Minerals Council of Australia Report: Australian Miners Losing Competitiveness

Posted: 09/18/2012

A new report released by the Minerals Council of Australia reveals the declining competitiveness of Australia’s mining industry and the policies required to regain Australia’s position as a premier global supplier of minerals.

The 88-page report commissioned from Port Jacksons Partners states that Australia’s rising capital costs mean new projects are becoming less competitive.

In competitive markets for thermal coal, coking coal, copper and nickel, more than half of Australia’s mines have costs above global averages.

"Only five years ago we could build coal and iron ore projects as cheaply as our competitors. Capital costs, however, are rising more rapidly here than in the rest of the world," the report states.
"Now, Australian iron ore projects are 30% more expensive than the global average. For thermal coal, the figure is 66%."

According to the report, increased labour, energy and transport costs all play a part in the mining industry’s declining global competitiveness.

Mineral Councils spokesman Mitch Hooke said while the mining boom is not over, the dynamics of it has changed. He said that five per cent could be stripped off Australia's economic growth over the next 30 years if there is no major policy reform.
"If we don't have the policy settings that enable us to grow, then we will continue to lose our market share as we have to emerging resource-rich economies like Chile, Peru, Mongolia, Indonesia," he said to ABC.

The report states that the ‘burning platform’ for the local mining industry is the problem of rising structural cost competitiveness. As a result, "Australia cannot bank on continued commodity price increases" if it wants the mining-led boom to last.
The MCA report has also lashed out at the Resource Super Profits Tax (RSPT) saying it has damaged Australia’s reputation on tax.
"To restore investor confidence to previous levels, governments in Australia should commit to stable and competitive tax and royalty regimes," the report said.
You can download the full report above.
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Posted: 09/18/2012