Australia high costs crimp investment - Ms Rinehart
The Australian cited mining magnate Ms Gina Rinehart as saying that the high cost of doing business in Australia is driving some multinational companies to pursue overseas projects that have the potential to further damage the country’s export revenue.
Mrs Rinehart, the chairwoman of the privately owned Hancock Prospecting and the nation’s richest person, lamented the decision by some companies to invest in lower-cost offshore projects that could drive down commodity prices and undercut Australian projects.
She said that “Sadly, too many multinational companies, even Australian companies, are focusing and preferring to invest in overseas countries with lower costs. For instance, Rio Tinto, which has been in Australia for decades, and made most of its revenue from Australia, is now arranging multi billions of dollars of investment for a major resource project with substantial infrastructure in Guinea in Africa.”
Mrs Rinehart said that “When that’s operating, it will bring billions of tonnes of ore on to the market to compete against Australia, and push down commodity prices. Too few seem to recognise the impact this will have when we are competing with lower-cost countries and how it will hurt Australia for decades.”
Mrs Rinehart said that Rio Tinto, Hancock’s partner in the giant Hope Downs iron ore project in Western Australia, should not be singled out, saying the nation must do more “to lower its costs and compete for investment.”
McKinsey & Company analysis released by the Business Council Australia ranked mining and energy as one of only three sectors of the economy where Australia enjoys an international competitive advantage.
However, the BCA warned the competitiveness of the nation’s resources sector had “declined over the last decade soaring costs of inputs, relatively low labour productivity and regulatory delays have caused capital costs to blow out and projects to be delayed.
Mrs Rinehart welcomed moves by the Abbott government to reduce some costs and investment deterrents by eliminating the carbon tax and endeavouring to eliminate the mineral resources rent tax. These actions are so important and should be supported. Regrettably the critics are at it again, without any regard to the realities Australia faces and the needs to ensure sustainable jobs and revenue in the future.
Mrs Rinehart was talking as Hancock marked the halfway mark of the construction phase of its AUD 10 billion Roy Hill iron ore project in the Pilbara region of Western Australia. Roy Hill, about 270 kilometers south of Port Hedland, is currently the biggest construction project on mainland Australia, employing about 3800 people. When fully operational, it will employ 2000 and ship 55 million tonnes of ore a year, making it one of the biggest single iron ore mines in the country.
Mrs Rinehart said that Roy Hill had never been a get rich quick project. We started the journey with Roy Hill approximately 20 years ago with substantial obstacles blocking our project for years along the way, and we don’t ship (until the) last quarter next year. There is an enormous amount of risk in mining but the critics conveniently leave that out.
She said that Hancock and its Roy Hill partners, South Korea’s POSCO, Japan’s Marubeni and China Steel Corp, were committed to making it a low cost operation that could compete with other projects. One of the things Australia has to learn and appreciate is that for us to export, people aren’t going to buy products because they like Australians forget it.
She added that “They’re only going to buy the products if we remain commercially competitive, cost-competitive. And this is a really big challenge for Australia because we’ve got very high costs and we’ve really got to work hard on that if we want to sustain our future, and a good future.”
Source - The Australian