‘WE MUST CONSTANTLY REMIND PEOPLE THAT WE NEED MINING’
This is an edited extract from a speech from Hancock Prospecting executive chairman Gina Rinehart delivered to the Queensland Resources Council
Thank you for such a warm welcome to someone from that far away country, West Australia. But across the miles we do share something very important, the contribution our industry makes to our States and country.
This month is a special one for our mining company, as we are celebrating the anniversary of our Hope Downs mines development together with our 50 per cent partner Rio Tinto. In 2005 this was a game changer for our then little Aussie company.
We noticed it the day after signing with Rio, when we took Sam Walsh with some of his staff to see what they’d bought into. We lunched together on top of the mountain of the deposit which later became Hope North 1.
Now, Hancock-style Pilbara lunches meant, drinking out of the water bag, tin mugs if we brought a thermos of coffee, and sandwiches, while sitting on the larger rocks under the shade of a tree.
But we immediately saw the difference with Rio. Two trucks appeared in the distance, and staggered over the rough gravel track up the mountain. Out of them came chairs and a table, with serviettes, cutlery, glasses, wine glasses, plates and bowls. Followed by refrigerated items to eat, not a sandwich in sight, and there we were, happily sitting on top of the Hope mountain and toasting our joint venture partners with their delightfully cold white wine!
The changes weren’t just for us, but more importantly if you look back to first export from Hope North 1 in 2007 and our subsequent mines, the Hope mines have brought to the State almost $5 billion in royalties to the West Australian government, over $400 million in payments to local Indigenous groups, and hundreds of millions more in other State and Federal taxes. Not to mention the billions of dollars spent on West Australian and Australian companies to enable the mines and relevant infrastructure to be built and to operate.
It’s a similar story with our mega Pilbara project, Roy Hill, which has so far paid $3 billion in royalties to the West Australian government, $300 million in payments to local Indigenous groups, and $5.3 billion in company tax, to list just some benefits.
And it’s not just “get a tenement and money spurts out”, it takes years of hard work, thousands of approvals and licences, and significant investment and risk to create such a bonanza to our State and country.
The mines are active, delivering benefits to many. Safety has improved for staff, conditions significantly improved, wages for our Pilbara miners, averaging the highest in our country, indeed, some of the highest in the world, and morale is terrific. I love to hear staff tell me, “this is the best mining company I’ve worked for”.
I really love to hear our staff say “we have the best company in Australia”. If I may, thank you to all of our staff.
Our company and industry is exciting, isn’t it. But then we have the governments!
With things going so well, and remembering the disruptions, strikes, even violence back in the late 70s and early 80s, and the damage to our international reputation that our consequent unreliability caused, one has to wonder why our government has brought back such industrial relations risks for the mining industry, an industry our country so desperately needs and relies upon.
But I’m here to talk about what we should be focusing on: great mines of the future. Mega Roy took some $US7.2 billion of debt. It is estimated to have only 10 years of mining life left. There is potential to extend this if more investment, regulatory hurdles and approvals are achievable.
If we want our standards of living to continue, we must have more investment in mines, and more mines developed, and for that we need to do far more to ensure that our government much better understands and puts policies in place, that welcome investment.
I don’t mean government handouts of billions of taxpayers’ monies for unproven technologies, or millions to choose favourites, but policies that let us build the great mines of the future.
As I look around this room, and see the faces of the young miners here, I can’t help thinking, as it’s getting harder and harder, how can they become the next Hancock Prospecting? And achieve for themselves and Australia mines that contribute high paying jobs and billions of dollars in tax revenue, and other benefits.
It’s very popular now to restrict mining in the name of the environment. But let’s not forget, all this environmental tape takes up staff time, costs money, and means less investment, philanthropy, bonuses, training and conditions.
If we want to consider net zero, we are simply not going to get there unless we drastically change the government burdens and drastically and urgently reduce regulations and approval times.
Onshore windmills for electricity generation take approximately nine times the minerals required for a gas-fired power plant of the same capacity. And the average electric vehicle requires six times the minerals for a non-electric vehicles.
Where are these minerals to come from and when?
Many of you would have noticed the recent findings of the Fraser Institute of Canada, which found that despite Queensland rating seventh for mineral potential, given government policies it ranked 28th, just ahead of Brazil and Victoria, and behind South Australia, Tasmania, West Australia, NSW and the Northern Territory.
Surely, we should be making sure our States and the Northern Territory are in the top 10 for favourable investment and mining conditions in the world, to achieve the mining production our governments say they need and to maintain our globally envied living standards.
If we continue to hamper projects with regulations and approvals that make it harder for new mines, or even extensions of mines, we risk seeing investment head overseas.
Just one example of this is our partner Rio. We have mines still to be developed at Hope Downs, but Rio instead is heading to the giant resource in very risky Guinea, spending billions to start Simandou, which, despite any spinning, will be generating huge tonnes to compete with Australian ore and impact world prices. Why on earth are we encouraging miners to turn to and invest heavily in high-risk Guinea, instead of our north?
We also must get our act together and get mining to be a reliable supplier to our allies. As the former Japanese Ambassador, Shingo Yamagami, stated before his departure: “You only have to look at the vibrant streets of Japan’s never-sleeping capital. It’s hard to imagine the neon lights of Tokyo ever going out, but with Australia now supplying 70 per cent of coal, 60 per cent of iron ore, and 40 per cent of Japan’s gas imports, this is exactly what would happen if Australia stopped producing energy resources.”
India imports about 50 million tonnes of steelmaking coal each year, and Australia provides about 80 per cent of this. India wants to double its steel production by 2030, meaning Australia should ramp up our critical metallurgical coal exports to help our ally.
As the managing director of Tata Steel said on a recent visit to Australia: “…if India does not see the coking coal supply from Australia increasing over the years then obviously India will have to start looking at other sources”.
Takayuki Ueda, CEO of Japan’s Inpex said recently: “On the geopolitical front, Australia’s ‘quiet quitting’ of the LNG business has potentially very sinister consequence. The question of who will replace Australian supply into the market is front and centre.”
If Australia does not step up our investment and exports that will have consequences for the security of western countries.
The IEA has noted that “expected supply from existing mines and projects under construction is estimated to meet only half of projected lithium and cobalt requirements and 80 per cent of copper needs by 2030.”
Under currently stated government policies, demand for lithium will increase an estimated 750 per cent, demand for nickel will increase 540 per cent, and demand for cobalt will increase 534 per cent, compared with 2020 levels.
The reason for this is simple: the so-called “green economy” is built by massive amounts of metals and minerals that must first be mined.
But current government policies are making Australia less attractive for the necessary investment.
We’re simply not seeing the massive investments you would expect given high commodity prices, and despite the stated need for rapid expansions in metals and minerals supply to be able to meet the governments’ green policies.
The unit value of our commodity exports are currently 30 per cent higher than during the last mining boom, a time when annual mining capital expenditure peaked at over $100 billion. However, today we have just $40 billion in mining capital expenditure. This $60 billion investment gap is massive, and a missed opportunity for Australia. The increasing size of government and their increasing regulation is largely to blame, and the reduced investment has huge consequences for our future.
We as an industry need to accelerate speaking up for ourselves, to remind politicians and the public that without our critical resources industries, our living standards cannot be maintained.
And, nor would our governments have massive tax revenues to waste without our industries. We should remind our governments they need to become pro-mining and explain why, and they must drop their use of propaganda like “dirty mining” and “evil mining”.
We must constantly remind people that we need mining, be that for phones, iPads, refrigeration, air-conditioning, or electric vehicles.
In the current high school national curriculum iron ore is referenced only twice.
Yet climate change and renewable energy are mentioned 48 times. Mining, coal and iron ore do not receive even one mention in the entire high school economics and business curriculum.
This plus increased tape, lower revenue and falling living standards, is what we are up against.
It was said by France’s Louis XIV’s finance minister that the art of taxation is to pluck the goose in a way that delivered “the largest possible amount of feathers with the smallest possible amount of hissing”.
Our industry is facing being that increasingly plucked goose!
So, take every opportunity you can, be it talking to your families, friends, your Uber drivers, doctors, chemists or your local member of Parliament, even online, to remind everyone of the essential contribution of mining.
Don’t let a day go past without devoting time to spread the mining message. Our Government must urgently and significantly wind back their regulations, approvals and interference; if they don’t, Australians’ living standards will suffer.
The full May 16 speech can be read at miningday.com.au .