CFMEU - Mining and Energy Division
Mining companies crying wolf yet again
Published in the Courier Mail 29 October 2012
HAVE you heard the one about the mining executive threatening to pack up and go to Africa? It's an old one but a good one.
Even with record commodity prices mainlining profits into their coffers, mining company executives have argued with perfectly straight faces that they should pay less tax; get more subsidies; be liberated from pesky employment and environment regulations; and have no obligation to engage with local industry.
After all, we can always pack up and go somewhere cheaper, they say.
If that's how they behave in the best of times, then as commodity prices fall and recent astronomical profit margins are squeezed, mining companies will go even harder, arguing for the kind of reforms that will make it easier for them to make a buck.
It's in the mining industry's interests to fuel anxiety that the boom is over. After all, if there's no boom, how can they be required to share the benefits by providing secure jobs and investing in local communities and economies?
But commodity prices easing back to levels typical of five years ago doesn't mean the boom is over. The gravy train of absolutely huge profit margins, and speculators becoming billionaires without ever mining a tonne of coal, may be over, but the mining boom isn't. Far from it.
Recent forecasts from the Bureau of Resources and Energy Economics show increases in volume will drive production of resources to three times the pre-boom levels during the next decade.
The numbers tell the story.
Thermal coal exports have increased from 100 million tonnes and $6 billion in 2002-03 to almost 160 million tonnes and $17 billion in 2011-12.
Coking coal has increased from 108 million tonnes and $10 billion in 2002-03 to 142 million tonnes and $32 billion in 2011-12.
Iron ore exports have been even more spectacular.
The jobs growth has been huge too - from about 60,000 in the late 1990s to more than 220,000 today, a number that probably includes some resource construction workers but is still huge. In coal mining alone we have gone from about 19,000 at the turn of the century to more than 50,000.
Is this all about to collapse? No way. The Reserve Bank recently warned the investment boom in resources would peak earlier than expected and at a lower level than previously forecast.
But this still means the peak of the investment boom is ahead of us, not behind us.
The list of firmly committed projects remains huge. Yes, some projects have been postponed indefinitely but
Australia still has formally committed resources projects valued at $260 billion under way. Hardly what you would call a bust.
The investment boom will give way to a production and export boom. And that increased supply is certainly bringing down prices.
Exports of thermal coal, coking coal and iron ore are expected to surge over the next decade.
Of course it won't be easy now prices have fallen and the huge cash margins are gone. In some recent years the cash profit has been more than half of all revenue.
But perspective is in order. This mining boom has a long way to play out, transforming our economy and communities. If we buy into the miners' spin that the boom is over, we'll miss our opportunity to make sure it delivers for Australians - for local jobs with good conditions, for families and communities, for our shared economic future - and not just for mining company shareholders.
The truth is, the mining companies have been crying wolf for years.
Despite years of threats from mining executives, the mass exodus is yet to take place and the investment figures show it isn't going to happen any time in the next couple of decades.
So next time you hear the one about mining companies packing up and going to Africa, treat it like the joke it is.
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