Up for the Challenge

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-By Aleisha Parr

A year ago, we spoke with Michael Roche, Chief Executive of the Queensland Resources Council (QRC), about the minerals and energy sector’s resolve to bounce back from devastating flooding as well as fronting up to the impacts of the MRRT and a carbon tax.

Mr Roche warned that due to the major contribution of the resources sector in Queensland, any threat to its ongoing viability could have consequences for the entire state. He stated: “Think what the Queensland economy would be like if some of our opponents would have their way and shut us down overnight; that’s 21 per cent of our economy under threat, and over 1/8 of all jobs. That’s the stark message that we do want to bring home.”

While the RSPT has been consigned to history, the recently passed Mineral Resource Rent Tax (MRRT) is among a number of concerns for the Queensland minerals and energy sector, given its focus on coal exports.

“The coincidence of the MRRT and the carbon tax starting 1 July is going to test the viability of resources projects across Queensland – from ‘gassy’ coal mines to energy-intensive minerals processing and the heavy reliance that the sector must place on diesel fuel for operational survival,” he declared in a recent interview.

Indeed, under the MRRT, Queensland coal producers will pay an effective tax rate of 45 per cent to state and federal governments while under the carbon tax, the state could forgo up to $13 billion in income this decade from the loss of proposed coal mines that might not be able to proceed under the tax. That translates into a potential loss of more than $1 billion in royalties to the Queensland Government over the next 10 years.

“On top of that,” continues Mr Roche, “the tax threatens the jobs of people working in six of our 42 open-cut mines, which are at risk of closing prematurely because of the carbon tax. None of Queensland’s minerals and energy competitors is facing a similar domestic impost.”

Of great significance to the QRC is the need to maintain local jobs and income across the sector, under the weight of the world’s biggest carbon tax.

“The federal government can’t avoid the reality that it is sending local jobs and income offshore without the prospect of reducing global greenhouse gas emissions by one molecule,” asserts Mr Roche. “Also on the radar in the run-up to the federal budget is speculation that the diesel fuel tax credits scheme may be lost to mining, which is contrary to the principle of not taxing business inputs and based on the false assumption of our industries’ continuing capacity to pay.”

That capacity is rebuilding following major floods and a cyclone in 2011. Coal exports from Queensland last year were on a record-breaking track until record rainfall and flooding intervened, costing the state nearly 40 million tonnes of production. In the final analysis, the industry’s performance was only marginally better than what was achieved during the global financial crisis.

Although significant progress has been made, the coal industry still bears the scars of 2011. Explains Mr Roche: “In the first half of 2011-12, the industry started from a base of around 80 per cent capacity – not surprising when you consider it was carrying the equivalent of a Sydney Harbour’s worth of water into the new financial year.”

The recently published Queensland Floods Commission of Inquiry report supports concerns raised by the QRC leading up to and during the floods of last year. “The Commission supported the QRC’s submission that the Fitzroy [River] model conditions imposed in late 2009 to regulate mine water discharges prevented the industry from being able to properly prepare for the 2010-11 wet season,” comments Mr Roche, “and that authorities acted too late on those concerns. We’ll be looking to the new Queensland Government to pursue its commitment to implementing the inquiry’s recommendations including the granting of urgently needed mine water discharge approvals.”

Approvals for pre-emptive releases when a high rainfall event is forecast and for mines across an entire catchment in flood were also recommended in the report. Mr Roche says QRC members are also interested in seeing the government response to improving the flood resilience of the state’s road and rail infrastructure. Coal companies are investing heavily in preparations for future wet seasons with the construction of additional on-site water storages, pipelines, pumps and water treatment plants.

“Our industries must live with the seasons, and the wet season is a normal part of life in central Queensland. Hopefully with the reported weakening of the La Niña influence over Australian weather conditions, we can look forward to reaching the end of the financial year on a positive note.”

In general, this optimism is consistent throughout Michael Roche’s commentary on the state’s resources outlook, supported by one of the QRC’s latest publications, the QRC Growth Outlook Study. The QRC describes the report as a “vital guide” for industry, governments and communities in the interests of maximising the state-wide benefits from an unprecedented expansion of the minerals and energy sector.

“Subject to caveats such as new taxes and the speed at which the global economy recovers, Queensland is on the verge of the largest economic growth opportunity in its history,” declares Mr Roche. “We’re looking at 66 resource sector projects either under study, committed or under construction out to 2020 with a combined value of more than $140 billion. Under a ‘full-growth’ scenario, they stand to boost state royalties to almost $8 billion a year by 2020 – almost three times the $2.8 billion dollars banked in 2010-11.”

Of course, the development process is, as always, vulnerable to supply side issues associated with labour, water and electricity, which are capable of slowing sector growth or preventing it from reaching its full potential, warns Mr Roche. “If all the identified projects proceed the sector could require up to an additional 40,000 workers, another 5,000 megawatts of electricity and almost 200,000 megalitres of water. These challenges must be addressed even if only half the projects on the drawing board proceed.”

Another important issue identified by the QRC as a potential threat to the resources sector in Queensland is the emergence of a dedicated and sophisticated anti-coal movement led by Greenpeace. According to Mr Roche, this collection of anti-development groups have developed tactics through which they intend to disrupt and delay key projects and infrastructure, and “should be of enormous concern to Queenslanders and their elected representatives.

“We will be to talking to the Newman Government about any loopholes that allow our ideological opponents to misuse the legal system to disrupt and delay,” affirms Mr Roche. “Genuine community concerns deserve the opportunity to be aired, but there is a real danger that the anti-coal movement is gearing up to litigate the industry to a standstill. Rubbing salt into the wounds is taxpayer funding of anti-coal movement members such as the Environmental Defender’s Office of Queensland.”

Representing the interests of more than 280 Queensland resources companies through the QRC on these and a host of other pressing issues, Michael Roche says that despite the tumultuous year behind them and the complex journey ahead. “Queensland can either play a leading role in a global industrial revolution or start finding excuses why it can’t – and I just don’t see that sitting well with Queenslanders.

“As identified by Premier Newman, the resources sector is one of the four pillars of the Queensland economy and the companies QRC represents are determined to make their contribution a lasting one supported by the world-class environmental and social outcomes. We’re up for the challenge.”

Strategic Resources

There are 17 classified rare earth elements, many of which have strategic purposes. Rare in name only, these elements are anything but scarce as they are found all over the world. The challenge rare earth elements pose is during extraction, as they exist in low concentrations and are difficult to separate from one another.

November 19, 2017, 11:06 PM AEDT

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