Mining in Australia is Entering a New Phase

Mining in Australia is Entering a New Phase

The recent drop in commodity prices has signalled a change in the global economic environment, presenting challenges for miners across NSW and the nation. 

As conditions become tougher, mining companies are carefully assessing projects, and more than ever all investment must be justified – like other industries, mining companies are looking to get the most out of their limited investment dollars.

In this context it’s vital that all levels of government understand that mining in NSW does not operate in a vacuum. Australia’s mining states compete with each other for investment as well as with international competitors. 

If NSW becomes a less attractive place to invest than our competitors, we could see revenue and jobs head to QLD, WA and more attractive investment locations overseas.

For mining communities across NSW it’s therefore essential that government policies at local, state and federal level support the industry so it can continue to provide economic stability and growth as well as deliver jobs.

In NSW the $20 billion mining and minerals processing industry generates more than 91,000direct jobs and supports around 325,000 jobs indirectly.

Mining royalties paid to the NSW Government totalled nearly $1.5 billion in 2010-11 and are forecast to rise to $1.9 billion in the next financial year.  This includes new supplementary coal royalties of $235 million that are expected to rise to more than $500 million in 2015-16.

In the NSW Hunter region alone coal mining provides over 17,000 employees and their families with an income. On average the mining industry also spends more than $2 billion a year on local and regional suppliers helping to bring significant additional jobs and growth to the region.

However in the last year, mining has been hit by a wave of new taxes and levies which have combined with the fall in commodity prices to create uncertainty.

The Carbon Tax which came into effect on 1 July 2012 will see production and other input costs rise at a time when our competitors are vying for the same investment dollars, without the burden of an unnecessary and virtually uncompensated tax.

None of Australia’s mining competitors tax the mining or production of coal.

The Carbon Tax is compounded by the new Minerals Resource Rent Tax (MRRT), which also came into effect on 1 July.  This new tax impacts around 320 companies across the country, including NSW coal producers.  The MRRT directly contributes to Australian mining standing as one of the most taxed mining sectors in the world.

Last year, the Federal Government also announced a 6.2 cents per litre reduction in the diesel fuel rebate, with that impost increasing steadily as the carbon tax increases.  This represents another cost burden mining companies in Australia will be forced to absorb. 

For mining to continue to underpin government revenue and economic stability in our regions and across the country, all levels of government need to come to terms with this new phase of mining in NSW and Australia.  Policies that consistently increase the cost burden for mining in NSW and across the country are not sustainable.  Government strategies need to encourage investment in responsible mining projects to support employment and economic growth in our regions.

Further, the flow on effects of mining are also crucial for the ongoing development of communities in NSW like the Upper and Lower Hunter, Central West, New England North West and the Illawarra.

The Australian Government’s recent report Smarter Manufacturing for a Smarter Australia examined ways the Australian manufacturing sector can grow and develop into the future.  The report found that manufacturers can benefit from engaging with the mining sector.

The report’s comments on manufacturing and mining are spot on. 

There are growing opportunities for supply and manufacturing companies in mining regions to establish new ways of linking with mining companies.  Not only are there opportunities in engineering and construction but also in environmental science, accounting and law. The industry is also a major user of hospitality and other service industries, as well as supplier businesses large and small.

It’s also vital that as mining supports regional economies to grow and develop, public infrastructure investment keeps pace.  Growth in local communities is placing further pressure on local infrastructure and services, and demands a coordinated response from all levels of government. 

The mining industry in NSW already plays an important role in the provision of regional infrastructure and services in mining regions through developer contributions and voluntary planning agreements. This is in addition to the significant contribution to government revenues through mining royalties.  

The NSW mining industry supports the call from mining communities for a fair share of this royalty revenue to be returned in public infrastructure investment. The NSW Minerals Council would like the NSW Government to consider a long-term, sustainable approach to funding of public infrastructure in mining regions and communities, such as a Royalties for Regions fund allocated from existing funding streams.  Such a fund would be able to strategically allocate resources to achieve economic growth in mining regions.

Mining is not a perfect industry; there are challenges that must be addressed.

NSW miners are serious about the environment and sustainable development. We are committed to rehabilitation of mine sites and minimising the impact of dust and noise. A good example is our use of water. While 46 per cent of water consumed in NSW is used by agriculture, mining uses just 1.4 per cent. NSW miners also recycle up to 80 per cent of the water that is used and in some cases even give back to town supplies to help drought-proof places like Lithgow west of Sydney.

No industry is without its challenges, however mining and exploration are industries with an enviable track record of innovation and problem-solving. The best miners produce incredible engineering and environmental feats and are always striving to achieve new breakthroughs. It is in this spirit that our world-class NSW miners will approach the challenges of the next phase of mining in this country.

Combined with a properly focused government policy framework, Australian mining will continue to contribute to the growth and prosperity of NSW and the nation.

Stephen Galilee

CEO

NSW Minerals Council

The NSW Minerals Council (NSWMC) is a not for profit, peak industry association representing the State’s $20 billion mining industry.

NSWMC provides a single, united voice on behalf of its 100 member companies: 40 full members (producers and explorers), 25 associate members (junior explorers) and 35 associate members (service providers) and works closely with government, industry groups, key stakeholders and the community to foster a dynamic, efficient and sustainable mining industry in NSW.

NSWMC is committed to healthy working conditions, strong growth, responsible environmental practices and vital regional communities throughout the state.

The primary focus of NSWMC is on state issues but the organisation also works closely with the Minerals Council of Australia and the Australian Coal Association (both based in Canberra) on national policy issues. NSWMC also has close working relations with other State and Territory minerals and resources associations and other major industry associations.