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