Election Bucket List: Ensuring Long-Term Growth for the Australian Coal Industry

BRISBANE, Australia - Aug. 25, 2013 - PRLog -- The Australian Coal Association (ACA) led the charge by calling on any future government to formulate strong policies to set Australia on course for the next stage of the resources growth cycle.

ACA head, Dr Nikki Williams, said: “Currently Australian coal producers have the highest cost base in the world with burdensome taxes and a sloth-like, cumbersome and costly regulatory system. Labyrinthine regulations are continuing to stymie economic growth: causing project delays, putting investment at risk and, worst of all, utterly failing to deliver better environmental or social outcomes,”.

“Around 11,000 jobs have been shed from the industry in the last 12-odd months and yet we have seen nothing from government to indicate it is remotely concerned about the lives of these workers and their families and have not heard a word about its plans to secure those jobs for the future.”

She said if the current complacency persists, coal mining jobs would continue being lost to competitor countries such as Indonesia, the United States, Colombia and Mongolia.

For the ACA the policy priorities are:

Taxation: Australia must have stable and competitive taxation arrangements to provide confidence to international investors and underpin future economic growth. The Fuel Tax Credit Scheme must continue as a bipartisan and longstanding arrangement for the long term.  

Carbon policy: A future carbon framework must place Australia on the same footing as competitors. The taxing of greenhouse gas emissions from coal mining - which is imposed here but on no other coal-exporting country in the world - must end.

Environment: Environmental regulations for assessing and approving projects must be streamlined to reduce costly delays.

Energy: Policy settings should treat technologies for carbon abatement of coal as part of a suite of low emissions technologies for the future. The Renewable Energy Target (RET) is distorting the market and must be phased out.

CEO of the Queensland Resources Council (QRC), Michael Roche, said his affiliates are looking to the major parties to put down markers in a number of key policy areas as well. The QRC asking list covers a lot of common ground with the ACA but expands on some points.

“To simplify the environmental approvals process, we need to restart the process abandoned by the Commonwealth in December 2012,” he said.

“The government must also recognise the headwinds confronting the exploration industry given the market weakness and difficulties in accessing equity markets. This issue is increasing in significance as confirmed by our CEO Sentiment Index findings this quarter.

“The inability to raise capital rates today is the second most significant impediment facing the resources sector. There is no better time for the next federal government to revisit a much-promised but so far undelivered ‘flow through shares’ (FTS) or exploration tax credit (ETC) scheme to allow unused deductions to filter back to exploration companies to be spent on eligible exploration activities.”

CEO of the Association of Mining and Exploration Companies (AMEC), Simon Bennison, referred to research undertaken by the University of Western Australia in 2012 indicating mineral discoveries are reducing, getting deeper and harder to find, and equity investment is being lost to competitive offshore projects. “It also found that the national mineral inventory is gradually being depleted and the mining industry is becoming unsustainable in the long run.”

“The research highlighted that about half of Australia’s non-bulk commodities mines would be exhausted in between 7 and 18 years. As it takes on average 7 years to convert a discovery into an operating mine these trends are alarming,” he said.

Bennison said because of the need to discover the mines of tomorrow to ensure that future revenue streams from base metals did not dry up, AMEC proposes a reform initiative called the Mineral Exploration Tax Credit (METC) that will allow current eligible losses to be passed back to their Australian share owner in the form of a tax credit through the well known franking system. It was unclear if the initiative was being proposed for the bulks, such as coal and iron ore.

Significant economy wide benefits are confirmed in a KPMG Report, commissioned to support the tax reform measure being proposed by AMEC. It found that a multiplier factor of two in additional exploration activity would conservatively result in:

•   Potential to provide a positive annual tax revenue stream to Government of up to $283m

•   Up to 4,356 additional jobs across the whole mining sector
•   Contributing an additional $2.2b in GDP across the mining sector

This article first appeared in the Australian Coal Report. IHS Energy Publishing is a Brisbane-based internationally renowned publisher of leading coal industry publications and reports covering Asia Pacific. In addition to the weekly Australian Coal Report, our publications include the weekly Coalfax, Indian Coal Report, South African Coal Report, and importantly, we also deliver key market price indicators for all regions, including the Newcastle Export Index (NEX) and the world's first Coking Coal Index as well as a Database of Prices & Indices.

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