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Tag Archives: BHP Billiton

June 15, 2012

It’s the timing of the Olympic Dam expansion that is being reviewed and, despite what the opposition may say, the carbon tax and mining tax are not decisive. Photo: AFP

BHP has always been reconciled with the carbon tax and it is not decisive in development plans.

EVEN taking into account the fact Canberra’s spin cycle is in overdrive ahead of the July 1 start of Labor’s carbon tax, Tony Abbott and Christopher Pyne have been a bit hyperbolic this week.

During a whistle-stop tour of South Australia, Abbott said BHP Billiton’s $30 billion Olympic dam expansion project was ”hanging in the balance”. Axing Labor’s carbon tax and mining tax and reining in ”union militancy” were three major incentives that a Coalition government would deliver, he said, adding that in the meantime the Labor government should guarantee that its mining tax won’t be extended to gold, copper and uranium.

Pyne said BHP was reconsidering the timing of the Olympic Dam expansion because of heightened political risk, adding: ”I directly blame the Gillard government for that.”

The truth is more complex, as usual. It’s the timing of the Olympic Dam expansion that is being reviewed, and the carbon tax and mining tax are not decisive.

BHP chief executive Marius Kloppers, the group’s chairman, Jac Nasser, Rio Tinto chief executive Tom Albanese and Glencore chief executive Ivan Glasenberg have all warned recently that Australia is becoming a more expensive place to invest in, and a more regulation-heavy one.

But as BHP reacts to softer commodity markets by re-sequencing its lengthy line-up of potential resources developments, Australia’s carbon tax and mining tax are not front of mind: hardly surprising really, given that Kloppers is a supporter of carbon pricing and helped negotiate a watered-down mining tax after Julia Gillard pushed Kevin Rudd aside in June 2010.

Kloppers said in September 2010 that BHP accepted that climate change was a reality and added that, because the multilateral push for a carbon pricing regime had been derailed, Australia would be best served by going alone, and going early.

The BHP view at that time was that carbon pricing was inevitable, but that it needed to be simple, transparent and predictable, revenue neutral and broadly based, but also designed to protect trade-exposed industries.

He has subsequently criticised the structure of the Australian carbon-pricing regime, saying for example that the imposition of a carbon tax on the coal industry makes it more costly, and therefore less attractive as an investment destination than it was compared with coal-producing countries, including Indonesia, that have not yet introduced carbon pricing.

Nasser has called for a slower introduction of carbon pricing here and he has also said he thinks Labor’s Fair Work Act should be redrawn to reduce ”disproportionate union influence”.

And yes, getting the go-ahead for a mine development in this country is a regulatory marathon. It took more than five years to negotiate it in Olympic Dam’s case and more than 8300 people, 38 government departments and service providers, 55 non-government organisations and 60 industry groups had a role in the development of the project’s environmental impact statement.

We can do better than that.

It’s worth noting that BHP’s consistent message has been that it understands that careful and open planning and consultation is needed to build a lasting consensus around a development of the size of Olympic Dam, the world’s biggest uranium deposit and fourth-largest copper deposit.

BHP has also not stepped back its overall support for carbon pricing. In fact, it’s been loading a price for carbon into its investment decisions for years. The structure of the tax here is not its ideal, but BHP believes it can live with it.

The key forces behind BHP’s rethink about major expansions, including Olympic Dam, are commodity demand and commodity prices.

Both have softened as the northern hemisphere sovereign debt crisis and the economic slowdown it has induced depresses China’s growth, and as the hangover from last year’s over-zealous attack on inflation in China endures.

The price of copper, Olympic Dam’s main product, leapt by 257 per cent between December 2008 and mid-February last year for example, but has since slid by 27 per cent.

Kloppers and Nasser have been pretty clear on this, with Nasser flatly answering ”no” to a question in mid-May about whether BHP was going to stick to a previously announced five-year $US80 billion capital expenditure budget, and Kloppers stating that iron ore demand will grow strongly but less rapidly in the next decade than it has in the past 10 years. He also predicted that after 2025 it will move into a ”protracted period of low to negative growth”.

BHP has 22 major project developments and expansions under way, and they will soak up the group’s spending power in the 2012 and 2013 financial years. Thereafter, BHP would have ”flexibility” on project sequencing, Kloppers said last month, and it will be running the slide rule over new prospects very carefully.

The sums on projects here, including Olympic Dam, will include the cost of the mining tax and the carbon tax, and BHP will also be comparing labour productivity.

Commodity prices are the big variable, however – if they stay off the boil, projects like Olympic Dam will proceed more slowly regardless of what party is in power in Canberra.

mmaiden@theage.com.au

Read more: http://www.theage.com.au/business/demand-not-carbon-drives-expansion-20120614-20cy6.html#ixzz1xo4Q37sj

 

Peter Ker

June 6, 2012 – 1:13PM

BHP Billiton will soon reveal a new company policy to combat carbon emissions, which will include some ”pretty dramatic” changes, according to chief executive Marius Kloppers.

Speaking in Perth this morning, Mr Kloppers said BHP had been revising its internal policy on energy and carbon emissions and would shortly reveal an updated version that would keep the company’s footprint at 2006 levels for the medium term.

“We are just coming up to setting the next set of targets, and without wanting to commit to it today, we are very close to approving a target that says we will – despite real growth and all the money we are investing – endeavour to keep our carbon footprint at the end of 2017, to maintain that footprint at or below the footprint we had in 2006,” he said.

“Given that we hope to increase our market share and scale and scope, means that we have had to do pretty dramatic things inside the corporation on energy efficiency and so on, and I have every anticipation that that is going to continue”.

BHP is expected to be a dramatically bigger company by 2017, with the resources giant currently mulling major expansions to its iron ore, copper and potash divisions.

While deteriorating market conditions are expected to slow one or more of those expansions, BHP is still expected to push ahead with some of those expansions by 2017.

Mr Kloppers’ comments on carbon policy come ahead of next month’s start to Australia’s controversial carbon tax.

Mr Kloppers has been heavily involved in the carbon tax debate over recent years. A speech he delivered in late 2010 was widely viewed as reigniting the domestic push for carbon policy in Australia, yet he has also blamed the tax in recent times for being one of several factors increasing the cost of doing business in Australia.

When asked about the world’s future energy choices this morning, Mr Kloppers said fossil fuels were likely to persist as the world’s preferred source of energy, with alternative forms of gas set to enjoy a period of strength.

“In the medium term (the world) is going to very powerfully elect to choose gas, not as a perfect thing, because there is no such thing as a perfect, non-impact energy, but as a halfway station to cut the carbon emissions by approximately half per potential unit of energy generated,” he said.

“Longer term the world is going to continue to work on nuclear products and that has to augment the energy mix at some time.”

The predictions very much reflect BHP’s corporate strategy. The resources giant has invested close to $20 billion over the past year on alternative gas assets in the USA, and also has major uranium assets – such as Olympic Dam in South Australia – which are expected to be a decade or more away from full exploitation.

Read more: http://www.theage.com.au/business/bhp-poised-to-reveal-dramatic-carbon-plan-20120606-1zvje.html#ixzz1x08hn9lb

Rania Spooner

June 6, 2012 – 1:08PM

Marius Kloppers . . .  "People simply are not not willing enough to move to Western Australia."Marius Kloppers . . . “People simply are not not willing enough to move to Western Australia.” Photo: Torsten Blackwood/AFP

Workers from the east coast of Australia could be less willing to relocate than foreign counterparts in Canada and the United States, because they tend to go to university where they grew up, according to the BHP Billiton chief executive Marius Kloppers.

Mr Kloppers warned against rigid regulation of the Australian mining sector while markets remain volatile, in a speech that avoided a clear message on the company’s plans for major projects, in Perth today.

Taking aim at the finer details of the carbon tax and weighing into the foreign worker debate sparked by Hancock Prospecting’s application to bring 1700 foreign workers onto the Roy Hill project in the Pilbara on an enterprise migration agreement, Mr Kloppers said flexible regulation would factor into the nation’s ability to attract investment in the future.

BHP has not had the need to consider applying for an EMA, something Mr Kloppers said was due to the strength of BHP’s existing labour force in WA.

But Mr Kloppers said attracting labour was an issue for companies trying to enter the market while its hot.
“Arguably the biggest challenge that we’ve got is labour mobility,” he said.

“People simply are not not willing enough to move to Western Australia.”

He said while there were structural barriers preventing people moving West such as tax differences, Mr Kloppers suspected some other factors could be at play.

“Anecdotally my personal observation would be that particularly on the east coast people tend to study in their own home towns and that sets the basis for ‘I’m going to live where I grew up’,” he said, adding that the price of coffee in Perth could also act as a deterrant.

Mr Kloppers said he believed moving workers in Canada and the US interstate was easier because of the cultural contrast, where students tend to be sent away from home to study.

Labour mobility was not entirely to blame for increased operating costs though, Mr Kloppers said any decision on royalties and other taxes would have lasting effects on the nation’s ability to attract investment.

“Australia’s future prosperity depends not on investments that have been made in the past but on ensuring that we continue to attract investment flows in the sector in which we arguably have the greatest competitive advantage,” he said.

Read more: http://www.theage.com.au/business/mining-and-resources/aussie-workers-not-mobile-enough-kloppers-complains-20120606-1zvgd.html#ixzz1x08MbIUv

Kevin Naughton

June 6, 2012

GLOBAL financial services giant JPMorgan is the latest company to throw doubts over BHP Billiton’s Olympic Dam copper and gold expansion project.

JPMorgan’s recently recruited and well-connected mining analyst Lyndon Fagan has suggested to investors that the $20-25 billion expansion project could be on the back burner for at least three to four years.

Fagan, a former Royal Bank of Scotland analyst, joined JP Morgan last month as an executive director to cover BHP Billiton, Rio Tinto, Fortescue Metals Group as well as Alumina and OZ Minerals for the investment house which holds more than $2.3 trillion in assets.

The Australian newspaper reported today that Fagan’s latest assessment of BHP’s position ranked the expansion proposal as the least attractive of its major projects.

“Olympic Dam may not happen,” Fagan’s report said.

“Of all the major projects in the growth pipeline for BHP and Rio Tinto, the Olympic Dam expansion has the least attractive risk-return trade-off.”

The Australian says Fagan would “not be surprised if BHP delayed the first stage of Olympic Dam by three to four years to strengthen its balance sheet and focus on returns to shareholders.

“If this decision was communicated to the market, we would view this discipline as a net positive,” he said.

The Fagan report follows similar concerns expressed by Platypus Asset Management portfolio manager Prasad Patkar.

“For the amount of capital that they have to outlay, they will need a very high and stable copper and uranium price for a very long time for the board to have the comfort to be able to sign off on a project of this scale,” Patkar told Bloomberg last month.

Deutsche Bank and Citi have also forecast a delay to the project.

Analysts have interpreted the comments of chief executive Marius Kloppers last month in Miami where he told major investors there would be no substantial spending on new projects until at least June next year.

Similar comments by BHP chairman Jacques Nasser in China have sent a chill through the corridors of the South Australian government after last week’s State Budget factored in the expansion in its jobs growth forecasts.

The government’s Mineral Resources Minister Tom Koutsantonis initially took a hard line on extending government approvals for the project, but has since said he would “consider” any requests.

Under the current Indenture agreement legislated by the parliament last year, BHP has until mid-December to start work on the expansion.

http://www.indaily.com.au/?iid=63869&sr=0#folio=6

May 19, 2012
Ian Verrender

I went down to the crossroads, fell down on my knees. Asked the Lord above, have mercy now, save poor Bob if you please. 

 Is this really where we are at, that awful space between heaven and hell, where the legendary Mississippi Delta blues king Robert Johnson found himself shortly before his untimely demise in 1938?

Legend has it that Johnson, one of the greatest guitarists who ever lived and whose skills still are impossible to emulate, sold his soul to the Devil to further his musicianship shortly before being poisoned by a lover’s jealous husband at the tender age of 27.

The road signs are all there. But which direction should we take?

Jac Nasser certainly does not know. He has straddled both sides of the business divide – manufacturing and resources – in a stellar career that began shortly after leaving school.

Emigrating with his family from Lebanon shortly after World War II, he started at the bottom of the line at Melbourne’s Ford factory in Broadmeadows on a 33-year journey that led him to the very top of the global company’s Detroit headquarters, and in more recent times to become chairman of the world’s biggest mining company, BHP Billiton.

This week, in an address to the Australian Institute of Company Directors, he hinted the China-led resources boom was running out of steam. That is bad news for resources groups such as BHP, Rio Tinto and Fortescue.

That has been partly reflected in BHP’s plunging share price, now down 5 per cent this year after a 25 per cent plunge last year, as the company diverts its bumper cash flow to fund massive mine expansions that may not be needed.

Underpinning that was the political calamity unfolding in Europe – China’s biggest export market – with Greece plunging headlong into an economic catastrophe that now seems irreversible and has held forth the stark reality of the European Union and the single currency unravelling. China’s growth, too, is under question, raising doubts about the sustainability of the resources boom.

But then there was the counterbalance, the tantalisingly slim ray of hope to the local manufacturing sector that a permanently weaker Australian dollar could deliver.

Nasser is trapped between the two worlds. For as much as he is a proponent of a free market, and a minimal government intervention model in a booming resources industry, he continues to harbour the belief that governments should intervene to support its fragile and fracturing manufacturing base.

But who should pay? Consumers through the cost of higher protection levels? Or taxpayers generally through direct government support?

From his musings on Wednesday, it is pretty clear Nasser certainly is not keen on the mining industry doling out any extra cash to subsidise manufacturing. He prefers taxpayer handouts.

When asked after his speech whether the government made the right decision to tip even more funds into the ailing auto industry and whether we even should be producing Holdens and Fords, Nasser hesitated only briefly. ”I knew I wouldn’t be able to escape this one,” he said. ”I’d like to think the answer is yes.”

After a blistering attack on the federal government for its heavy handed taxation and industrial relations policies – which he claimed had harmed the national interest and Australia’s competitiveness – Nasser suddenly was transformed into an interventionist and a government supporter.

”You have to give the industry the best chance possible, and I always ask: ‘Is the juice worth the squeeze?”’

Jac says that involves tying management, suppliers and unions to agreements that will help the industry evolve.

It is an arresting philosophy. But in terms of car manufacturing, it does not seem to have worked. The industry has been on the taxpayer teat for seven decades, has paid minimal tax and continues to threaten successive governments, state and federal, almost every other year with a retreat unless more cash is doled out.

Jac’s rationale? ”It’s an industry everyone either loves or loves to hate but if you look around the world, almost every government provides assistance.”

What happened to the concept of laissez-faire and minimal government intervention? Surely if every government around the globe is supporting an industry, those involved are having a lend of taxpayers and pitting nations against one another.

Perhaps the auto industry is not the best case study, given it again has notched up massive losses and never has made a return without government support. But in a perverse kind of way, Nasser may be on to something.

What if we pursued a completely laissez-faire approach and allowed all our industry to move offshore, only to find the resources boom come to an abrupt halt and the dollar collapse.

An economist would rationalise that as: Capital will shift back and the industry once again will be viable. That’s fine in theory. In reality, however, it simply does not work that way. As Nasser pointed out on Wednesday, industry needs certainty, it needs stability particularly those sectors with huge capital costs. Once gone, it could take years to return.

BHP clearly believes the resources boom still has some way to run, that China still has a good deal of growth left in it. But for Australia, it is pretty obvious the best days of the boom are behind us, and the ”stronger for longer” mantra no longer holds sway.

That is a problem for BHP. Having committed itself to massive expansions – delaying returns from this boom to future generations – it is faced with an investor backlash.

Both Nasser, and the chief executive, Marius Kloppers, indicated this week the planned $80 billion investment blitz during the next three years would be scaled back.

And there was a less than subtle message that unless the federal government played ball on tax and industrial relations, the Big Australian could become the Big Foreigner, looking for opportunities elsewhere.

Clearly, it is every company’s duty to direct investment to places and industries that will deliver the best returns. It just so happens the most fertile ground for resources returns has been here.

While there is never a guarantee that will continue forever, the simple fact is that Australia – abundantly rich in resources with a stable democracy, robust legal system and great infrastructure – is the star attraction for a resource-hungry world.

As Nasser mentioned, resource booms do not last forever. And booms, as we are discovering now, can involve painful readjustment.

But if Jac truly believes manufacturing should be supported, that we need to keep an eye on the longer term, then perhaps he should reconsider his views on the taxation side of the industry causing the pain to manufacturing in the first place. Someone has to pay.

You cannot have it both ways.

Read more: http://www.smh.com.au/business/intervention-v-free-market-nasser-digs-himself-into-a-hole-20120518-1yvrj.html#ixzz1vJlVeZq0

 May 16, 2012 – 12:11PM

The second multinational in a week has criticised the tight labour supply problem in Australia’s mining and resources sector, arguing the lack of labour as well as equipment and materials have slowed the pace of expansion of key iron ore projects owned by giants BHP Billiton, Rio Tinto and Vale.

Japanese trading house Mitsui & Co told analysts in the United States overnight that its mining partners in Australia were running up against a slower expansion pace than expected when it came to their iron ore projects. ‘‘We are working with big three, namely BHP, Rio Tinto, and Vale,’’ a Mitsui & Co spokesman said.

‘‘All of them are making progress in a capacity expansion, but … (at a) slower pace than expected. BHP and Rio Tinto are getting behind their schedules due to the labour issue in Australia and the tight supply of equipment and materials.’’

 The Mitsui & Co spokesman said that was why there was ‘‘not much growth’’ in the iron ore equity share of output for March 2012. Only last week the boss of one of the world’s largest engineering and construction companies, KBR, told US investors he was worried about the pricey labour market in Australia which made the cost of flying in construction workers for resources projects on par with directly hiring locals.

KBR chairman and chief executive William Utt said there was a “very high cost situation in Australia” when it came to liquefied natural gas (LNG) and that although the nation was blessed with an abundance of natural resources, it also faced a number of cost disadvantages that made other regions, such as east Africa, more attractive. “We do worry about the labour market in Australia, and we can land expats in Australia for about the cost of what we’re hiring directly for construction workers,” Mr Utt said during an earnings briefing.

In its recent submission to the Fair Work Act review, APPEA said there was anecdotal evidence of an escalation of cost increases in excess of 35 per cent over one year in some offshore oil and gas construction projects. This could endanger the estimated $330 billion in planned investment in the sector. “Of course, investment of this order will only proceed if Australia is able to show a record of international competitiveness in project development cost and schedule.”

Read more: http://www.theage.com.au/business/complaints-grow-on-minings-high-labour-costs-20120516-1yq3v.html#ixzz1v1UFPrdH

May 14, 2012Opinion

PALMER AFR PHOTOGRAPH BY GLENN HUNT 30042012.NEWS- Clive Palmer announcing at a press conference in Brisbane that he will be building Titanic II.Nervous … perks mining magnates like Clive Palmer have enjoyed for too long have now come under threat. Photo: Glenn Hunt

In the days leading up to last week’s budget, the minerals giants grew nervous. Already cranky at having to pay the carbon tax and the mining tax from July 1, they were uneasy at speculation that certain tax perks they enjoyed were in the frame, as the government strived for savings to achieve its promised surplus.

Reports suggested such breaks as the $2 billion diesel excise rebate, exploration deductions and accelerated depreciation were under consideration by the razor gang. So, they ran full-page newspaper ads essentially warning the government to back off.

Under their parent lobby group, the Minerals Council of Australia, the companies, primarily BHP Billiton, Xstrata, and Rio Tinto, argued they were not prepared to pay even more tax. The ads carried the line ”keep mining strong”, the same line that underpinned the $22 million blitz in 2010, which shredded the Rudd government and the original incarnation of the mining tax, the resources super profits tax.

The government’s response to these new ads was deafening silence. Even though, at the time, the Treasurer, Wayne Swan, was in full flight against powerful vested interests flexing their financial muscle to shape public policy to suit their own interest rather than that of the nation.

The focus of Swan’s ire was the mining bazillionaires Gina Rinehart, Clive Palmer and Andrew Forrest. When Swan began his crusade, starting with an essay in The Monthly, the most obvious example of a vested interest shaping government policy had been the mining tax campaign.

It proved so effective that it became the template for other campaigns, such as that by the gambling lobby which put so much pressure on targeted MPs that it weakened the prime minister’s leadership, defeated the proposed reforms and collapsed the deal Andrew Wilkie had with the government.

Yet Rinehart, Palmer and Forrest were at most bit players in the war against the original mining tax.

They do not even belong to the Minerals Council, which waged the campaign. When Swan was asked at the National Press Club on March 5 whether he was going after the wrong people, he explained that after initial resistance the minerals giants sat down, negotiated a compromised tax and have accepted it, whereas the others keep griping.

”We resolved this issue of a resource rent tax in the national interest, sitting across the table with responsible mining companies, who eventually came to the party and worked our way through the issues. It wasn’t possible for some months for that to happen, but it did happen,” he said.

”But what we’ve seen, not just during that debate and even prior to the resolution of the issue, was the vested interests that I have talked about here today who have continued a really strong, vitriolic, well funded [campaign], backed by enormous corporate manoeuvring from a group of people to try and sink this tax.”

When the budget came out, the miners won. There had been serious consideration of going after their tax perks but there was nothing in the budget. As one minister said during deliberations, ”Do we really want to pick another fight with them?”

The budget forecast the mining tax to make $13.4 billion over four years, about $900 million less than forecasts last year. This reflects volatility in commodity prices and the dollar. Forrest maintains the revenue forecasts are fanciful because, he said, neither his company, Fortescue Metals Group, nor any of the big three were going to pay any mining tax for several years because they hoodwinked the government during negotiations and can deduct the market value of their operations from their mining tax liability.

The big three are slated to pay 80 per cent of the mining tax so, if they do not stump up, there will be an almighty hole in the budget, especially as the revenue has already been allocated to various measures, including two extra cash handouts worth a combined $2.9 billion which replaced the promised company tax cut.

The Opposition claims on one hand that the mining tax will kill the industry but, on the other, agrees with Forrest that it is not going to make any money.

Tony Abbott, Joe Hockey and Ian Macfarlane have all said the miners have told them they will be paying no mining tax for several years.

It is understood Hockey got a clip around the ears from BHP for being too candid about what he had been told, including that a company had ”given me data”. The other version, coming from the minerals industry, is that Hockey did not accurately reflect what BHP told him and that the company does expect to pay the tax.

Either way, we will have a first indication in October when the first instalment must be paid. If the money is there, Forrest and the Opposition will look stupid. If it is not, we’ll see how brave the government really is.

Read more: http://www.smh.com.au/opinion/politics/proof-will-be-in-the-paying-when-mining-tax-kicks-in-20120513-1ykre.html#ixzz1unlhhuj3

Kevin Naughton
 
May 1, 2012

EVERYTHING that can be done, has been done, says the head of the state government’s Olympic Dam Taskforce as it waits for BHP Billiton to give the green light to the mine’s proposed expansion.

“Everything is lined up nicely for this decision,” Resources and Energy Department deputy CEO Paul Heithersay said yesterday.

A formal commitment to proceed from the BHP board would trigger billions of dollars in associated infrastructure projects. A board decision is expected mid-year.

Mr Heithersay addressed hundreds of miners, explorers and contractors gathered at the Hilton Hotel for the “2012 Paydirt” SA Resources and Energy Investment Conference.

“Everything the government can do is done; we have completed the EIS and Indenture processes,” he told delegates.

Heithersay said BHP Billiton was already spending “around $20 million a week on pre-commitment projects”, such as expansion of the road from Port Augusta, and engineering design work and earthworks.

Other projects included:

  • 270km of electricity transmission line;
  • 400km of gas pipeline and a gas-fired power station;
  • 105km of railway to be built from Pimba to Olympic Dam;
  • a sea landing facility south of Port Augusta for the unloading of heavy machinery;
  • an airport, complete with solar power and a 737 jet capability;
  • a 10,000 person camp as well as expansion of the Roxby Downs township; and
  • upgrades to Adelaide and Darwin harbours.

Earlier in the conference, Mineral Resources Minister Tom Koutsantonis repeated his “elephant” analogy, used in a recent presentation overseas.

“South Australia is poised to take its place among the titans of mining – not just in Australia but in the world,” Koutsantonis told delegates.

“In Olympic Dam we have tracked down an elephant, we are still in the hunt for the rest of the herd.

“These are exciting times, but they are also challenging times for our State.

“We need to manage our transition into a global mining giant in a way that benefits all South Australians.”

The minister also announced the successful applicants for exploration subsidies under the Plan for Accelerating Exploration, a subsidy program that dates back to the SA Exploration initiative (SAEI) in the early 1990s.

“Twenty-six mineral and petroleum exploration companies spread across South Australia will share about $1.7 million funding from the State Government,” he said.

Under its newer name PACE, it is to be expanded into a series of other collaborations including energy and water, subject to government funding approval.

The importance of Olympic Dam to the economy had earlier been underlined by Oz Mineral’s managing director Terry Burgess when he told delegates a recent set of job ads for work at nearby Prominent Hill had attracted 3000 applicants.

BHP Billinerals Adam Morton
April 22, 2009

AUSTRALIA’S big miners are pushing for a merger of 11 industry bodies in a bid to cut costs and centralise lobbying power under the Minerals Council of Australia.

Organisations targeted under the plan include the Australian Coal Association, the Australian Aluminium Council, the Australian Uranium Association and state and territory minerals councils.

A letter signed by chief executives at 11 companies, including BHP Billiton, Rio Tinto and Xstrata, says it would “improve national consistency” and reduce a combined operating cost topping $45 million a year.

“Quite simply, we will not continue funding organisations as separate entities to the Minerals Council of Australia as we have previously,” it says.

Sent on the eve of Easter, the letter has angered some industry bodies and their junior member companies.

Most declined to speak, but industry insiders said they feared concentrating power in Canberra would strip some commodities of representation and deny others a strong voice at state level, where much of their business lies.

Tony Fawdon, executive chairman of minerals explorer Diatreme, said the Queensland Resources Council had been crucial in the industry winning $50 million from its State Government in 2006.

He said the national minerals council sat in an ivory tower with little idea of what happened at state level.

“Frankly, I don’t think the (minerals council) is going to have any practicality at all — the bigger the company, the bigger the chamber, the less hands-on the practitioners are at the top of it,” he said. “How are you going to cut up a very, very thin cake of funding across the states?”

Minerals Council chief executive Mitch Hooke said the plan was a commonsense approach that would “enhance regional capacity, not diminish it”.

He said the states would continue to be represented by branches within the national council, as Victoria had been since a merger in 2004. The Northern Territory Resources Council had already volunteered to take part.

“The goal is alignment of advocacy, the goal is improved efficiency and effectiveness,” Mr Hooke said. “If Victoria is anything to go by, the regions are richer for working within the national secretariat while maintaining autonomy to deal with the state issues.”

Mr Fawdon said this meant little: the Victorian minerals council was “pretty toothless”, unlike its counterparts in Queensland, South Australia and Western Australia.

Mr Hooke will convene an implementation committee to be chaired by former Newmont executive Paul Dowd.

Other companies backing the plan are Anglo Coal, Downer EDI, Barrick Gold, Minara Resources, Newcrest Mining, Ausminerals, Thiess and Newmont Asia Pacific.

Several industry bodies declined to comment.

http://business.theage.com.au/business/mining-giants-to-combine-power-20090421-ae3x.html