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Mining 2016 Resources Convention

Brisbane

24 August 2016

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It is fantastic to be here as the new Resources Minister to address your conference.

I am a new Minister but I am not new to the resources sector.

I am based up in Rockhampton so I know how important the mining sector is to regional economies. Sometimes it is a case of you don’t know what you’ve got till it’s gone.

The last few years have been difficult for regional Queensland with the mining downturn increasing unemployment and cutting business activity.

If there is one silver lining it is that it has exposed the myth that somehow we can walk away from mining and the more than 200,000 people employed in the sector can just get jobs somewhere else.

The truth is there is no other industry in Australia that can provide the high-paying, rewarding jobs that mining can.

Mining has played an oversized role in the development of Australia and it will continue to in the future.

Rockhampton itself, although today known as the beef capital, really is a gold town. It would not be the city it is if not for the wealth of Mount Morgan, that helped construct its stunning buildings on the Fitzroy and attracted people to come to Rockhampton in the early 1900s.

So it is great to see Tony James from Carbine Resources here is attempting to get the Mount Morgan mine going again.

One of the great stories of world history is the British investors who made a motza from the Mount Morgan mines, sold their interest, went back to Britain and started a small company called British Petroleum.

I wish Tony all the best with Mount Morgan but just remember Tony, creating the kind of the wealth that BP did is the benchmark.

Hopefully that is not in the KPIs your shareholders have set you!

I also have learnt a little more about the sector because I have four boys. The three that are old enough are addicted to the game minecraft. I too now have a minecraft account because the boys much prefer to play that over the internet on the many nights that I am away than talk over Skype.

The great thing about the game is that it captures the imagination and the romance of exploring and prospecting. The ground under us really is the great unknown.

In a modern world where we often seem to maintain that we know it all about the climate, about space, about our origins, it is fascinating to have something so close to us that we still know so little about.

That’s why this sector is so tantalising. It’s why Mark Twain quipped that a gold mine is a hole in the ground with a liar standing on top of it.

The other thing about minecraft is it does help teach our children how important this sector is to our everyday life.

If you want to make decent tools in minecraft you need to mine ores and also coal to fire the furnace to make iron. My children probably learn at school all day how bad coal is and then they come home at night and madly search for black gold.

I am backing the computer game to win over the ideology sometimes taught in schools.

As this is my first major speech to a mining conference as the new Minister I thought it worthwhile to outline some of my priorities in this role.

First, is that I want to stand up for the importance of this sector.

Second, I want to make sure that Australia is an attractive destination for exploration because it is new discoveries that will help spur the next mining boom.

Third, I want to ensure that mining continues to play its historical role of contributing to the development of Australia by employing people on good wages especially in regional areas so that we can develop our country away from just the big cities.

Finally, in doing all of these things I want to commit to listening to the industry and finding out what is important to you.

I have already met mining executives in all major capital cities except for Perth, and I was due there last week but for a personal issue I had to reschedule. I will be back there in a couple of weeks’ time.

As I hinted earlier, the mining sector is under misguided attack from some quarters.

This is not just about climate change and coal, it is also a message that somehow that we don’t need to rely on mining anymore, that it is an outdated, an “old economy” technology.

In my very first ABC interview as the new Resources Minister, I was asked whether I feel like the person who has to clean up after the party is over.

I was a little dumbstruck at where the question was coming from so I asked for an explanation of the metaphor and the answer was that now the mining boom is over don’t we have a lot of cleaning up to do?

This is a misguided attitude because the mining sector is bigger as a share of our economy than it has been since the war. It is now 9 per cent of GDP up from 6 to 7 per cent before the boom. It employs over 200,000 people, more the double than before the boom.

The mining investment boom has ended but we still have a production boom that is hugely important to our economic growth.

Last year Australia exported record amounts of coal and iron ore, and we are on track to become the world’s biggest exporter of liquefied natural gas.

And, Australia was ranked second in the world by volume for alumina, gold, lead and zinc production and was the fifth highest volume exporter of copper, with an export value of AU$8.5 billion.

It is probably safe to say that we win more world medals in mining than we did at the Olympics!

Mining is a core part of Australian history. Every Australian schoolchild learns at least one thing about Australian history: the Eureka Stockade.

The gold rushes of the 1850s changed Australia. In the 10 years after 1850, Victoria’s population grew fivefold and, from 1860 to 1880, Australia’s population doubled.

Melburnians may not feel the same connection to the mining sector today, but living in Melbourne and calling for the end of the mining sector is a bit like hoping your parents never got married. As Marty McFly discovered in Back to the Future, that’s a dangerous wish to make.

The minerals sector has never been more important to the wider economy and the gadgets and toys that dominate modern life too.

This has been ably demonstrated by the Queensland Resources Council’s “Did You Know” series.  Like did you know that Pokemon Go! would not exist without smart phones and smart phones rely on the mining of copper, gold, alumina, silica, cobalt, carbon, aluminium, nickel and magnesium.

I actually passed a motion in the Senate last year pointing this out (although not the Pokemon Go! bit), and called on Senators that did not support the mining sector to refrain from using smartphones or other similar devices.  The motion was passed but the Greens of course voted against it.

Australia is also an emerging supplier of rare earth elements including various critical minerals and metals.

For example lithium is a key input for energy storage batteries and Australia’s lithium reserves and resources are ranked fourth in the world.

Our resources sector is resilient too. There has been a remarkable turnaround in productivity in the sector. Labour productivity over the past year is up more than 20 per cent, and multi-factor productivity is up more than 5 per cent.

This result shows that the resources sector is a key part of the innovation story for our nation.

Low commodity prices also pose a challenge for Australian exploration companies when it comes to attracting and maintaining exploration expenditure.

Australia still accounted for around 12 per cent of global exploration expenditure in 2015, but this was well below the 17 per cent recorded in the early 2000s.

Mineral exploration expenditure declined across all states in 2015, and fell 22 per cent overall, largely reflecting the declines in exploration for iron ore in Western Australia and coal in Queensland.

The Government itself cannot fill this entire gap but we can create the right business conditions to maintain our position as an attractive investment destination.

We are reducing business taxes and plan to progressively reduce the company tax rate over 10 years to 25 per cent and we’re providing additional tax incentives for small businesses.

We’ve repealed the carbon and mining taxes, relieving cost pressures on resources companies.

We’re also reducing the regulatory burden that hinders businesses.

We expect businesses will save in excess of $300 million a year through one-stop shops for environmental approvals to minimise project delays and costs.

A recent survey found that environmental policy and regulatory reform are still the most pressing issues for mining companies operating in Queensland.

In particular, it is a major concern that groups ideologically opposed to mining are using the courts to delay and disrupt major projects that have met rigorous environmental standards.

We cannot repeat the situation that has bedevilled the Adani Carmichael Coal project. This is a $16 billion project that will create a significant number of job opportunities. Despite having received all necessary approvals over an extended period this project is still held up in the courts.

According to Pricewaterhouse Coopers these legal actions have cost the company $152 million in legal expenses and a further $122.5 million in holding costs due to project delays.

The Australian Government is committed to reducing environmental red tape and firm action is also required at the state level.

The Government is also aware of mining industry concerns that guidance issued by ASIC about forward-looking statements will inhibit investment for junior explorers.

ASIC, the ASX and the mining industry have been working closely over the last few months to find a mutually acceptable solution and I am pleased progress is being made towards addressing industry concerns.

We are also about expanding market opportunities for Australia’s exporters through our free trade agreements with China, Korea and Japan.

These countries purchase over two-thirds of our resources and energy exports— purchases worth $117 billion in 2014–15—and the FTAs will further enhance our competitiveness.

For example, the China FTA locks in existing zero tariffs on iron ore, gold, crude petroleum oils and LNG, and ends tariffs on alumina, zinc, nickel, copper, coking coal and thermal coal.

While the Government’s primary role is to put in place the right economic settings, it’s also important we provide targeted support to promote growth in the resources sector.

There are two areas we’re focused on: exploration and innovation.

I mentioned earlier the challenges facing Australian exploration companies.

That’s why we’re de-risking exploration through the $100 million Exploring for the Future program.

Under this program, Geoscience Australia will undertake airborne electromagnetic surveys, stratigraphic drilling and seismic and gravity surveys covering targeted areas of northern Australia and parts of South Australia.

Exploring for the Future will provide new geoscience information to assist industry to better target areas likely to contain the next major oil, gas and mineral deposits.

It will also deliver pre-competitive geological data sets that have the potential to identify major new groundwater resources. The data will be released to industry as it becomes available.

Later this year we will see Geoscience Australia issuing tenders that will kick off this work – so once the wet season is over the work can begin in earnest.

There are proven benefits of undertaking this type of work.

One previous success was the $4.7 million Gawler Mineral Promotion project which began in South Australia in 2000. Over six years, in collaboration with the Geological Survey of South Australia, Geoscience Australia acquired and interpreted new datasets, ultimately defining a 500km belt of the eastern Gawler Craton likely to contain mineral deposits.

A junior exploration company subsequently received funding to drill at Carrapateena, where it discovered large copper and gold deposits. The Carrapateena project is currently under development by a major company which is expected to generate $22 billion in revenue over 24 years.

Successfully implementing the Exploring for the Future program is one of my priorities.

This program complements the Government’s efforts to encourage new exploration through the $100 million Exploration Development Incentive.

Innovation is the second area in which the Government is providing targeted support. As part of the $250 million Industry Growth Centres initiative, the Government has also launched two centres focused on driving innovation and productivity in the resources industry.

The Oil, Gas and Energy Resources Growth Centre—known as National Energy Resources Australia (NERA)—was established in February and is now up and running.

NERA is already talking to researchers, suppliers, service providers and governments about how it can help to strengthen collaboration and promote innovation.

NERA is headquartered in Perth and it plans to establish nodes in Brisbane and Adelaide.

The Government has also launched the Mining Equipment, Technology and Services Growth Centre—known as METS Ignited—to enhance Australia’s position as a global METS leader.

Australia’s METS sector provides the resources industry with cutting-edge innovation.

For example, an Industrial Transformation Training Centre based at Deakin University is pioneering the development of customised alloys that excel in severe mining conditions.

METS Ignited will seek to further strengthen collaboration, identify best practice in the mining innovation system and help the industry to reduce barriers to success. METS Ignited is headquartered at the Queensland University of Technology in Brisbane.

The Australian Government committed $14 million toward its establishment and I would like to acknowledge the Queensland Government for having contributed an additional $6 million.

I started by talking about the development of my home town of Rockhampton, and it is fitting that I finish by talking about the METS sector.

When Australians think of mining, they often think of BHP, Rio, big trucks and big capital. But I know that the resources sector supports so many small and medium sized businesses in my region.

During the election campaign I visited Team Engineering. Andrew Hegarty and his team have built a successful business but it has been a tough few years.

They built their business during the boom years but have had to lay off some in the past couple of years.  Nonetheless, they are still over 100 people and the day I visited them they were moving into a new shed in Mackay.

They are innovating and investing in 3D technologies, providing fabrication services to more than just the mining industry and are part of a dynamic engineering ecosystem in Mackay and Central Queensland.

But they got their start as a business by servicing the resources industry.

It is an industry that provides so much wealth and opportunity for Australia.

I am very proud to represent it as the Minister at the Commonwealth, and I hope that I can work with you all to build an even stronger resources sector for the future.

Thank you and God bless.

(ENDS)